With a median sale price for a single-family home hovering around $875,000 and over half the current listings priced over a million dollars, it's no wonder people say it's getting expensive to live in Bozeman, Montana! So why is Bozeman, Montana real estate so expensive?
1) LACK OF SUPPLY
We've heard it over and over, but supply in Bozeman simply has not been able to keep up with demand. In 2021 the number of homes for sale dropped 60% and while we are seeing an increase in supply in 2023, it is not at the level Bozeman needs. The rush of people moving to Bozeman has calmed down and construction is booming, but we are not seeing home prices come down drastically.
2) OUT-OF-STATE MONEY
This was one of the biggest reasons for the increase in Bozeman real estate prices during the Covid pandemic. People left cities and Bozeman became a hot spot to move to. The competition for the limited number of homes that were for sale quickly got snatched up by out-of-staters that recently sold homes in more expensive markets and cash deals became the norm. Over the past decade there has been a heightened interest in mountain west towns, Covid just accelerated this.
It wasn't just individuals and families moving here. Bozeman, Montana became a place that investors, tech companies, and large employers started eyeing. This meant more investors were buying up property which added to the high prices.
And we cannot discount the role that, Yellowstone has played on interest in Bozeman. What A River Runs Through It did in the 90's, Yellowstone did in 2020. We can't even tell you how many calls we get from people wanting to talk about the show!
3) INCREASE IN COST OF LIVING, SUPPLY, AND LABOR
It's not just Bozeman real estate that has gotten expensive. With supply chain issues during the past few years, building supplies became scarce and with that building costs went up. Along with everything else in Bozeman. Suddenly rents increased, groceries got pricey, and now it's hard to find a hamburger in town for under 20 bucks. According to Bloomberg the cost of living in Bozeman is 20% higher than the national average! Employers, including the construction industry have had to start paying more to find labor and those higher costs get offset by housing prices.
4) REGULATIONS AND RESTRICTIONS
Building and developing in Bozeman is not without its obstacles. There are park and open space requirements, wetland setbacks, engineering/architecture requirements, building codes, environmental laws, density and zoning restrictions, and impact fees to mention a few! Building a home or developing a new subdivision is more time-consuming, challenging, and expensive than ever. Obviously, these costs get passed down to the price of a home.
5) INFLATION OF THE HOUSING MARKET
We saw inflation of the housing market nationwide, beginning in the 1990's and get worse during the 2000's. Montana was no exception to this. Since the end of the recession homes in Montana have increased by 4.1% each year! (https://discoveringmontana.com/why-is-montana-expensive/) The Federal Reserve has been increasing mortgage rates to battle inflation since 2022. While it has slowed the real estate market down, we have not seen a huge decrease in real estate prices in Bozeman.
Here are some of the most expensive homes currently listed in Bozeman, Montana.
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