Are Home Prices Dropping in Bozeman, Montana?

Everyone anticipated interest rate drops this fall, and thought this trend would continue throughout the year. This isn't the first time we've been told that rates would decrease, only to find that they didn't. This seems to be the ongoing challenge in the real estate market for 2024. While we have seen a slight decrease in interest rates, mortgage rates remain high. The question is how this has impacted the housing market in Bozeman and whether home prices are declining. 

HAVE HOME PRICES DROPPED? 

Throughout 2024, we have seen the median sales price of a home in Bozeman fluctuate between around $715,000 and a little over $800,000. In September 2023, the median sales price was $803,000, and one year later, that number was $800,000. This indicates that home prices have not come down in Bozeman this year. However, the rate of increase in prices is not as rapid as it was a few years ago. Overall, home prices in Bozeman have remained relatively stable since 2023.

Median sales price aside, we are seeing other signs of a slowdown in Bozeman's real estate market. At the height of the market in the Bozeman area, you would rarely see a home come on the market for under half a million. Especially if you were searching for single-family homes! Now in the under $500K price range, there are close to 50 homes currently on the market. There are also homes for sale in Bozeman in the $300,000 range which is something we haven't seen in the past couple of years. 

We asked Bozeman Real Estate Group agent Bronson Neff about why he thinks we have yet to see a significant drop in prices in the Bozeman area. He said, “the high interest rates have significantly affected the bottom half of the market. Those buyers are sitting on the sidelines until rates drop. The total volume of sales is certainly down and with that, the top half of the median price point is keeping the overall median price where it is. Buyers in the top half of the market may be able to absorb the higher interest rates due to potentially higher income and/or being able to put a significant down payment from the increased equity in their homes, or they are paying with cash and therefore unaffected by the rising rates."

Homes are also taking longer to sell. The number of days a home spends on the market has increased in 2024, averaging 25 days. This is a far cry from the early pandemic days when homes would go under contract the day they came on the market. You can read more about what we are seeing in Bozeman's real estate market now in our recent real estate market update. 

WHAT IS HAPPENING IN THE SURROUNDING AREAS

The situation in Bozeman's neighboring communities is quite similar. In Livingston, the median sale price experienced an increase last fall but then dropped during the winter months. It stabilized throughout the summer, and aside from a spike in September, it has remained consistent. Belgrade has followed a similar trend as Bozeman, although at a lower price point. Three Forks has seen the most fluctuation, likely due to the smaller number of homes sold. It's important to note that in these smaller communities, the number of homes sold each month is very limited, and this small sample size can significantly influence the reported median sale price each month.

WE ARE SEEING MORE PRICE REDUCTIONS

While we aren’t seeing a significant drop in home prices, we are seeing an increase in price reductions. In the first two weeks of November 2024, there were nearly 40 price reductions. This indicates that while homes may not be coming on the market at lower prices, they are sitting on the market longer which leads to price reductions. To see the most recent price reductions, click here. 

OVERALL

While we may not see it in the numbers yet, there are a number of factors that are signaling a slowdown in Bozeman's real estate market. We are seeing buyers in the lower price points stay out of the market because mortgage rates are not dropping. Buyers in the higher price points are continuing to purchase properties and that may be what is keeping the median sales price in Bozeman and the surrounding areas steady, for now. To keep an eye on what the market is doing, bookmark our market report page. 

Would you like to discuss the market with someone on our team? Click here. 

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