Times are changing in the real estate world and there is no denying that we are in a very different market than we were just a few months ago. There was a time when it seemed like the covid craziness that hit the real estate market would never subside. After two straight years of homes flying off the market, bidding wars, and essentially no inventory many of us wondering if we would ever see a correction in the market. But in the last few months, Bozeman’s real estate market has changed significantly. Photo credit: Saul Creative.
Since the beginning of the year mortgage rates have been steadily increasing, and are now more than double what they were at this time last year*. These rate hikes quickly suppressed buyer demand, as buyers faced significantly larger mortgage payments for the same home as they would have paid just a few months before. That’s a tough pill to swallow for any buyer, but for many, it made buying a home at their price point impossible. With this decrease in buyer demand, homes are not selling the way they were just a few months ago. What we are seeing now is a bit of a correction in the market as there are no longer dozens of buyers standing at the door of every home for sale.
It’s obvious that homes are not selling at the same pace that they were a year ago, but the real estate market has not come to a screeching halt. There are still buyers out there looking for properties and we get inquiries nearly every day from people looking to purchase a property in the Bozeman area. The number of pending sales of residential properties in Bozeman is down 27.8% compared to last year, but that number has stayed steady over the last 3 months. The number of days a home in Bozeman spends on the market is still less than a month, meaning if a home is priced for the current market, it will still sell.
In the last 60 days, 60% of residential properties sold in Bozeman sold for under the original asking price. At this same time last year, only 20% of properties had sold for under the asking price. Not only are buyers regaining some negotiating power, this is also putting some downward pressure on the median price of a home in Bozeman – a glimmer of hope for all the buyers out there.
The number of homes on the market has been steadily increasing since the beginning of the year and is now close to reaching the numbers that we saw pre-pandemic. The number of homes on the market right now is 70% higher than it was at the same time last year. A year ago, you would be hard-pressed to find any single-family home available under $700k in Bozeman and now there are 30 single-family homes for sale in that price range.
The number of price reductions we are seeing now are double what they were at this time last year. Over the past few months, Bozeman's real estate market has been in an adjustment period where homes were coming on the market at prices you would have expected a few months ago, only to make price reductions down the road. It has been very interesting to keep an eye on the price reductions lately, we are seeing them on everything from condos in the $300k range to multi-million-dollar properties. You can see the most recent price reductions here.
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