Bozeman Montana Real Estate Information Archive

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How Rising Home Prices & Growing Wages Relate to Desirability in Montana

by Hart Real Estate Solutions

Montana housing market prices are high, especially in Bozeman. In 2016, the median sale price for a single-family home in Bozeman was $359,250. Fast forward one year— the median sale price in Bozeman in 2017 was $380,750 (a 5.98% increase from the previous year).      

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.

 

In terms of median home values, Bozeman ranked the highest when compared to both other large cities in the state and the United States as a whole.

 

Median Home Values 

Although wages in Montana remain lower than the U.S. average, they are growing faster than other areas across the country. In 2000, the average weekly wage in Montana was 69% of the U.S. level— by 2016, they had grown to 76% of the U.S. level. Quickly growing wages could be a contributing factor to the ever-increasing demand for housing in Montana (and Bozeman in particular), although the demand for quality of life is likely the largest reason for the high demand and rapidly growing population. While the median household income in Bozeman is currently $68,000 (keeping pace with the current median home price), this statistic doesn’t account for the quality of the housing that is available at this price.

Many of the people coming to Bozeman are not reliant on Montana’s economy for income. This group of people includes out-of-state residents who own a second home in Montana, telecommuters, and retirees. In 2010, the share of second homes in Montana was 8%, while the U.S. percentage was only 3.5%. Our state also attracts a large number of people who have the financial means to live wherever they choose—23% of Montana’s personal income comes from non-wage sources such as dividends and retirement. The U.S. level is only 19%. In Gallatin County, more than 40% of adjusted gross income comes from non-wage sources.

Because of the high quality of life in Montana, rising housing costs are partially related to the state’s desirability to those whose income isn’t related to Montana’s economy, which means that wage increases may not be as tied to housing cost increases as we previously thought.

With Bozeman’s population expected to hit 50,000 by the 2020 census, wages growing relatively quickly, and home prices continually on the rise, when will our local market start to become more balanced? With new construction expected to rise as we move closer to that 50,000 mark and potential inventory growth predicted countrywide by the fall, we may be moving closer to both a more balanced market and more affordable housing than we think. 

91% of US Homes Have Equity

by Tim Hart

After 759,000 properties regained equity in the second quarter, almost 45.9 million homes now have a higher property value than the remaining balance on their mortgage. In essence, 91% of US homes with mortgages now have equity—great news for the recovering US Housing Market.

At the end of 2014, 89% of US homes had equity, totaling 44.5 million homes.

Ninety five percent of mortgaged homes valued at 200k or more currently have equity. At the end of 2014, that number was at 94 percent of mortgaged homes.

Homeowners with lower home values struggled to get over the equity hump in comparison to those buying more expensive homes. But these homeowners also saw the biggest improvement over 2015. In 2014, 84% of buyers under 200k had equity in their home but in 2015, 87% now have equity.

Much of the country has recovered from negative equity issues seen during the recession. Five states alone contributed to nearly 32% of the negative equity seen in the entire US. Although terrible news for these specific states, the general outlook for the nation overall might be even more positive than these numbers suggest. The US states with the highest negative equity rate (% of mortgaged homes in state without equity) are Nevada (20.6%), Florida (18.5%), Arizona (15.4%), Rhode Island (13.8%) and Illinois (13.1%).

Montana was in the top 5 states for lowest percentage of negative equity homes. In March of this year, Montana had 97% of homes with mortgages in positive equity. Although certainly not major, that number has climbed to 97.2 percent.

If property values rise by an additional 4.7 percent, experts believe another 800,000 homeowners will have positive equity in their home by July 2016.

 

Source: http://realtormag.realtor.org/daily-news/2015/09/16/91-properties-now-have-equity

 

For those still wondering if buyer confidence has returned to the United States Housing Market, they will be relieved when they read the new survey for released by Bankrate. According to their survey, real estate now ranks as the number one investment choice for Americans.

The company asked people how they would choose to invest their money if they had extra cash lying around. Twenty seven percent of Americans chose some form of property investment – the highest ranked answer of all other options. With signs of a normalizing real estate market, buyers are feeling confident that once again, real estate will turn in some high returns.

Buyer confidence has been climbing steadily in the last years. However, most articles discussing buyer confidence compared real estate confidence to previous years. This survey shows that confidence in real estate has now reached a point that it is also starting to compete (and beat!) other industries.

CDs and other cash investments, last year’s top answer, came in second at 23 percent. Seventeen percent of Americans would put their money in the stock market, 14% chose gold and other precious metals, and 5% chose investing in the bond market.

Coupled with low mortgage rates, high rental rates and low vacancy rates, its easy to see why an investor can see a lot of potential in real estate based investments.

Americans living in the West (35%) and urban (31%) areas showed the highest preference towards making a real estate based investment.

The South preferred real estate and cash investments. The Midwest preferred cash and stocks over real estate.

 

Source: http://realtormag.realtor.org/daily-news/2015/07/24/real-estate-ranks-tops-among-investments

 

97% of Montana Borrowers Have Equity in their Home

by Tim Hart

If Montana already didn’t have enough positive trends for their housing market, more good news came from Realtor Magazine in mid March. The magazine released which states had the highest percentage of borrowers with positive equity in their home—and Montana ranked 3rd, at 97 percent. The magazine analyzed any property with an active mortgage in the United States to reach their numbers. Montana and the Gallatin County rebounded comparatively well from the housing crisis compared to many of the other states in the nation, but seeing how many borrowers in the state have equity in their home really cements that fact.

In the United States, 89% of homes ended 2014 with equity in their home—a great sign for the national housing market. 44.5 million homes had equity and if home prices rise by 5% another 1 million will no longer have negative equity.

