‘The faucet has shut off’: Bozeman area housing market sees signs of cooling, but prices remain high | City

Marc Parent, a broker with Bozeman Brokers Real Estate who has been in the real estate industry for nearly two decades, said his year started off hot.

But when reached last week, Parent said he is about half as busy as he was last year.

“The faucet has shut off for me,” Parent said. “I feel the biggest thing, the word I would use, is probably urgency. I feel like the sense of urgency has totally stopped.”

Recent housing market data backs up their experiences that the Bozeman area’s housing market is slowing down slightly and becoming more predictable.

Bozeman is part of a national trend as higher interest rates have impacted real estate across the country. But in a market where the median price of a single-family home went from $459,000 in July of 2019 to $745,000 in July 2022, any sign of a slowdown is notable.

“It’s a normalization of what was an out-of-balance market, that’s how I see it right now,” said Joanna Harper, the board president of the Gallatin Association of Realtors.

Several local realtors say their business is much calmer nowadays. They have more time to make offers on homes and can negotiate for things like appraisals and inspections.

“That million dollar property which would have, three months ago, had six or seven offers may only have one (offer) in a couple of weeks, and it might not be full price,” said Arison Antonucci-Burns with Aspire Realty. “I think it’s patient, more than anything it’s becoming a more patient market, it’s not quite as aggressive.”

For Parent, whose business has slowed down over the summer, the only consistency with real estate is inconsistency, and he noted that while he is having a slow spell, the industry is such that his colleague down the hall could be frantically busy.

But there’s no doubt in his mind that things are different in Bozeman. He likened the current feel to the start of the pandemic in 2020, when for a few weeks, everybody was in a “holding pattern” as people waited to see what would happen next.

Of course, we know what did happen next. Median sale prices for single-family homes skyrocketed, supply was far outpaced by demand and shocks were passed down the line to the rental market.

Stories of the cutthroat market abounded. Potential buyers offering well over asking price for a property they hadn’t even toured and were passed over for people offering even higher, buyers with financing were beat out by people offering all cash, and Bozeman became a poster child for the pandemic’s housing craziness.

Though things may be cooling slightly, there hasn’t been a steep decline in prices: The median sale price for a single-family home in Gallatin County’s market was $812,750 in January of this year, according to the realtors association. It was $450,000 in January 2020.

While the cool down has not resulted in price drops to pre-COVID levels, there have been other implications.

Realtors actually have to market properties now, Cribbes said, rather than just rely on frenetic demand to sell their properties. Since prices are no longer rapidly rising, Harper said realtors are able to actually glean useful information from recent data to price homes or make offers.

Harper said buyers also have more negotiating power. During the heat of the COVID market, buyers were waiving contingencies like appraisals or inspections to sweeten the deal, but now that is happening less and less.

Harper and other realtors said cash offers may now get the buyer a discount from the asking price, whereas during COVID cash offers often simply helped get a buyer to the top of the list, but at full asking price or more.

Antonucci-Burns said the recent, relative stabilization has pushed some locals who were waiting the market out into buying.

“The people who were waiting, who were saying ‘There’s no way Bozeman can go higher,’ and sat around and paid high rents, now they’re coming back to the table,” Antonucci-Burns said. “The fence sitters are no longer fence sitters, they’re actually jumping now.”

Lexi Olson and her fiancé thought they were about a year out from buying a home. But earlier this summer, they got the news that their rent was going to increase enough that they figured it wouldn’t hurt to look.

They had a budget of $500,000-$700,000 and were planning to use a Veterans Affairs loan.

Olson said they ended up finding a place in the middle of that range, though she declined to share the exact sale price.

“What I found is it felt more fair, if that makes sense,” Olson said about her experience in the housing market. “We didn’t feel like we had to make an offer for 10,000 or 15,000 over what it was listed for. We definitely felt like we could make a fair offer.”

Antonucci-Burns, who said she felt a shift in the market in April, pointed to a change in interest rates as a key cause of the market cooling down.

Freddie Mac reported this week that the 30-year mortgage rate was to 5.66%. It was at 2.87% a year prior.

The increases have pushed down what many potential buyers could afford and put others out of the market entirely.

Harper said the impact of increased interest rates was expected. It showed up quickly in the data.

In July, according to the Gallatin Association of Realtors, the median price for a single-family home in July was $745,000. That is an increase of 9.2% from last July, but down from June 2022’s median price of $752,500, May’s median price of $812,000 and April’s median of $823,750.

Median prices for condo and townhome sales have been more variable, starting the year at $475,000; spiking up to $657,000 in February. The median price for those units in July was at $535,000.

But July marked the fourth month in a row that both types of homes — single-family and condos/townhomes — had increased inventory, with 91 new condo or townhome listings and 193 new single-family home listings.

Listings for both types of units also spent more time on the market in July. Single-family homes spent a median of 18 days on the market this July — up from eight days last July, and condos/townhomes spent a median of 22 days in July, up from a median of four days for that month in 2021.

But its not all good news for those looking to buy.

Cribbes pointed to months of inventory data — which measures how long the current listings on the market would fulfill the current demand — as an indicator that the area’s market is still unhealthy.

July data from the Gallatin Association of Realtors shows there was 3.8 months of inventory for single family homes and 3.1 for condos and townhomes.

Harper, with the realtors association, explained that months of inventory is a valuable statistic because it gives a good sense of the pace of the market and gauges supply against demand.

The rule of thumb for realtors, Harper said, is that “buyers markets” have about five or six months of inventory.

Bozeman, then, is still considered a sellers market, Harper said.

“We’re still low inventory which … that would suggest that we wouldn’t see a rapid deterioration of prices, because we would need more supply than there is demand on a significant level,” Harper said.