Why Are Homes So Expensive In Bozeman, Montana?
Houses are 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 Are Expensive In Bozeman
⇓ Availability of Land Is Low in Bozeman
Chart 1: (disregard “homes” in title) Houses are expensive in Bozeman because the amount of land for sale in Bozeman.
For instance, land under 1/4 acre, in greater Bozeman, and inside and outside city limits, has been steadily decreasing for the past 18 months.
The amount of available land dropped from 46 pieces in June 2019 to 10 in June 2021.
Presently, in June 2021, there are only 10 lots for sale from 1/4 to 1/2 acre in greater Bozeman.
And, there are only 9 lots for sale in greater Bozeman from 1/2 to 1 acre.
In all size ranges of land for sale in greater Bozeman, there are 95 parcels listed.
⇑ Cost of Land is High in Bozeman
Chart 2: As a result of low availability of land in Bozeman, land is costly, contributing to why houses are so expensive in Bozeman.
The overall cost of land in greater Bozeman has been steadily rising since August 2019.
During this period the cost increased from $165,450 to a June 2021 price of $280,000, a ⇑ $114,550 or ⇑ 69% increase in 22 months.
Outside the city, during this same 22-month period, the price rose from $214,000 to $323,500, and increase of ⇑ $109,500 or ⇑ 51%.
⇑ High Labor Costs in Bozeman
Though laborer jobs exist, because the building trade is in overdrive, competition for “good” laborers is high among builders, pushing hourly wages to record highs in Bozeman.
According to one luxury home builder in Bozeman, framers are making up to $55/hour and a finish carpenter can make $45/hour in Bozeman.
According to Bozeman Job Service, an inexperienced laborer can make from $15-$25/hour.
Subcontractors have difficulty finding and keeping crews, as competition for workers weakens loyalty and drives up wages.
These and lesser reasons are contributing to why houses are so expensive in Bozeman, Montana.
⇑ The Cost of Building Materials Continues to Rise Across the U.S.
Chart 3: In March 2001, the price for lumber is over $1000/1000 board feet (1″x12″x12″), an all-time record.
The forecast is for prices to begin decreasing this spring.
Though demand for homes in Bozeman is very high, land is at a premium if you can find it.
Across all U.S. markets, lumber mills cannot run at full capacity due to Covid, thus the record high price for lumber in 2021.
Home building costs vary depending on many factors from 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 has been decreasing for many years, from 376 in March 2016 to 149 in March 2021, a 146% decrease in 5 years.
The slope in the long-term angle of decline (chart 4) increased significantly in May 2020, as refugees from Covid arrived and purchased homes in Bozeman.
This steep decline continues in Q2 2021, contributing to why houses are so expensive in Bozeman.