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Bozeman Real Estate Group
4 Statistics to Watch as Bozeman’s Real Estate Market Shifts
On Dec 07, 2022
Last month, the Federal Reserve raised interest rates by another .75% in an effort to curb inflation. This was the sixth interest rate hike this year, with another anticipated next week. Mortgage rates are now more than double what they were at the beginning of the year and as a result the housing market is slowing down nationwide.
Here in Bozeman, the median sold price of a home (single family, condo, townhome) dropped for the first time in 2 years in May but has since hovered in the mid $700k range. The median sold price of a home in Bozeman is still 15% higher than it was at this point last year, leading many to say we are not experiencing a downturn in the Bozeman area.
But it can take time for changes in the market to be reflected in sold prices. With that in mind, we wanted to take a look at some other market statistics to determine if Bozeman’s real estate market is heading into a downturn or simply experiencing a long overdue correction.
Percent of List Price Received
The average percent of the price received is a good indicator of what homeowners are getting for their homes when they decide to sell. We do typically see seasonal fluctuations here with the lowest percent of list price received usually reported in the fall. But the numbers we are seeing now are more than a fluctuation. Throughout 2020 and 2021, the average % of list price received hovered between 97% and 103%. But as of November, that number has dropped to 92.4%, the lowest point since early 2012.
Days on Market
In the spring of 2020, the number of days a home in Bozeman spent on the market dropped to record lows hovering mostly in the single digits until July 2022. Since then the time a home spends on the market has increased to a median number of 55 days compared to a median number of 10 days at the same time last year. While this may seem like a dramatic increase, this number is in line with the time that homes were spending on the market pre-pandemic.
Price Reductions
As of November 2022, there were 165 price reductions on properties in the Gallatin Valley compared to 66 at the same time last year. It is important to point out that there are more homes on the market now, and with a higher number of homes on the market we can expect a higher number of price reductions. So, while this increase may not be a big red flag, there are more “deals” to be had out there! If you are house hunting, click here to see all the recent price reductions in our area.
Months Supply of Inventory
The months supply of inventory is the number of months it would take to sell a home based on the current sales rate and available inventory. Typically, any supply inventory under 5 months indicates a market that favors sellers, 6 months is neutral, and anything above 7 months is a market that favors buyers. The months supply of inventory in Bozeman dropped to less than a month throughout 2021 and 2022 and has recently started climbing upward toward the threshold of what is considered a balanced market. As of November, the months supply of inventory in Bozeman is 3.7, a more than 400% increase from this time last year.
While some of these statistics point to a big shift in the real estate market, many industry professionals argue that what we are seeing now is nothing more than a long-overdue correction. The COVID boom impacted Bozeman’s real estate market in many ways, and that pace of growth could not continue forever.
While it is certainly tough out there for buyers given the higher interest rates and equally challenging for sellers given the decreased demand for their homes, many are breathing a sigh of relief as Bozeman’s real estate market shows signs of returning to a balanced state. Only time (and the Fed) will tell how long these interest rate increases will continue to impact the real estate market.
If you are thinking of selling, who you choose to list your home with is more important than ever in order to sell your home quickly and for the best price possible. Click here for more information on selling your home with our office. If you are thinking of buying, your negotiating power is back! Working with an experienced agent will help you get the best deal possible, and it comes at no cost to you! Click here for more information on buying a home with our office.
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