Community News

As we drive around the Gallatin Valley, it is common to see all phases of home construction from the digging of the foundation to the finishing touches of landscaping. Many are custom homes wherein the builder has been hired by the future homeowner and each detail has been discussed and implemented. Others are spec homes (spec meaning speculation) that a contractor builds with a predesigned plan and finishes in order to sell ideally before or upon completion of the home.

As with many categories of commerce, trends come and go in the design and details of homes. REALTOR® Magazine tracked and published some of the “Trends That’ll Influence Homes in 2016.” These include the construction of more resilient and sustainable homes, the use of more affordable yet classically styled materials, the increased demand for reclaimed wood floors, and better integration of indoor and outdoor spaces, among many other trends. The National Association of Home Builders (NAHB) is watching out for what millennials seek in their homes since they are becoming a growing force in the real estate market. Demand is changing to smaller-sized homes with features such as stand-alone laundry rooms, increased energy efficiency, and storage/ closets at the top of the list. NAHB also works to identify features that move-up buyers seek. This list includes impressive kitchens, new technology, and spa master baths.

While much personal flair can and should go into the construction of a new home, there are many things that are required by state law for each and every house. Residential construction contracts must include certain disclosures and warranty requirements. A significant clause, taken from the Montana Code Annotated 28-2-2201 (g), instructs that contracts for residential construction must contain “a statement that the general contractor is providing an express warranty that is valid for a period of at least 1 year from completion of the construction project. The warranty must provide detailed descriptions of those components that are included or excluded from the warranty, the length of the warranty, and any specialty warranty provisions or time periods relating to certain components. The warranty provisions must also clearly set forth the requirements that must be adhered to by the buyer, including the time and method for reporting warranty claims, in order for the warranty provision to become applicable.” Further disclosure includes the R-value, type, and thickness of insulation when the contract is written.

By pulling together some rudimentary statistics from the Southwest Montana Multiple Listing Service (MLS), it is interesting to see the prices at which new construction sells. If we look at listings that were sold from January 1st to August 8th of this year within the Bozeman city limits, there have been 339 single-family homes on less than one acre sold. Of these, 93 homes were built in 2015 or 2016. The sales price per square foot ranges from $133.76 to $285.98 with a median of $180.04. Newly constructed homes in the area immediately surrounding Bozeman ranged from $118.10 to $299.88 per square foot for the 82 reported sales with the above criteria. The median price was $162.78. Belgrade reported 39 sales of new single-family homes on under one acre thus far in 2016. These sales range from $109.17 to $189.71 per square foot with a median at $155.06. Factors that go into the price per square foot include everything from the price and size of the lot, impact fees, and labor costs to the level of quality of each and every finish including flooring, plumbing fixtures, lighting, appliances, windows, doors, and even high tech features.

As our existing housing inventory levels continue to shrink, we will see upward pressure for new construction in every location. The high demand for builders and sub-contractors in the booming Big Sky market is also a factor that will increase the price of new construction throughout the valley in the coming years.