Bozeman Homes Were Expensive in 2022.
2022: Houses are so expensive in Bozeman because of the low availability of land ⇓, high cost of land ⇑, high cost of labor ⇑, high cost of building materials ⇑, limited supply of homes for sale ⇓.
Five simple reasons why houses were expensive in Bozeman in 2022:
⇓ Availability of land was low in Bozeman
Houses were so expensive in Bozeman because of the diminishing amount of land for sale in Bozeman.
Chart 1: (disregard “homes” in title) Consider the availability of land under ¼ acre in greater Bozeman–includes inside and outside city limits.
Availability of lots under 1-acre had been on the decline since March 2016, when there were 360 lots for sale.
In June 2022–more than 5 years later–there were only 26 for sale, a decline of ⇓ 334 lots or ⇓ 128.5%.
The number of lots for sale under ¼ acres began rising a bit in mid-2018 until mid-2021, after which it dropped for a few months but was on the rise again.
The amount of available ¼ acre lots dropped from 54 parcels in January 2020 to 8 parcels in June 2022, a ⇓ 200% decrease in a little over 2 years.
In the ¼ to ½ acre lot range, there were only 4 lots for sale in greater Bozeman in June 2022.
And, there were just 13 lots for sale in greater Bozeman from ½ to 1 acre. In this price range, for sale numbers increased ⇑ 116% from August 2021 to June 2022.
In every size range of land for sale in greater Bozeman, there were 67 parcels listed in June 2022, 17 in the city and 56 outside the city.
⇑ Cost of land was high in Bozeman
As a result of low availability of land in Bozeman, land was costly, contributing to why houses were expensive in Bozeman.
Chart 2: The overall, average cost of land in greater Bozeman had been steadily rising since early 2017.
And, since the pandemic–around March 2020–prices had been skyrocketing.
Ironically, after Covid began, the median price for all Bozeman land slowly increased until mid-2020.
Then it rose significantly from $174,000 in June 2020 to June 2022’s $400,000, which was a ⇑ $226,000 or a ⇑ 129.9% increase in 24 months.
In June 2022, Bozeman land prices flattened for all sizes of land.
Inside the city of Bozeman, land prices were stagnant from mid-2018 to mid-2021, when a dramatic rise began in Q1 2021.
From there forward, median prices increased from $131,700 June 2021 to June 2022’s $306,500, a ⇑ $174,800 or a ⇑ 132.7% increase.
Outside the city, during 2021, the price rose from $325,000 to the $526,000, an increase of ⇑ $201,000 or ⇑ 61.8%.
⇑ High labor costs in Bozeman
Though laborer jobs exist, because the building trade is in overdrive, competition for “good” laborers was high among builders, pushing hourly wages to record highs in Bozeman.
According to one luxury home builder in Bozeman, framers were making up to $55/hour and a finish carpenter could make $45/hour in Bozeman.
According to Bozeman Job Service, an inexperienced laborer could make from $15-$25/hour.
Subcontractors had difficulty finding and keeping crews, as competition for workers weakened loyalty and drove up wages.
These and lesser reasons were contributing to why houses were so expensive in Bozeman, Montana in 2022.
⇑ The cost of building materials continued to rise across the U.S.
Chart 3: In June 2022, lumber prices began rising again, hitting $611/1000 board feet; last June, lumber prices were $650/1000 board feet.
In May 2021, the price for lumber was $1684/1000 board feet (1″x12″x12″), an all-time record.
The forecast was for prices to begin decreasing spring 2021, and prices fell below $1000/1000 board feet in mid-June 2021.
Demand for homes in Bozeman was very high and land was at a premium, if you could find it.
Across all U.S. markets, lumber mills had been unable to run at full capacity due to Covid, thus the record high price for lumber in 2021.
Home building costs vary depending on many factors: square footage, room configuration, price of land, types of finishes, level of appliances, and anything else that goes above and beyond the basics of a home.
Hot Market: High competition for limited number of homes ⇓
Chart 4: Availability of homes in the Bozeman area had been decreasing for many years, from 395, May 2020 to 136 in June of 2022, a decrease of ⇓ 259 or a ⇓ 190.4% decrease in 2 years.
The decade-long, downward slide in homes for sale increased significantly in May 2020, as refugees from Covid arrived and purchased homes in Bozeman.
This steep decline in homes for sale flattened in late summer 2021 and remained very low, contributing to why homes were expensive in Bozeman.
