Over the past couple of months, the market has continually tightened around popular price points resulting in multiple offer situations and sellers on properties priced under $300K have been backing down very little off their asking prices. New construction continues to go up around the valley and the demand is ever increasing. It appears we’ve entered a ‘new phase’ of the real estate market cycle. This article was published in the economy section of the Bozeman Daily Chronicle just last weekend that featured an interview with a co-broker of mine at PureWest Christies.
A seller’s market – Confidence returns to housing market, but tight supply still squeezing buyers
After a few years of slow, incremental gains in the aftermath of the Great Recession, Bozeman’s housing market in 2014 saw the return of confidence.
More than a third of the 70 homes built or under construction in the luxury golf course community Black Bull Run broke ground in the past 12 months, said Bert Brandon, listing real estate broker with PureWest Christie’s, which works with Black Bull located west of Bozeman.
Houses are moving quickly on the other end of the spectrum as well, with those priced at or below $350,000 selling fast and sometimes for more than full price, said Robyn Erlenbush, broker-owner of ERA Landmark Real Estate.
The existing supply for Bozeman houses in that lower price range is about 3-1/2 months, which means at the current pace of sales, all homes in that price range would be sold by about mid-December. It also means that it’s a seller’s market. A six-month inventory is generally considered a healthy balance between buyer’s and seller’s markets.
New Montana residents, investors and young professionals are driving the sales and real estate moves, Erlenbush said.
“Part of what I love about the American spirit is people are attracted to real estate as a long-term investment,” she said. “Part of (this surge in confidence) was there was a pent-up demand from when things were so tough. … (Homeowners) weren’t willing to sell their homes or take a loss.”
Brandon believes the confidence in Black Bull’s community comes from a steady build-up of houses. It takes a leap of faith, he said, to buy a lot and build when there are just five other homes built. It feels like there’s more risk at that point compared to when there are 50 other homes, he said.
“(It) is really starting to feel more like a community and not a golf club outside of Bozeman. It actually feels like more of a neighborhood,” Brandon said. “There’s more comfort in knowing now I’m not the only one doing this, and Black Bull’s now a proven neighborhood and a proven club.”
Buyers are a mix of longtime local residents, new full-time residents and some second homebuyers. The average value of the homes is about $1 million. In the Bozeman area, the number of homes sold in that price range increased by more than 50 percent since 2013, according to local real estate data provided by Erlenbush.
Homebuyers’ increased interest in the community has the Black Bull higher-ups pondering the next phase of development. David Baucom, general manager, said they’re looking into adding condominiums and amenities like fly fishing by sprucing up a spring creek along Love Lane.
“It’s pretty exciting to have ownership that cares enough to look to the future and how to be better stewards of the land,” Baucom said.
On the other end of the spectrum, young professionals who either bought their homes before or during the recession drive the number of homes available for sale, Erlenbush said.
Buyers for those houses include other young professionals or families buying their first homes, investors purchasing rental properties or parents buying a home to rent to their kids as they attend Montana State University.
People in search of affordable housing are being pinched by the pace of those sales and those who they’re competing with for homes, said Sara Savage, housing director with the Human Resources Development Council, a nonprofit community action agency.
The HRDC offers free classes to potential homebuyers. About 50 to 70 households each month participate in the classes, she said, and another 20 or so follow-up with additional education from HRDC.
The nonprofit also can provide down payment assistance for mortgages under $214,000 in Gallatin County. Savage said it’s a struggle to find housing in that range.
“One of the larger shared experiences that a lot of our customers have is frustration: both rental and homeownership,” Savage said.
A tight housing and rental market has a greater impact on younger people and those working to establish financial stability. The effect that might have on the community at large is unclear, said Pat Barkey, executive director of the University of Montana’s Bureau of Business and Economic Research. It is a function of the market, he said.
“It sounds rather trite to say this, but it’s still true. It kind of takes two to tango. Willing buyer, willing seller,” he said. “When markets tighten and prices go up it’s tough.”
And the market appears set to expand soon, Erlenbush said. She estimated that there are hundreds, if not a thousand, potential rental units going up near MSU and around the area.