2023 Year End Update

Real Estate
December 30, 2023by Sarah Day
As the year comes to an end, we in Bozeman, Montana have experienced an unusually warm December. This unexpected twist in the weather pattern has implications not just for daily life, but also for the real estate market in the Gallatin Valley.

Bozeman is known for its stunning landscapes and outdoor recreational opportunities and everyone typically braces for cold, snowy winters. However, this year's warmer temperatures have painted a different picture for tourists and residents.

Lower heating bills the past few months have definitely been a plus. Aside from that, it depends on who you ask whether the warm temperatures have been a blessing or a curse. It’s allowed residents and visitors to enjoy hiking, biking and exploring without the usual winter gear or challenges. Skiers on the other hand have found the lack of snow quite frustrating. Even in Big Sky they are having to make snow on many of the runs.

From what I’ve heard the warm weather is also impacting sales of outdoor recreation equipment and gear. My guess is that with the warmer temperatures people aren’t needing to replace old or outdated gear because they might not need it – either because they can’t do the activity currently (like cross country skiing in town) or because if they are they don’t need as many layers (such as hiking).

For the real estate market in Bozeman, the warm December is a double-edged sword. On one hand, the pleasant weather can make the process of home searching more convenient – roads are more clear, you aren’t trudging through snow and you can actually see the backyard. For home sellers you can expect less mud and snow to be tracked through the home, making the showing processes a little easier on everyone. The warm weather can also be attractive to out-of-state buyers that are keen to invest in a location that offers a high quality of life and more temperate winter conditions.

However, the warm weather has not seemed to increase market activity. In fact things have slowed slightly – likely more so due to the natural swings of our market and the busy holiday season. Comparing August 2023 to November 2023, the median sales prices of residential properties in Gallatin Valley has gone down over 6%, median days on market is up to 46 days from 18 days and sellers are receiving on average 97% of asking price whereas in August they were getting above 98%.

There are many predictions for the year ahead – the majority of which now incorporate the Federal Reserve lowing interest rates a bit starting mid-2024. This has caused many potential home buyers to be very optimistic about mortgage rates later in the year. It’s possible that rates will go down as a result of this and make monthly payments more accessible for some buyers. However, please keep in mind that this will also increase competition in the market. You might have a better interest rate but we might have to put in a very strong offer to beat out the other buyers.

For sellers a decrease in interest rates is likely good news all around. More buyer competition for your home will benefit you. If you’re considering selling sometime in 2024 I would still recommend that you address any big deferred maintenance items. Even with reduced interest rates buyers are likely going to continue to prioritize homes with less work needed over homes they see as big “project homes.”

As we head into 2024 please don’t hesitate to reach out if you have any questions about the market or how I might be able to help you with your real estate goals. Have a very Happy New Year!
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