HomeMy WebLinkAbout2025 Gallatin Valley Housing ReportGALLATIN VALLEY
HOUSING REPORT
GALLATIN VALLEY
HOUSING REPORT
2
0
2
5
TRACKING THE PERFORMANCE OF MONTANA’S MOST VIBRANT HOUSING MARKET
ACKNOWLEDGMENTS
Housing Report Steering Committee & Contributors
Cindi Siggs - CEO, Gallatin Association of REALTORS®
Mike Lake - CEO, Big Sky Country MLS
Joanna Harper - Housing Report Workgroup Leader, Realty One Group Peak
Michelle Haverstick - Housing Report Workgroup Co-Leader,Broker/Owner, Gallatin Realty Group
Lisa Blank - Administrative Assistant, Southwest Montana Building Industry Association
Heather Grenier - President/CEO, Human Resource Development Council (HRDC)
Renata Munfrada - Community Housing Program Coordinator, City of Bozeman
Daryl W. Schliem - CEO, Bozeman Area Chamber of Commerce
Patrick Barkey - Director of Research, Bureau of Business and Economic Research (BBER)
Derek Sheehan - Economist, Bureau of Business and Economic Research (BBER)
About this Report
This report is the product of a joint effort of the leaders listed above, including real estate professionals, government
officials, lenders, data professionals, and researchers who collaborated on all aspects of this project to bring it to a
successful conclusion. The purpose of this report is to give a comprehensive statistical snapshot of the status of the Gallatin
Valley’s residential real estate markets that can be used as a starting point for productive conversations addressing its
opportunities and challenges. The data was compiled and the report was written by the Bureau of Business Research
(BBER) at the University of Montana. The BBER is greatly indebted to all those individuals who so graciously supplied the
data and insights that you see in this report.
This report is available as a downloadable PDF document on our website.
https://www.gallatinrealtors.com/gallatin-valley-housing-report
1
BIG SKY COUNTRY MLS SUPPORTS COOPERATION WITHIN THE REAL ESTATE COMMUNITY.
The MLS is a powerful force for competition by leveling the playing field so buyers and sellers can work with the professional
of their choice, confident that they have access to the largest pool of properties for sale in the marketplace.
The Big Sky Country MLS unites REALTORS® and provides them with superior services, supporting the role they play in a
consumer's homeownership needs.
THE GALLATIN ASSOCIATION OF REALTORS® IS THE VOICE FOR PRIVATE PROPERTY RIGHTS.
This housing report is a component of our advocacy efforts for property ownership, real estate investment, and strong
communities. We recognize that property ownership, whether as an owner or an investor, represents a major financial
commitment to our community's success. We recognize every time a real estate transaction occurs, it is the result of
someone believing that our community is worthy of investment. We should not take it for granted that people want to live
here and also see their financial future security tied to this wonderful place. Making policies that don't respect the critical
role of property owners will not only fail to increase the supply of affordable housing, but will also damage our economic
health.
THE GALLATIN ASSOCIATION OF REALTORS® SUPPORTS IMPROVING ACCESS TO HOUSING & HOMEOWNERSHIP.
The Gallatin Association of REALTORS® is committed to improving access to housing and homeownership for all.
Underwriting this report is just one component of our commitment to housing affordability. We are founding members of
the Regional Housing Coalition, whose mission is to inform community members, coordinate diverse partners and
resources, and catalyze solutions to address housing attainability and affordability needs in Gallatin County.
Our Gallatin REALTORS® Charitable Foundation has pledged to support the HRDC's construction of Homeward Point with a
pledge of $100,000 over five years and has already contributed $65,000 in the first two years. Our members individually
volunteer with hundreds of local non-profits. 66% of REALTORS® volunteer on a monthly basis compared to 23% of the
general population.
We maintain the most equitable way to increase homeownership is to increase the creation of new housing units. We
support public-private development partnerships. We encourage our policymakers to focus on creating an environment
where new construction can occur rather than on restrictions or reallocation of existing housing stock.
ENSURING THE LAST BEST PLACE IS ELEVATED BY OUR MEMBERS.
Our mission is to empower members in an ever-evolving industry by
fostering excellence and innovation to build vibrant communities
through the power of real estate.
