Local Market Updates (LMU)

The local real estate market has been healthy and active in 2019, with trends in the western part of the valley closely mirroring those in Bozeman, according to recently released statistics from the Gallatin Association of Realtors.

Countywide, prices have continued to rise and inventory has remained relatively low, despite the amount of new construction taking place. As of Sept. 30, the number of new single-family home listings in 2019 was up 2.3 percent over the same period last year, and the median and average sales prices rose 6.3 percent and 11.8 percent respectively to $439,999 and $612,072.

As in the recent past, home sellers in Gallatin County continued to capture in excess of 98 percent of their asking prices. For the quarter ending Sept. 30, single-family residences were on the market for fewer days than during the same period in the past two years.

Mike Lake, director of the Big Sky Country Multiple Listing Service, said that 56 percent of listings in Gallatin County are in Bozeman, so that market has the greatest effect on county statistics. However, when figures from the rest of Gallatin County are analyzed separately – except for in Big Sky, where prices are “way off the chart” – each community’s statistical trends pretty much mirror those seen in Bozeman.

Year to date in Belgrade, the number of new listings through September increased by 21.1 percent to 408, compared to 337 through September 2018. The median sales price increased by 5 percent to $335,500, and the average sales prices increased by 8.5 percent to $377,046.

The greater Manhattan and Three Forks areas, by contrast, have seen fewer new single-family residential listings this year than last, but – as elsewhere in the valley – prices continue to rise in both communities. Through September, Manhattan had 66 new listings, down 13.2 percent from 2018, and Three Forks had 57 new listings, down 27.8 percent over the year before. Prices in both areas rose: Manhattan’s median and average sales prices increased by 8.3 percent and 7.2 percent respectively to $415,500 and $457,472. In Three Forks, median and average prices grew by significantly higher margins, with the median price rising 22.1 percent to $295,500, and the average sales price climbing 21.4 percent to $297,756.

Across the United States, the median home sales price climbed 5.9 percent from a year ago to $272,100, outpacing wage gains as the strongest price appreciation since January 2018.

The continued rising prices and high demand have some wondering how long the trend will continue.

“We have a lot of headwind but not a lot of tailwind in our market,” said Andrew Hurlburt, president of the Gallatin Association of Realtors. “It’s hard to say how long it’s going to last.”

Chris Awe, owner of Awe Real Estate in downtown Belgrade, said his clients wonder the same thing. He said he is often asked if the market is softening when people notice price reductions on particular listings. But Awe said that in most of those cases, homeowners have listed their properties at high prices just to see what the market will bear, then choose to drop the prices later to actual market levels.

“People want to know if the market is turning on us when they see price reductions,” said Awe. “But buyers know what is a fair price or not, and they end up paying what it should be worth.”

Awe said he hasn’t noticed significant effects of new construction inventory on prices or demand.

“Obviously more product is helping, but we’re not witnessing prices coming down because of a flood of inventory,” he said.

Demand remains especially high at entry-level price points and for townhomes and condominiums, said Awe, adding that “those are the challenges.”

Lack of affordable housing is an issue not just locally, but also across the country, according to housing market reports. Homebuyers have been hamstrung by a shortage of available properties this year, especially at the lower-priced end of the market. Inventory is down 2.7 percent from a year ago. Land and labor shortages also have constrained building, so a tightening supply of homes has pushed prices up at a pace faster than income.

Hurlburt noted that Gallatin County has been somewhat insulated from such national trends, particularly in areas like Belgrade where building is booming. However, the county is not immune from other influences that might affect the market, including how the Federal Reserve might adjust interest rates and next year’s national election.

“Any of those factors could affect us here,” he said. “We’re almost 11 years into an expansion, and there’s got to be some leveling of that growth at some point.”

The seasonal slowdown in local real estate activity has begun, Lake said, but that is typical for this time of year as winter approaches.

The Associated Press contributed to this report