From 2018 through 2023, home prices surged to record highs, straining affordability for local buyers.
This mismatch between soaring prices and modest income gains led to a steep decline in affordability.
Housing inventory was extremely tight through these years, intensifying competition.
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A combination of factors strong demand, low supply, and a pandemic-era migration surge fueled the price growth.
By mid-2022, Montana home values were the 5th fastest-growing in the nation since the pandemic began.
Home sales volume initially surged during the pandemic boom then cooled as affordability waned.
This was near the post-2008 recession lows as buyers grew scarce at high prices.
The Local Buyer Majority
However, data suggests that Montana buyers remained predominantly local.
High prices and tough competition raised barriers to entry for younger buyers without existing home equity.
Repeat or move-up buyers (often older, higher-income, or equity-rich) thus dominated the market from 20182023.
Even nationally, 75% of recent homebuyers bought a detached single-family house.
Townhouses and condominiums make up a much smaller slice of purchases (often under 10% combined).
This was partly driven by developers and city planners trying to add more attainable housing.
By late 2023, a condo in Bozeman or Whitefish could easily cost well over $400K.
Upsizing vs.
Downsizing Trends
In terms of home size and upsizing vs. downsizing, Montanas trends have been mixed.
On the other end, some empty-nesters and retirees looked todownsizeto smaller, easier-to-maintain homes.
The resort town of Whitefish itself saw median prices soar to over $1.3 million by mid-2022.
These gains were fueled by wealthy out-of-state buyers snapping up lakefront cabins, ski condos, and luxury retreats.
By mid-2022 Bozemans home values were up nearly 20% year-over-year.
Investment Property Activity
Investment property activity also climbed during 20182021.
With low interest rates and surging rents, real estate investors both local and out-of-state targeted Montanas housing.
Montanas resort markets likewise saw sales volumes fall in 20222023, as some discretionary buyers paused.
These low rates reduced monthly payments and allowed buyers to stretch their budgets to afford higher-priced homes.
This rate shock reduced what buyers could qualify for e.g.
Thus, fewer entry-level homes came on the market, compounding challenges for first-time buyers.
However, many moderate-income and first-time buyers turned to government-backed loans like FHA and USDA.
Few first-time buyers can save that quickly, so many relied on smaller down payments or assistance.
These can be paired with an MBOH low-interest 30-year fixed loan.
There are income and price limits (e.g.
In summary, Montanas budget-conscious buyers increasingly leveraged every available resource to buy homes from 20182023.
By 2017, values had rebounded strongly.
However, that 71% gain was spread over 12 years.
By the end of 2023, with median prices around $500K, affordability had worsened dramatically.
Buyer Demographics: The earlier decade saw a healthier influx of first-time buyers as the market recovered.
The median first-time buyer age in 2015 was about 31.
The net result: the pool of Montanans able to buy homes with ease shrank in the latter period.
Condo development in places like Bozeman and Missoula was minimal until the late 2010s.
Thus, virtually all homebuying pre-2018 was houses, often on decent-sized lots.
Generational Housing Patterns
Upsizing/Downsizing: During 20082017, downsizing by Baby Boomers was a more visible trend.
There was a generational turnover that helped supply in that era.
But millennials in Montana in the 2020s have struggled to even get that starter, much less upgrade.
Many buyers in 20082012 relied on FHA loans because conventional lending had pulled back.
FHAs market share spiked nationally around 20092010.
Most sales involved financing and there were abundant listings.
By 20212022, cash offers were winning bidding wars on scarce listings.
Policy Responses to Housing Challenges
Housing assistance and policy: State and federal housing support also evolved.
From 2018 to 2023, the housing affordability issue gained prominence, prompting new initiatives.
to help folks buy, whereas in the earlier period traditional mortgages sufficed for most.
Conclusion
Montanas budget-conscious homebuyers have navigated a challenging and fast-changing landscape from 2018 through 2023.
Comparing this era to 20082017 highlights just how extraordinary the recent market has been.
A decade ago, a steady income could reasonably get a family into a home in most Montana communities.
Now, creative strategies and significant resources are often needed to achieve the same goal.
