Real Estate Year End Market Report
Last year, 2022, saw a lot of big headlines: Russia’s invasion of Ukraine, the removal of mask requirements on airplanes and in most public places, the Winter Olympic Games in Beijing, inflation, and an overturning of Roe V. Wade are just a sampling of all that went on. The big news in real estate, both in Bozeman and around the country, is the increase in interest rates, which has been followed by a reduction in sales volume, or the number of closed transactions.
Mortgage rates, which hovered around and even below 3% for much of 2020 and 2021, began to rise in the spring of 2022, eventually hitting 7% in the fall, then tapering back down to the 6% range, where they sit as of this writing. Rates are volatile, and change daily.
The peak for number of closed transactions in Bozeman was 2020, during which 1133 single family homes sold in and around Bozeman. That number waned in 2021 to 979 home sales, and continued to decline this year to 708 sales in 2022.
Some of this decrease was likely caused by the reduction in new listings to choose from, which has also continued to decline over the past few years. The peak for new listings was 2019, when 1244 homes were listed for sale in and around Bozeman. That number decreased a modest 4% into 2020 with 1193 new listings. It then fell over 9% into 2021 with 1080; 2022 saw another 6.6% decrease with 1008 homes listed for sale. Although the number of new listings for 2022 was only off 6.6% from the previous year, that was nearly 19% lower than the 1244 homes listed in 2019.
Bozeman is not alone in this reduction in available inventory. Markets across the country have seen fewer homes come onto the market during what some economists have dubbed the “seller’s strike.” Many point to interest rates as the cause. For homeowners who locked in an interest rate around 3% to 4%, it’s difficult to swallow selling and taking out a new mortgage north of 6%.
New construction numbers are also interesting, both in Bozeman and Belgrade, across all residential types, including condos, townhouses, and single family homes. In 2019, there were 643 new construction homes listed for sale on the MLS. This does not include custom homes or homes sold directly from builder to buyer, just new construction homes listed for sale. That number increased in 2020 to 729 homes. Then, in 2021, it plummeted by more than 50%, to 345. It remained low into 2022, with just 395 new construction homes listed for sale on our local MLS.
The median sold price has continued to climb. Including all 12 months of sales for single family homes both inside and outside of city limits, the median sold price rose over 18% from 2021 to 2022. If we want to compare the time period after mortgage rates rose and look at just the last six months of 2022 versus the last six months of 2021, we see the median sold price was still up 11%, from $790,000 in 2021 to $880,000 in 2022.
Drilling down deeper to exclude many of the more expensive areas outside city limits, and restricting the data to include only homes inside Bozeman city limits, the median sold price for all of 2022 was $799,500, up 14% from $700,000 in 2021. Again, comparing sales after the rise in interest rates, the last six months of 2022 saw a median sold price for single family home sales inside Bozeman city limits at $794,500, up 9.7% from the last six months of 2021, when that number was $724,000.
Both the median days on market and average days on market have increased over last year, but are still considerably below 2020 and 2019, currently sitting at around 10 median days on market.
The luxury market remains strong. The pandemic saw a significant increase in the number of luxury homes sold in our market, and those numbers continue to increase. In 2019, only 11 homes sold for more than $2 million. That number nearly tripled to 32 closed sales in 2020, then nearly doubled again, to 56 homes sold for more than $2 million in 2021. That number continued its rise as 61 single family homes sold north of $2 million in and around Bozeman in 2022.
The included data reflects sales of homes in the greater Bozeman area, including Four Corners, Gallatin Gateway, Bridger Canyon, and Bozeman city limits. The data includes home sales reported through the local Big Sky Country MLS, and does not include private party sales.