Why Are Homes Expensive In Bozeman, Montana? Let’s Count The Reasons…
Houses are still expensive in Bozeman in 2024 due to the low availability of land ⇓, the high cost of land ⇑, the high cost of labor ⇑, the high cost of building materials ⇑, and the limited supply of homes for sale ⇓.
Five simple reasons why houses are so (remain) expensive in Bozeman.
Reason 1. ⇔ Availability of Land Remains Low But is Rising in Bozeman
Houses are expensive in Bozeman because of the diminishing amount of land for sale in Bozeman.
Chart 1: The availability of land under ½ acre in greater Bozeman, which includes inside and outside city limits is rising and at 84 lots at the end of Q1 2024.
Also, the availability of lots under 1-acre–98–has been rising since late 2020, when there were 4 lots for sale.
The number of lots for sale under ½ acres began rising late-2018, peaked at the end of 2019 at 264, and has been below 175, even below 10 or less, since.
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.
Today, in every size range of land for sale in Bozeman, there are 182 parcels listed, 81 in the city and 101 outside the city.
Reason 2. ⇑ Cost of Land Remains High in Parts of Bozeman
As a result of low availability of land in Bozeman, land remains costly, contributing to why houses are expensive in Bozeman.
Chart 2: The overall, average price of land in greater Bozeman has been steadily rising since early 2017.
And, since the pandemic–around March 2020–prices have skyrocketed. Today, median land price in all of Bozeman is $547,500.
After Covid began, the median price for Bozeman land started increasing and remains expensive.
The price for Bozeman land 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 early 2023, the median price for all sizes of land was $420,000.
In June 2022, land prices flattened for all sizes of land.
Inside the city of Bozeman, land prices were stagnant from mid-2018 to mid-2021, beginning a dramatic rise in Q1 2021.Chart 2:
Since then, median prices increased from $131,700 in June 2021 to June 2022’s $306,500, a ⇑ $174,800 or a ⇑ 132.7% increase.
Today, nearing Q2, 2023, land costs 286,500 in the city of Bozeman.
Outside the city, during the same period, the price rose from $325,000 to June 2022’s $526,000, an increase of ⇑ $201,000 or ⇑ 61.8%.
Today, on the edge of Q2, 2023, land costs $622,000 outside the city of Bozeman.
Reason 3. ⇑ 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 over $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.
Reason 4. ⇑ The Cost of Building Materials Continues to Rise Across the U.S.
Chart 3: In March 2024, lumber prices hit $621/1000 board feet (1″x12″x12″).
In Q2 2024 they’ve dropped to $490/1000 board feet.
Compare this to May 2021 when the price for lumber was a whopping $1684/1000 board feet, 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 still high and land remains 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.
Reason 5. Competition Remains Up ⇑ For A Growing Number of Homes ⇑
Chart 4: Reason 5: The number of homes for sale in Bozeman has been rising for the last 2.5 years and is at 436 near the end of Q2 2024.
Availability of homes in the Bozeman area had been decreasing for many years, from 395, May 2020 to 136 in June of 2022, 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 though rising significantly in the last 2.5 years, homes are still expensive in Bozeman.
