We know that real estate in Bozeman has gotten expensive in the past several years with the median sales price of a single-family home exceeding $880,000! If you look across the state of Montana you will find that Bozeman was not the only city to see an influx of people moving in and home prices rising. This has been a common theme across all of Montana. Here are 6 reasons why.
Okay not everyone, but in the last few years, it certainly feels like that! Here are some stats to give you an idea of what has been happening here. Moves into Montana from out of state are 2 times more likely than people leaving the state. This is true across every city including Missoula, Bozeman, Kalispell, and Great Falls. In 2020 and 2021 Montana was the #1 state for people moving into it! According to the 2020 U.S. Census, Montana broke the 1 million mark in population for the first time. These numbers indicate that Montana is officially on the map and people are moving here quickly for a variety of reasons. Prior to Covid, there were people who had probably never even heard of Montana and now it’s on the top of everyone’s list of best places to live. This is one of the largest contributing factors as to why real estate has gotten expensive. Demand increased and the supply has not been able to catch up, even as things have slowed down.
Lumber and other material costs rose tremendously throughout the pandemic when there were shortages. This contributed to the rising home prices for new construction. Since last spring we have seen lumber prices come down, however, we haven’t seen that reflected drastically in home prices. Labor costs are an even bigger issue across our state with a shortage of workers. According to the Montana Department of Labor & Industry, our workforce is down by over 10,000 workers despite the influx of new residents. Without workers and material prices slow to come down, homes are not being built fast enough to catch up.
If you look at the people moving to Montana, 27% are from California and Washington. There are also a lot of people migrating from Arizona, Texas, and Oregon. All of these states have higher housing costs than Montana making it easier for them to buy a home in our market, often in cash. The average cost of a home in big cities in California is around $1.1 million and in Washington is $887,000. People selling homes in those markets and then coming to Montana to buy contributed to prices increasing here. We are seeing a slowdown in out-of-state interest, but home prices remain high.
It’s not as simple as building more homes and increasing development in Montana to help bring real estate costs down. 29% of Montana is covered by wetlands, agricultural land, and federal land.* These types of lands cannot be sold or developed. Locally in each city, there can be strict building regulations, density restrictions, and impact fees. While these things can be frustrating when real estate is already expensive, we also want Montana to stay a place of open space and protect our agricultural roots. Montana now has a housing task force that is working to find a balance between tight regulations and solutions to the affordability problems we are experiencing.
It’s not just housing that has gotten expensive in Montana. There has been a ripple effect on the rest of our state’s economy. When housing prices began to rise other goods and services rose as well. Businesses have to pay higher wages so employees can afford to live here and this results in higher costs getting passed on. In Bozeman, the cost of living is 20% higher than the national average. Even when it comes to groceries, Montana is more expensive at 4.6% higher than the national average.*
The secret is out, Montana is the last best place. For a long time, it went unnoticed, but like all good things once it gets discovered it’s going to cost you. The quality of life in Montana, the wide open spaces, the friendly communities, and the big blue sky will continue to draw people here. Now you just have to pay for it.
Moving to Montana data courtesy of www.movebuddha.com/blog/moving-to-montana-migration-report/
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