It is fair to say 2020 has been quite a year! Last year we predicted that 2020 would be a strong year for Bozeman real estate, but no one could have predicted how the Covid pandemic would affect the market. At the end of 2019, the median sales price of a single-family home in Bozeman was $489,850, and at the end of 2020 that has increased by 19% to $585,000. As uncertainty continues it's hard to say what 2021 will bring, but most experts agree the real estate market will remain strong, especially in Bozeman.
1. Inventory will remain low
Low inventory has been an issue in Bozeman for several years, but since May of 2020, we have seen a drastic decline in homes for sale. Low inventory is not something we are seeing only in Bozeman, but nationwide. According to Forbes.com, inventory is incredibly low everywhere with less than 500,000 homes for sale. Experts do not expect this to change much in 2021. There are a handful of new subdivisions being developed in Bozeman, and several condos downtown going up, but there will continue to be a lack of supply problem this year.
2. Demand will remain high
Bozeman has been experiencing growth for the past decade and gaining national attention as one of the best places to live. The pandemic put this growth into overdrive with a huge influx of out of state buyers. With the number of people continuing to work remotely and the desire to leave crowded cities, we anticipate this to continue well into the new year. Adding to the demand are local home buyers looking to either purchase their first home or upgrade, creating more demand for our struggling supply of homes available. On a positive note, spring is generally when we begin to see homes hit the market so inventory might begin to increase as we get further into 2021.
3. The outside communities will see an increase in interest
With low supply and high demand, local agents agree that the surrounding Bozeman communities will see an increase in interest. Some home buyers are finding that living in Bozeman is simply not an option. Luckily there are great alternatives nearby. Belgrade, Bozeman's closest neighbor has seen the most growth and is working hard to accommodate this with new subdivisions and a recent new growth policy plan. With the median sales price of a single-family home around $374,000, Belgrade continues to be a more affordable option. Livingston, Manhattan, and Three Forks will most likely have more people looking to buy homes in their communities because they are all within commuting distance to Bozeman, have more affordable housing costs, and smaller town vibes.
4. Prices will rise
This is predicted to be the case nationwide, and Bozeman is unlikely to be an exception with prices steadily climbing in 2020. An economist from realtor.com expects prices to rise another 5.7% over the already high prices of 2020. It's hard to predict what percent Bozeman homes prices will go up, but most do not anticipate them going down anytime soon. Mortgage rates are at an all-time low and with high demand and low supply, the competitive market in Bozeman is expected to continue to drive prices up.
5. Technology will play an increased role in real estate transactions
The increased use of technology in real estate was happening before Covid hit, however, the pandemic made it essential. Sellers no longer wanted to open their doors to potential buyers so virtual tours became vital. Signing documents electronically, curbside closings, and buying homes sight-unseen quickly became normal. There are some things in real estate that are slowly going back to normal, but much of the technology is here to stay. In Bozeman, with the amount of out of state interest, buyers viewing and purchasing homes virtually will most likely continue. First time home buyers are predicted to remain a strong force in the real estate market and with many Millennials heading into their 30's, this tech-savvy generation is going to continue to drive changes in the real estate world.
To find out more about what is happening specifically in the Bozeman real estate market, click here.
*Local statistic courtesy of the Big Sky Country MLS, InfoSparks