Community News

Published in the Bozeman Chronicle, February 2008.

As we reflect on last year from a real estate perspective, the general consensus from those in the building, lending, real estate, and related industries is a relief that 2007 has come to an end. The local market in general saw lower numbers of sales, and yet several segments of the market experienced higher-than-average sale prices from the previous year. Marketing conditions and industry sentiments, so far through January 2008, seem guardedly optimistic, with many real estate firms and title companies showing an increase in the number of closings and pending transactions from 2007. Property showing activity has increased dramatically since the holidays, and more importantly, buyers are writing offers, and sellers are accepting those offers. Though some buyers are still waiting for prices to go lower, market timing is very tricky, if not impossible, to execute perfectly in the real estate business. Many buyers are finding that lower interest rates coupled with seller incentives to discount prices, offer upgrades, or participate in interest rate buy-downs, make this a very attractive time to buy. This renewed market activity is a “key indicator” of the return of a more stable and balanced market. Of special note, the Big Sky market has experienced increased showings and renewed buyer interest after having a very flat 2007. I have always thought that good snow conditions can cure a lot of economic woes. And the simple fact is the more foot traffic we have in Big Sky, the stronger business activity we will have across our region.

Let's take a look at a few of the numbers from 2007. Also, please see the companion piece by Nicole Ritter in this issue of BTB which further explores and analyzes the numbers. All information is compiled from the Southwest Montana Multiple Listing Service (SWMLS).

Within the Bozeman city limits, the condo and townhome dominance trend continues to grow. For the third straight year, attached housing sales have surpassed single-family detached housing. Both affordability and availability drive this ever-increasing market segment. There were 425 condos and townhouses sold in 2007 which compares to 433 in 2006. The average price for in-town condos and townhouses was $234,936, up slightly from 2006's average of $228,269. There were 331 single-family homes sold with the average price reported at $337,683. For 2006, this same category included 379 sales units with an average price of $348,766. Even though average prices are down year over year, 2007's average of $337,683 is up by 8% from 2005's average of $312,723. It is important to stress that average sales prices are impacted by many factors, including land prices, building costs, design trends, square footage, etc., and have no direct correlation to appreciation or depreciation rates.

Statistics from the City of Bozeman's Building Division website show a noticeable increase in the new construction trend. The city issued 758 housing unit permits in 2007 compared to 670 in 2006. Furthermore, the total valuation of all building permits for 2007 increased to $243,751,248 from $192,676,993 in 2006.

The Belgrade market area is one of the more stable in our region. Belgrade's available residential inventory has actually decreased in the past year. As of January 1, 2008, there were only 147 single-family homes available for sale in comparison to 153 at the beginning of 2007. Condo and townhome inventories are down as well from 54 units to 37. Lower supply is another “key indicator” of market stabilization. Belgrade serves many first-time buyers, with an average sales price of $50,000 lower than within the Bozeman city limits. The number of single-family homes sold in 2007 decreased slightly to 268 from 284 in 2006. There was also a small decrease in the average price from $295,397 to $284,834. The Belgrade condo and townhouse market has slowed also in the number of units sold from 163 in 2006 to 114 in 2007, but it shows an almost 5% increase with the average sales price rising from $149,375 in 2006 to $156,499 in 2007.

The Livingston/ Park County market is also worth noting. Although the in-town single-family home sales decreased in the number of units, the average sales price rose again last year to $212,773 from $203,772 in 2006, an increase of 4%. The in-town condo and townhouse market, an emerging trend in Livingston, experienced substantial growth in the number of units sold with an increase from 19 units in 2006 to 37 in 2007. The average price also increased to $171,686 in 2007 from $141,134 in 2006. The rural areas of the Park County market showed slight decreases with the total number of residential transactions declining from 74 to 68 last year. However, the average price in this segment did increase from $349,368 to $357,731.

Sales of vacant land and subdivision lots slowed substantially in 2007, caused in part by record numbers of existing homes for sale. Within the Bozeman city limits, the average price increased from $114,637 to $137,691 (a jump of 20%). Please note: this statistic also includes a number of multi-family lots and does not reflect an average sales price for a single-family lot. The average sales price of land in the surrounding Bozeman area increased by 43%, and Park County experienced a 21% increase in average price. There is still an abundance of inventory in this market segment from subdivision lots to large acreages in all price points. In the city of Bozeman as of year-end, there were 654 available lots for sale, and in the area immediately surrounding Bozeman, 618 available lots. Belgrade had 174 lots for sale, and the Manhattan/Three Forks area had 661 lots in inventory. The good news for buyers is ample availability and choices.

In conclusion, it is important to always keep in mind that the numbers reported are somewhat inconclusive when telling the whole story. There are many “pockets” of price ranges that are faring better than others or even certain neighborhoods that go against the norm of the market as a whole. Luxury and specialty properties are bucking the national trends with water amenities and larger acreages in high demand. Positive market signs include our growing employment base coupled with extremely low unemployment and continued national attention for the region as a prime retirement and second home location.

Robyn Erlenbush is the owner of ERA Landmark Real Estate (with offices in Bozeman, Big Sky, Livingston, and Clyde Park) and Intermountain Property Management. She can be reached at robyn@eralandmark.com.