Interestingly, home sale values greatly affected whether buyers have been sinking or swimming across the nation. For properties valued over $200,000, 94% of them had positive equity. For properties valued below $200,000, only 84% had equity.

5.4 million home owners are still underwater from the housing crash. The issue of negative equity continues to hold back the potential of the market but negative equity is expected to diminish in 2015. For Montana, the local market has been able to grow so much partly due to the financial freedom of buyers and sellers in the area.

Nevada had the highest percentage of home owners still with negative equity, at 24.2 percent.

 

Source: http://realtormag.realtor.org/daily-news/2015/03/18/89-us-homes-ended-2014-equity

 

United States Home Sales Down 4.9% in January

by Tim Hart

According to the National Association of Realtors (NAR), existing home sales fell 4.9% in January. Sales have not been so low since April of last year.

The United States has added 1 million new jobs over the past 3 months, but the improvement in wages and labor has not had the impact on the housing market for which experts had hoped. Low mortgage rates and job growth were expected to draw buyers back to the home market.

Now, experts are wondering if a spring sale rush will be had or whether United States real estate may be in for a slow 2015. Currently, home inventory is low in the nation, holding at a 4.7 month supply (home inventory is measured in how long the current homes on the market would be expected to last – i.e. 4.7 months). According to experts, a balanced market will have around a 6 month supply of homes.

Limited supply inevitably leads to higher priced homes. Over the past year, home prices in the United States have risen by 6.2 percent. Oftentimes, buyers will try to hold out when supply is low, in the hopes that better options will soon be appearing on the market.  Mortgage applications fell 13.2% in January, despite the low interest rates attempts to entice these buyers. Unfortunately, when there is a smaller buyer base, builders are less willing to improve home inventory numbers without the guarantee of finding a buyer, keeping prices high. 

The Gallatin Valley has been a micro chasm for these national trends, though the valley’s real estate market is definitely healthier than many US markets and improving quickly. Through the one third way mark of Quarter 1, Gallatin Valley home sales are projected to come in 38 home sales below last year’s first quarter total. However, average sales price has risen by $29,487 dollars since 2014—a large number indeed.

As supply has been limited of late in the area, it is no surprise to see the Gallatin Valley following similar national patterns. Gallatin Valley has struggled with home inventory, but it has struggled due to the area's increasing popularity (as oppose to a lack of buyer demand slowing production). However, construction in the area appears to be growing and healthy while the city has addressed expanding home inventory in both its rental and sales real estate markets. Both should improve the overall availability of homes in Gallatin County and continue the area’s higher paced recovery rate compared to the state and the nation.

 

Source: http://www.bozemandailychronicle.com/ap_news/business/us-home-sales-plunge-percent-in-january/article_2754146c-31c6-5b37-bc88-1c9e4d172006.html?utm_medium=desktop&utm_source=block_802944&utm_campaign=blox

 

https://gallatinrealtors.com/uploads/statistics/1_15_Market_Stats_Gallatin_County_Residential.pdf

 

Finances Largely Affect Millenial Buying Trends

by Tim Hart

Millenials are buying homes that are smaller, older and less expensive than homes bought by older generations. Half the homes bought by millenials averaged less than 1,650 square feet and cost less than $148,500. As millenials are the youngest buyers on the market, the types of homes they are shopping for make sense. Young buyers generally have little to no accumulated wealth, affecting the types of homes and even the loans they will shop for.

Millenials are less likely to buy a new home (9%) than other generations would (12% average for the entire industry). Although more than two thirds of Millenial home buyers bought single-family homes, more are willing to buy multi-family homes than other generations. Nine percent of millenials bought multi-family homes compared to a six percent average for everyone else.


When asked why they were purchasing a home, most millenials had hopes of establishing their own household. Many had hopes for a larger unit and many others bought to finally become a homeowner and stop renting.

Source: http://eyeonhousing.org/2014/12/what-homes-do-millennials-buy/

October Market Update: Gallatin Valley Townhomes and Condominiums

by Tim Hart

This month, we will highlight condominiums and townhomes in the Gallatin County from the first two quarters of 2013 compared to the first two quarters of 2014.

Here are a few stats for all of Gallatin County for condos and townhomes:

  • Units increased in the first two quarters by 27.5% (244 sold in 2013, 311 sold in 2014)
  • Dollar volume increased in the first two quarters by 55.8% from $56,339,593 in 2013 to $87,800,977 in 2014
  • Average sale price also increased from $234,833 to $280,586
  • For 2014 through 8/31/2014
    • Sold volume already at $117,936,021 and 438 units

Summary – based on increases across the board in the first two quarters from 2013 to 2014, the 2014 market continues to shine, looking to surpass 2013 annual totals easily.

Some Housing Market Info.

by Tim Hart

I read an article in the Bozeman Daily Chronicle today by Jason Bacaj about the current housing market in Bozeman.

Here is what I found to be very interesting:

Houses on the high and low ends of the market are moving extremely quickly, while mid-priced homes have stayed on the market longer.

Any current listing at or below $350,000 will be expected to be sold within three and a half months.

Out of state migrants, investors and young professionals are driving the current market in Bozeman.

According to Erlenbush, high end homes are selling by more than 50 percent compared to 2013.

Definitely an interesting read and I’m interested to see if the market follows the trends they are predicting.

Source: http://www.bozemandailychronicle.com/news/economy/article_82d77262-360f-11e4-9428-0019bb2963f4.html?utm_medium=desktop&utm_source=block_484710&utm_campaign=blox

Displaying blog entries 1-8 of 8

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