Bozeman Real Estate Market Predictions for 2025

As we start 2025, speculation about Bozeman’s real estate market is at an all-time high. There was a noticeable shift in 2023 with less buyers and prices stabilizing but we didn’t see a big drop in home prices like some thought would happen. Many hoped 2024 would bring lower interest rates and renewed market activity. Instead, the median sales price hovered between $700,000 and $800,000 throughout the year, signaling a market in limbo with sellers still asking high prices and buyers waiting it out.

While another real estate boom seems unlikely in 2025, there’s cautious optimism that the market could see small growth and greater stability. In this post, we’ll dive into the key trends and predictions for Bozeman’s real estate market in 2025.

INTEREST RATES

In 2024, many real estate professionals and economists anticipated a decline in interest rates—but as we now know, those predictions didn’t materialize. Heading into 2025, there’s a more cautious outlook, with widespread consensus that rates will eventually decrease, though the timing and extent remain uncertain. According to strategists, including the National Association of Realtors, interest rates are expected to stay in the high 6% range at the start of the year, with modest declines projected as the year progresses.

If this scenario plays out, the real estate market could see increased activity by the summer months, as buyers gain confidence in slightly lower borrowing costs. However, some buyers may remain hesitant, waiting for clearer signs of stability or further rate reductions.

HOME PRICES IN BOZEMAN

The National Association of Realtors is predicting a 9% increase in home sales while Fannie Mae expects to see that only increase 4.2%. Most local real estate professionals think it will fall somewhere in the middle for Bozeman's real estate market. Buyers who have been sitting on the sidelines, waiting for interest rates to stabilize, could re-enter the market this year, driving up demand.

If we see that happen, we would expect to see modest home price increases. For buyers considering making a move in 2025, starting their search this winter could be a smart strategy. With demand currently lower and negotiating power stronger, the early months of the year may offer an opportunity to buy a home before activity ramps up in the spring and summer.

CHANGING BUYER DEMOGRAPHICS

The demographics of home buyers have been changing in recent years. We are now seeing more all-cash buyers, single-buyers, and multigenerational buyers. The median age of a first-time home buyer is at an all-time high at 38, likely because people have to save longer to purchase a home.

This shift has had a noticeable impact on Bozeman’s real estate market. During the pandemic, an influx of cash buyers from more expensive cities drove up prices, often outbidding local buyers and making it harder for them to compete. Since 2023, the market for entry-level homes and condos has slowed, while the luxury home segment has remained strong. These changing dynamics will continue to shape Bozeman’s housing market in 2025, particularly as affordability challenges persist for many locals.

BOZEMAN REAL ESTATE

Overall, most Bozeman agents anticipate a slow start to the real estate season in 2025. However, as the economy adjusts to the new administration, a more balanced market is expected for the second half of the year. Bozeman remains a sought-after destination for both travelers and newcomers, maintaining strong housing demand, especially at higher-end prices. While no one foresees a return to the frenzied market of recent years, lower interest rates could boost demand and, slowly drive up home prices.

Another factor influencing Bozeman's growth is the push for employees to return to office settings. Major tech hubs like Seattle, San Francisco, and Portland are beginning to recall workers, which may prompt more people to leave places like Bozeman where they have worked remotely. Bozeman has experienced significant development in recent years to meet growing demand, but it will be interesting to see if supply eventually outpaces demand. Apartment complexes in particular continue to be built which should create a slight decrease in rental rates. This could make the multi-family investment property market slower compared to the past several years. New construction permit applications on single-family homes is substantially lower so the majority of homes sold in 2025 in Bozeman are likely to be preexisting homes. This will hold prices strong for the single family home market in the area. 

Are you thinking of making a move in 2025? Contact us, we are here to help!