LIVE BOZEMAN STYLE

Enough about me… what’s happening in the real estate market? 

Despite the economic fluctuations across America, the Bozeman real estate market has shown remarkable resilience in the first half of 2024. Even with residential purchase interest rates at 7%, Bozeman’s asking prices have surged by 26% since the peak of our market in 2021 and 8% since 2023. Bozeman continues to outshine the national market, which has remained stable, neither growing nor softening between 2023-2024. While the national market was at a standstill, Bozeman’s values rose by 8%. This is a testament to the enduring appeal of Bozeman, where buyers are still eager to invest, and we continue to grapple with a housing shortage.

Builders have continued to benefit from our constrained market, with 2023 being the Homebuilders' third-best year of performance since the 2008 foreclosure crisis. The 2020-2021 buyer interest rates created limited resale inventory, causing builder products to be the majority of what was available in 2023, nationally. Locally, nothing was really new there; we always have a housing shortage… making this a great community to be a builder! 

There is currently 4 months of inventory in our Bozeman market. This marked an improvement for Buyers from 2021, where we averaged a one-month supply. The inventory increases means buyers finally have a chance to think and make an informed decision in their purchase, as opposed to 2021, which was characterized by a “buy now, decide if you want it later” mentality. But don’t be confused. This increase in inventory hasn’t shifted Bozeman into a Buyer's market; there isn’t a huge window to negotiate.  Asking price vs. sold price negotiations are still hovering in a 4% window. Furthermore, well-priced homes continue moving quickly, with properties staying on the market for a median of 3-4 days through May 2024. 

As we move into June, our median days on the market have jumped to 40+ days. This is a new outlier and will be a curious trend to track as we have just made it through graduation season, school ending, and are transitioning into our historically busiest time of the year. While this is an election cycle, and those always impact the market activity, I anticipate this brief pause in our market lifting this month, and we will be back to business as usual until the end of September when everyone starts holding their breath again. 

My Crystal Ball:

Looking forward, we hope the National Association of REALTORS® (NAR) will successfully advocate for a legislative increase to the housing capital gains exemption limit: currently, $500,000 for a married couple or $250,000 for a single filer. This capital gains limit has been fixed at those values for 25 years. It is a huge detriment to Sellers as their significant gains over even just the last 5 years are no longer returning to their housing pocket, let alone owners who have been in a property for 10 years or more. Instead, many Sellers are having to evaluate the tax consequences of a home sale, further restricting resale inventory. NAR’s legislative goal is to match the capital gain index to inflation, allowing most Sellers to sell without a taxable event and realize their gains in their new purchasing power and personal financial house. 

Additionally, NAR is currently lobbying for a new tax break program for small investors to sell without a taxable event, as is the case today. If that is successful, that is another opportunity to open up resale inventory as investors would be able to divest out of the market without having to exchange their investment to preserve their equity. 

Looking ahead, Lawrence Yun, NAR Chief Economist, predicts that the market will improve in 8 of the next 10 years. This is based on the growing population and the inability to suppress consumption for an extended period. The market is expected to be fueled by a significant pent-up demand from homeowners who have been pushed out of the market due to limited inventory and interest rates. This forecast provides a positive outlook for both buyers and sellers in the Bozeman market.

Statistically, July is the most expensive month to buy in Bozeman, with August closings representing the height of our market from July’s buyers. For buyers, that means offer now! Save yourself some stress and capitalize on the increased inventory and stable pricing. Further, the age-old saying “date the rate, marry the house” absolutely applies today as we are anticipating a 6% interest rate environment by next year. As interest rates decrease, prices traditionally increase—think COVID and the wild bidding wars for Downtown homes. 

For Sellers, the time to act is now. By listing your property, you can position yourself perfectly for the peak of our 2024 market. With Gallatin County boasting a low 2% unemployment rate, half the national average, there are qualified buyers eagerly waiting for the perfect property to hit the market – could that property be your house or investment? Don't miss out on this opportunity to capitalize on the current market conditions.