OUR COMMITMENT IN OUR COMMUNITY
2
T
A
B
L
E
O
F
C
O
N
T
E
N
T
S
3
1.1 Economic Trends
1.2 Population and Demographics Trends
1.3 Airport Activity
2.1 Housing Stock
2.2 Housing Development
3.1 Sales Price Trends
3.2 Home Ownership Affordability
3.3 Housing Finance
3.4 Homeownership Programs
4.1 Trends in Rents and Vacancies
4.2 Rental Affordability
Introduction and Overview
1. Housing Demand
2. Housing Supply and Occupancy
3. Owner-Occupied Housing Market Trends
4. Rental Housing Markets
5. Affordable Housing
6. Conclusion
5
7
12
18
23
26
29
This report represents the fourth year in a row that we have compiled an annual review of the Gallatin
County and surrounding area’s housing market. In this report, we see the impact of both local
development policies as well as the adverse impact of higher interest rates on transaction volume and
measures of affordability. But are these impacts something more than just transitory? Is our area at
risk of losing its identity as “ Montana’s most vibrant housing market”?
Let’s consider first what does vibrant mean. Merriam Webster defines vibrant as pulsating with life,
vigor or activity. We have seen the overall transactional activity decrease but is that a reflection of a
loss of vigor or enthusiasm or simply a product of the combination of continued relative low
INTRODUCTION
Joanna Harper- Housing Report Committee Chair
availability and affordability. There is evidence of frustration and dissatisfaction from community members struggling to
secure affordable housing, recruiting qualified new employees or seeking to change their housing types as their needs
change. In addition, there are some long term residents electing to leave our area for more affordable communities.
While these challenges facing the housing marketplace do not have simple answers, we can observe a reassuring resilience.
We are benefiting from growth at a slower, maybe more sustainable rate, moderation in rental costs increases and
continued wage growth across many industries. It supports the idea that our community continues to offer solid
investment opportunities for both individual home owners, developers and businesses alike.
Navigating this market requires a level of humility in the face of the multi factorial hurdles facing new developments, an
acceptance that local policies alone do not produce meaningful relief from high costs and a commitment to pursuing
strategies that work synergistically across the public and private sector to increase housing supply.
Again this report is a tool to inform strategies, policies, and plans for REALTORS®, policy makers and consumers. Our
REALTOR® community is uniquely positioned to provide both content and context for the real estate marketplace. Our Big
Sky Country MLS has much of the data needed to compile this report, it simply couldn’t be created with out the assistance
of many helpful people at Gallatin County, the cities of Bozeman and Belgrade, SWMBIA and many more. Our sincere
gratitude goes out to all the individuals that provided data and guidance for this report.
Cindi Siggs- Chief Executive Officer of the Gallatin Associaion of REALTORS®
The report examines key economic and demographic drivers—including strong employment growth,
high in-migration, and rising median incomes—that are fueling housing demand, while also
highlighting significant challenges in housing affordability and supply. It documents the increasing
prevalence of multi-family housing, the strain on affordability for both buyers and renters due to
escalating home prices and interest rates, and the mismatch between the number of cost-burdened
households and available subsidized housing. By offering a rich set of data and analysis, the report
aims to inform policymakers, developers, and community stakeholders and foster data-driven
conversations about future housing strategies in the region. Its importance lies in grounding housing
policy discussions in clear, objective facts during a time of rapid economic and political change.
5
As the Gallatin Valley housing market moves another year further away from the dramatic events of the pandemic and its
immediate aftermath, a new perspective on its growth and evolution is emerging. It has been more than two years since the
30-year conventional mortgage rate pushed up past six percent, setting in motion new changes in markets that are still
being felt today. Those changes merit the new assessment of the current state of the area’s residential housing market that
is presented in this report.
Some of the forces shaping market outcomes continued in 2024 with little change. These included:
Economic growth in Gallatin County and many of its adjacent neighbors continued to significantly outpace the state in
2024, powered by commercial growth, tech developments, and a strong tourism economy.
Strong rates of population in-migration from outside of Montana continued, although increasingly offset by
outmigration from Gallatin to other Montana counties.
Interest rates for conventional mortgages remained above 6 percent, rising slightly towards the end of the year.
Prospects for significant rate cuts in 2025 have been challenged by the stubborn persistence of inflation above target
rates.
Other events and trends have impacted buyers, sellers, and developers in turn. Building materials—with the important
exception of softwood lumber—continued to see significant price increases in 2024. Construction labor remains tight. The
recent buildout of new housing units, especially multi-family structures, has impacted markets as well. Finally, there are
political developments that bear watching as well, most notably the increasing appetite of the state and federal
governments to intervene in local marketplace and regulatory issues.
