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
Houses are expensive in Bozeman because of the diminishing amount of land for sale in Bozeman.
Chart 1: (disregard “homes” in title) 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 has decreased from 39 pieces August 2020 to just 6 pieces for sale in August 2021, a drop of 550% in one year.
Presently, in August 2021, there are only 6 lots for sale from 1/4 to 1/2 acre in greater Bozeman.
And, there are only 7 lots for sale in greater Bozeman from 1/2 to 1 acre.
In every size range of land for sale in greater Bozeman, there are 72 parcels listed.
⇑ Cost of Land is High in Bozeman
As a result of low availability of land in Bozeman, land is costly, contributing to why houses are so expensive in Bozeman.
Chart 2: The overall cost of land in greater Bozeman has been steadily rising since early 2017.
And, since the pandemic–1.5 years–prices have skyrocketed.
During this year and a half, the cost of land increased from $212,500 (February 2020) to an August 2021 price of $300,000, an ⇑ $87,500 or a ⇑ 41% increase in 1.5 years.
Inside the city of Bozeman, from August 2018, when land prices began their upward trend after years of stagnation, to August 2021, prices have increased from $122,900 to $163,000, a ⇑ $40,100 or ⇑ 32.6% increase.
Outside the city, during this same 3-year period, the price rose from $177,000 to $325,000, an increase of ⇑ $148,000 or ⇑ 83.6%.
⇑ 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 May 2001, the price for lumber was over $1700/1000 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 is very high and land is at a premium, if you can find it.
Across all U.S. markets, lumber mills have 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 has been decreasing for many years, from 403 in August 2015 to 90 in August 2021, a decrease of 313 or 348% decrease in 6 years.
The decade-long, downward slide increased significantly in May 2020, as refugees from Covid arrived and purchased homes in Bozeman.
This steep decline continues in Q3 2021, contributing to why houses are so expensive in Bozeman.