Community News

With 2014 unbelievably more than halfway over already, it’s an opportune time to see how the real estate market has fared and to try to predict with some accuracy where it might be headed for the remainder of the year.  Official National Association of Realtors (NAR) mid-year figures were just published to gauge activity for 2014 thus far.  Nationwide, total existing home sales (including single-family homes, townhomes, condos, and co-ops) had a 2.6% sales gain in June over May of this year, though the total number of sales was 2.3% below the numbers in June of 2013.  In June, Lawrence Yun, NAR chief economist, attributed the increasing sales to “slower price growth due to the much-needed, rising inventory levels….improving job market…decline in mortgage rates.”  The inventory levels at the end of June were at 2.3 million existing homes currently on the market, which is 6.5% higher than the previous year.  Though this sounds quite positive, there is still a need for continued growth in new home construction to stay ahead of both future demand and affordability.  The median price is one that we monitor closely and throughout the U.S. it stood at $223,300 for existing homes, a 4.3% increase over June 2013. 

Eleven percent of the sales in June were comprised of distressed homes, which means foreclosures and short sales.  This figure is down from 15% the prior year. Distressed homes tend to sell for lower average prices than market value.

If broken down into the four reported regions, all areas stated increases in the number of existing home sales in June versus May of this year yet decreases when compared to June of last year, except the South which was up 1.0% over June 2013.  Regarding sales prices, the Northeast was the only area that showed a slight decline (0.1%) in medium price from last year while the West jumped 7.2% from last June to the highest median price of $301,000. These increases are most likely affected by the clearing of much of the distressed inventory.

On a local note, we also have statistics that include the first two quarters of this year. Single-family sales units increased 14% to 239 homes in the Bozeman city limits; 8% in the Bozeman area outside city limits; 9% in Belgrade; and 37% in Big Sky.  Sales units declined 23% in Manhattan/ Three Forks; 17% in Park County/ Livingston; and remained flat in Madison Valley.

Median sales prices rose in five out of the seven markets that we track when comparing June 2014 to 2013. In the Bozeman city limits, there was a 3% increase to $289,000; the Bozeman area outside city limits improved 7% to $369,000; Belgrade rose 16% to $219,500; Manhattan/ Three Forks fell 10% to $180,700; Big Sky grew 16% to $578,500; Park County/ Livingston increased 3% to $186,000; and Madison Valley decreased 4% to $212,500. 

The condo/townhome market remains very strong and has the most new construction starts.  In 2014 to 2013 comparisons, Bozeman condo/townhome sales increased 35% to 184 closed units, rural Bozeman was up 83% to 22 sales, Belgrade rose 26% to 29, Manhattan/Three Forks had 72 sales for a 9% increase and Livingston was stable at 6 units each year.  The median sales prices also rose nicely with Bozeman up 22% to $200,000, rural Bozeman up 11% to $182,000, Belgrade area up 10% to $118,500, Big Sky posted nice gains of 42% to $305,000, and Livingston also up 42% to $152,500.

New home construction is always a good indication of the real estate market’s health. The City of Bozeman building permit report shows that in May 2014, permits were issued for 34 single-family residences and 6 duplexes.  These figures are down from May 2013 when 43 single-family homes and 2 multi-family projects received permits. Year-to-date numbers show a strong construction industry with permits given to 328 single-family homes, 12 duplexes, and 27 multi-family projects. There are also many exciting commercial projects slated for completion later this year and early spring. Much of that activity is taking place on the perimeter blocks of historic downtown Bozeman, which is a very good sign for continued vibrancy for our favorite shopping area. 

The forecast for the remainder of 2014 will hopefully keep pace at or near 2013. The second half of 2013 was one of the strongest markets we have seen since prior to the recession. The increase in new construction, out-of-state buyer demand, and continued job growth will lead the way and help us finish strong.