What we present in this report can be thought of as the combined impacts of all of these forces and trends. Those impacts
spread beyond the city of Bozeman and even Gallatin County. It is the aim of this report to create and present a detailed
account of how the housing markets within this broader geography have evolved, so that conversations – and, ultimately,
decisions concerning how housing policies should evolve can start from a common factual base.
The data included in this report are the most up-to-date available. For many categories, the information encompasses
housing activity and other relevant activities that are complete through the end of 2024. Economic data and particularly
census data are only publicly available after a longer lag. The most recently available Census data in many instances is only
available through calendar year 2023.
6
OVERVIEW
Figure 1 - Payroll Employment Index, Seasonally Adjusted
Gallatin County, Montana and the U.S. Index 2012 = 100
Source: U.S. Bureau of Labor Statistics Quarterly Census of Employment and Wages
Figure 2: Employment by Industry
Gallatin County
2019 through 2024
Source: U.S. Bureau of Labor Statistics Quarterly Census of Employment and Wages
1.1 Economic Trends
Gallatin County is the heart of the economy of
the entire region, and its surging growth has
continued to be the biggest story in the state
in recent years. Before the Covid downturn in
2020 the growth in employment in the County
was more than twice that of either Montana or
the U.S. as a whole. In the years beyond that
dip its growth has been even faster, as shown
in Figure 1.
1. HOUSING DEMAND
The strong job growth has come from almost
every industry. The bars in Figure 2 shows
employment by industry in Gallatin County
ranked by the number of jobs in each. The
height of the bars shows employment levels in
2024, with the growth arrows contained within
each bar indicating the change in each job
count since 2019. The prominence of the
visitor industry, both in size and in growth, is
apparent. There has also been strong growth
in construction, health care, and professional,
scientific, and technical services industries.
The latter contains some, but not all, of high-
tech related businesses.
7
6
The disruption of the economy in the
beginning of 2020 due to COVID caused
unemployment rates to rise rapidly, but as
shown in Figure 3, those elevated rates were
short-lived. By the end of 2021 jobless rates
were already below pre-COVID levels across
Montana, and in Gallatin County they fell
below 2 percent in 2023. Stress in labor
markets caused by very low numbers of
available workers for job openings continues
to be evident across Montana, and especially
in Gallatin County.
Figure 3: Unemployment Rates, Seasonally Adjusted
Gallatin County, Montana and the U.S.
Source: U.S. Bureau of Labor Statistics
Robust economic growth has boosted
household income and has improved poverty
outcomes as well. While poverty rates in
Gallatin County have not changed markedly
since 2019, as shown in Figure 4 they are
significantly lower than elsewhere in the state
as well as the average for the U.S. as a whole.
Figure 4: Poverty Rate
Gallatin County, Montana, and the U.S.
Source: U.S. Census Bureau Small Area Income and Poverty Estimates
8
Source: U.S. Census Bureau Small Area Income and Poverty Estimates
Figure 5: Median Household Income
Gallatin County, Montana, and the U.S.
The continued growth of median household
income (MHI), encompassing joint earnings of
multi-earning households, shown in Figure 5 is
more dramatic. MHI in the County surged past
$90,000 in 2023, the last year for which data
was available. Gallatin County has the highest
MHI of any county in the state. Growth in
income has been boosted by the growth in
higher paying jobs, as well as the in-migration
of those with jobs outside the area who are
reside in the Gallatin Valley.
1.2 Population and Demographic Trends
Population changes have direct bearing on
housing markets, and especially on the real
estate business. Gallatin County has always
had a high degree of dynamism in its
population, due to the rapid growth in its
economy as well as the regular turnover of its
younger population due to the presence of
Montana State University in Bozeman.
There are two components of overall
population change, as shown for Gallatin
County in Figure 6. Natural change is the
annual difference between births and deaths,
which has been positive and fairly stable. In a
community with a comparatively low median
age, with a higher fraction of women of child-
bearing age, this component is larger than
many other communities. The second
component, net in-migration from outside the
county has been larger and much more
variable in recent years. The fall in in-migration
from its high levels of 2021 has reduced
pressure on the demand side of the market
from relocating households.
