March 30th, 2021

Why Are Houses Expensive In Bozeman?

Why Are Houses Expensive In Bozeman?

Why Homes Are 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 ⇓.

Photo the decreasing availability of land is why houses are expensive in Bozeman, Montana.
The decreasing amount of land in Bozeman (disregard “homes” in title).

Five Simple Reasons Why Homes Are Expensive In Bozeman

Availability of Land Is Low in Bozeman

Houses are expensive in Bozeman because the amount of land for sale in Bozeman, from .5 to 1 acre, inside and outside city limits, has been steadily decreasing for the past 18 months.

The amount of available land dropped from 45 pieces in June 2019 to below 13 in early March 2021.

Presently, in late March and sized from ½ to 1 acre, there are only 8 lots for sale in Bozeman.

In all the area of “Bozeman,” there are only 14 parcels of land available from .5 to 1 acre. In all size ranges of land for sale, there are 141 parcels available for sale.

Photo The rising cost of land is why houses are expensive in Bozeman, MT.
The rising cost of land in Bozeman.

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.

The overall cost of .5 to 1 acre of land in- and outside Bozeman has been steadily rising since January 2020.

During this period the cost increased from $111,000 to a March 2021 price of $204,000, an 84% increase in a little over 1 year.

Note: Inside the city of Bozeman during this same period, land prices increased from $190,000 to $450,000 and then dropped significantly to the present $160,000 in March 2021.

Outside the city, during this same 18-month period, the price rose from $106,400 to $204,000 in March 2021, almost doubling.

Photo Bozeman Montana construction worker labor shortage is why houses are expensive in Bozeman.
Bozeman Construction Worker Labor Shortage

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.

Photo Construction Materials Price Trend Rising from U.S. Federal Reserve.
Increasing construction materials price trend, U.S. Federal Reserve.

The Cost of Building Materials Continues to Rise Across the U.S.

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.

Photo Year-over-year decreasing number of homes to buy is why houses are expensive in Bozeman.
Year-over-year decreasing number of homes to purchase in Bozeman (disregard “homes” in title).

Hot Market: High Competition For Limited Number of Homes

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 increased significantly in May 2020, as refugees from Covid arrived and purchased homes in Bozeman.

This steep decline continues today, contributing to why houses are so expensive in Bozeman.

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Taunya Fagan

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