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On the Rise: Condos and Townhomes

by Hart Real Estate Solutions

If you drive past any part of Bozeman, you’ll more than likely find some sort of new housing development under construction. What may be surprising for some though is how many of these new developments are actually condos and townhomes, as opposed to traditional single-family detached homes. With both mortgage rates and gas prices having risen recently, some buyers (especially younger, prospective buyers) may feel a bit uncertain about what they’re able to afford. Luckily, condos and townhouses may be more attainable than they think.

Nationally, new townhouses account for 12.3% of all single-family housing starts according to the National Association of Home Builders (NAHB). Over the past 5 years, the number of new construction condos and townhomes for sale in Bozeman has fluctuated quite a bit, with the most recent dip in activity having taken place in March of 2017. Since then, the number of condos and townhomes for sale has been on the rise. In Belgrade, there has also been some fluctuation during this same time period, with new condos and townhomes for sale having also been on the rise since March of 2017, though not nearly as rapidly as Bozeman.

 

Condos and Townhouses for Sale in Bozeman & Belgrade, Jan. 2013 - Present

            

This data was pulled from the Big Sky Country MLS for 2018. While we attempt to provide reliable, useful information, we cannot guarantee that the information is accurate, current or suitable for any particular purpose. Estimates are subject to change without notice.

Similarly, the median sales price for condos and townhomes has also risen in recent years. As of April 2018, the median sales price for both condos and townhomes was $289,900, while in Belgrade this median sales price was $267,400. (Disclaimer: either of these numbers could be skewed toward the higher end of the spectrum by a higher-end listing on the market.) While this may still seem high to many, the median sales price of a single-family home in April 2018 was $396,250, while in Belgrade this median sales price was $310,000. (Again, either of these numbers could be skewed toward the higher end of the spectrum by a higher-end listing on the market.)  Based on these stats, choosing to purchase a condo or townhouse in Bozeman (as opposed to a single-family home) could save you up to $106,350, while choosing to purchase a condo or townhouse in Belgrade (as opposed to a single-family home) could save you up to $42,600.

Number of Condo/Townhouse Sales 2014 - Present

Robert Dietz, Chief Economist for NAHB, states that “future gains in the share as townhouses are a useful bridge from rentership to homeownership for younger prospective buyers in high cost markets…”. This is good news for millennials, as they represented 34% of all homebuyers across other generations in 2017. With condo and townhouse construction on the rise, we can continue to expect an increase in closed sales for these types of homes as we move further along into 2018, and even into 2019.

 

As many local Bozeman residents have surely figured out, a new apartment complex will be coming to the MSU area, south of the football stadium, to help ease the rental vacancy issues in Bozeman. Bozeman has been attracting more and more new residents of late as it has become one of the nation's most liveable towns. Both the local public schools and MSU have seen increased enrollments--also putting strain on the rental market. The apartments will add nearly 500 renters, but whether that will make any major changes to the overall market are yet to be seen.

According to the Bozeman Daily Chronicle, 3,200 additional renters have been added to the Bozeman market since 2010, assuming half of the new non-student residents are renting and not buying. If this is the case, and with 888 new apartments and 371 multi-family units built since 2010, the Bozeman Chronicle believes that Bozeman is still short on rental inventory.

Bozeman has been working with consultants, builders and Montana State University to help ease the high costs of renting in the area. Nationally, renters have been struggling with affordability issues as well as vacancy issues and Bozeman has seen similar concerns. The surrounding areas of Bozeman have provided residents with some respite, offering better rental prices.

Bozeman has been adding more inventory through new apartments and in some cases new subdivisions to help keep prices manageable. The apartment complex is another effort to help create a more positive rental market in the future.

 

Source: http://www.bozemandailychronicle.com/news/city/new-construction-may-help-ease-rental-market-pain/article_97dc4d16-7866-577b-927d-42451dea827a.html

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