2017 was another great year for real estate (especially in Bozeman). In spite of low inventory, we saw an increase in residential units for the entire Big Sky Country MLS up 9% and total volume sold up 13.6%. The low-interest rates continue to give buyers a stronger buying power, offsetting some of the increased sales prices of homes in the area. Experts expect some of these trends to continue into 2018 with moderate and steady gains in the market, both nationally and locally.
Here's a look at the predictions.
1. It’s All About the 1st Time Homebuyers Many experts are predicting this to be the year of millennial first-time homebuyers. Builders will be focusing their attention on entry-level homes. (Talbach Condominiums is a great example of this) making affordability the biggest priority of home builders in the near future.
2. Inventory Will Increase Moderately 2017 had very low inventory, although it rose nationally the second half of the year. Experts are predicting that over the next year, inventory will increase moderately, lead again by new construction. Locally, we could see an increase in resale properties, due to the high price of construction costs making it more affordable for a buyer to purchase an already existing home.
3. Interest Rates Interest rates are bound to increase in 2018. Some predict closer, on average to about 4.5%. Now as alarming as that may sound, these are still phenomenal interest rates. Ask anyone who owned a home in the 80’s and 90’s if 4.5% is high, and they will laugh at you. Think of it this way, for every 100K borrowed if your interest rate is increased by .5% (4.0 to 4.5) you pay an additional $30 a month. Not to scary now is it.
4. Higher Home Prices A lack of inventory could still be a common theme in 2018, we will still continue to see an increase in our home values as they will continue to rise. The good news for buyers? 2017 was full of record-breaking home price growth, and home prices are expected to climb 4.1% in 2018 (compared to the current pace of 6.9%) on a national average. Remember though, real estate is local. The real estate market varies greatly from region to region.
5. Remodel Rather Than Sell As the price of homes increase, homeowners may choose to remodel instead of selling. Why? Its easy to show a homeowner the pro’s on why they should sell. The catch is, it can be hard to find their replacement property. Rarely are sellers looking to make a “lateral” move. If they make the emotional or financial commitment to selling, more than likely they are looking for a functional change. More space for a growing family or less space for empty nesters. Whatever your motivation may be, think about all the options before doing or not doing anything.
To find out how the market looks here in Bozeman, give me a call at 406-570-2980 and I can let you know how things went in 2017 and what I expect the local market to do in 2018!