The last two years have been a wild ride for Bozeman’s real estate market. Extremely low inventory, rising home prices, and a rush of home buyers created market conditions that we have never experienced before. As we head into 2022, the question on everyone’s mind is what will real estate look like this year? While we don't have a crystal ball, we can offer our predictions of what the Bozeman real estate market might look like this year.
Low mortgage rates have been the fuel on the housing market fire the last few years, enticing buyers to take advantage of borrowing at some of the lowest rates in history. But as inflation reaches its highest level since 1982, there are indications that the Federal Reserve could raise interest rates several times in 2022. With these interest rate hikes on the horizon, both buyers and sellers will be facing new challenges.
For buyers, rising mortgage rates will decrease their buying power. Meaning, if a buyer waits until mid-year to purchase a home, they may be saddled with a significantly higher monthly payment than if they purchase while rates are still low. Click here for buyer resources.
For sellers who are counting on selling their home at a certain price, these rate increases mean that there may be fewer buyers in the pool. Competition for their home could be lower and sellers may have to adjust their expectations accordingly. For homeowners who are considering selling this year, it could be wise to list your home before the interest rate hikes take place. Click here for seller resources.
As Bozeman’s home prices increase, many people are looking to the surrounding areas for more affordable housing prices. Areas like Belgrade, Livingston, and Three Forks have become very popular for people who are looking for lower housing prices and smaller communities in the Gallatin Valley. And while those areas are still well suited for growth, we expect we may see more people choosing to live even further from Bozeman to avoid the high cost of homes. In 2022 we expect that places like Helena and Butte may become popular, even for people who still work in Bozeman and are willing to make the commute.
According to a research study by Zillow, 70% of real estate experts say they expect more houses to be listed on the market in 2022 than in previous years. After seeing an astonishing drop in inventory over the last 2 years, an increase in homes for sale would be a welcome relief! Realtor.com predicts that the number of homes for sale will be up 0.3% in 2022, which is great news for buyers.
Here in Bozeman, there are many new developments and subdivisions underway that will be bringing more homes to the market in 2022. Homes will continue to come up for sale in Gran Cielo, a great new neighborhood centered around a huge park on Bozeman’s south side. Home construction in the Blackwood Groves neighborhood will be underway this year, and there are a number of new residential projects happening in northwest Bozeman as well. If you are interested in any of these projects, feel free to contact us for the latest information.
Across much of the country and certainly in Bozeman, affordability will remain a challenge. Even with an expected increase in inventory finding a home will still be tough, particularly in lower price ranges. Rental rates are predicted to outpace the growth of home prices which will push more buyers into the market. So while there may be more inventory, buyers will still need to act fast and make strong offers.
In Bozeman, affordability has been a huge struggle, made even more difficult with the surge of out-of-state buyers driving up home prices. The City of Bozeman has been working on ways to address these issues as we move forward. Companies, like Bozeman Health, are buying housing for employees, and HRDC continues to work to provide affordable housing to residents. Unfortunately, there is no easy solution and with a growing population in Bozeman, it will continue to be a key issue. Read this post to learn more about how you can compete in Bozeman's competitive market.
Bozeman’s recent population boom was a direct result of the urban to suburban flight. When the pandemic began and many people began working remotely, it made sense to get out of the densely populated cities and move to places with more space. While the migratory surge has slowed since 2020, there are many companies that have decided to continue with remote or hybrid work environments. With its well-connected airport, Bozeman is an easy choice for many considering this type of lifestyle.
In a report by Realtor.com listing the top 10 housing markets positioned for growth in 2022, Salt Lake, Boise, and Spokane took the top three spots indicating the continued popularity of the mountain west. While Bozeman was not on the list, we do expect Bozeman and other Montana cities to remain popular places to move to in 2022.
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*National Association of Home Builders
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