Figure 6: Components of Population Change
Gallatin County
2013-2024
Source: U.S. Census Bureau Population and Housing Unit Estimates Program
9
10
Source: Census Bureau Population and Housing Unit Estimates Program
Figure 7: Share of Population by Age and Sex
Gallatin County
2013-2023
The combinations of people into
households – collections of people who
occupy a housing unit – is most relevant for
housing demand. As Table 1 shows, a little
over 40 percent of the households in
Gallatin County are nonfamily – many of
which are single person households,
judging from the lower average household
size.Source: U.S. Census Bureau American Community Survey, 1-year estimates
Table 1: Population in Households Summary
Gallatin County
2023
The age structure of the population, shown for
both women and men in Gallatin County for
the year 2023 in Figure 7, impacts housing
demand in different ways. First home buyers,
households moving up and down the ladder
according to their changing housing needs,
and the apartment rental demand are
influenced by the distribution of the
population by age.
The growth arrows in the Figure indicate the
change in the share of the total population for
each specific age/sex cohort over the last
decade. The presence of the MSU student
population is apparent, as is the decline in
birth rates that have caused the youngest
cohorts of children to decline in size. The
sizable in-migration over the decade has
largely mitigated the progressive aging the
population in aggregate that would occur
otherwise.
6
Single-person households in the County have
declined in number and as a share of the total
number of households over the last decade, as
seen in Figure 8. The two types of multi-person
households – family and nonfamily – have
gained share over the same period. This
doubtless has been affected by rapid increases
in housing costs over the period shown.
Source: U.S. Census Bureau American Community Survey 1-Year Estimates
Figure 8: Households by Type
Gallatin County
2013-2023
1.3 Airport Activity
The importance of visitor spending in the
economy is also reflected in the growth of
enplanements at Bozeman Yellowstone
International Airport (BZN), the state’s largest.
The much faster trend in passenger volume at
BZN shown in Figure 3 is both cause and effect
of the region’s economic growth. Higher visitor
volumes have increased the size of tourism-
related infrastructure and employment. They
also are a consequence of faster growth in
business-related travel associated with gains in
the high tech, advanced manufacturing, and
other non-visitor related industries. BZN
connects to major urban areas across the
United States and has introduced seasonal non-
stop flights to two additional cities in Southern
California—bringing the total to 25 destinations.
Figure 9: Inbound Passenger Volumes
Selected Montana Airports
2018-2024, Monthly
Source: U.S. Bureau of Transportation Statistics, T-100 Market
11
Source: Census Bureau American Community Survey, 5-Year Estimates
Table 2: Housing Stock Estimates Summary
Gallatin County
2019-23 Average
Source: U.S. Census Bureau American Community Survey, 5-Year Estimates
Figure 10: Occupied Housing Units by Type of Structure
Gallatin County
2023 The composition of the housing stock, shown
in Figure 10, has remained relatively stable in
terms of single-family detached homes, with
their share remaining unchanged from 2022 to
2023. However, notable shifts have occurred
within the single-family attached and multi-
family housing sector.
Much of the growth in multi-family units has
been concentrated in duplexes and structures
with five to nine units, indicating an increasing
trend toward higher-density housing. This shift
suggests that while single-family homes
continue to be more prevalent, developers and
communities are responding to housing
demand by increasing the availability of
smaller, multi-unit dwellings. This shift reflects
a focus on less expensive housing.
2.1 Housing Stock
Newly revised U.S. Census Bureau’s estimates for
local housing stock put the total number of
housing units in Gallatin County at 55,589 in 2023,
as shown in Table 2. Approximately 10 percent of
that number, or 5,558 units, are vacant or
unoccupied. This category includes properties in
disrepair, newly constructed homes, properties
available for sale or rent, and dwellings used by
those whose primary residence is elsewhere
(including vacation homes, short-term rentals,
and timeshares). The group quarters population
(e.g., university dormitories) is also included.
2. HOUSING SUPPLY AND OCCUPANCY
12
An important component of the unoccupied
housing units is those classified as used for
occasion, recreational, or seasonal use. As
shown in Figure 11, this number has been
relatively stable for the last seven years for
which data is available, after growing
significantly prior to 2017.
Figure 11: Vacant Housing Units for Occasional,
Recreational, or Seasonal Use
Gallatin County
2013 - 2023
Source: Census Bureau American Community Survey,
1-Year Estimates
Another category of housing units that has
received a great deal of attention are active
short-term rentals, shown in Figure 12.
Unfortunately, the geographic definitions used
to categorize these units changed significantly
in 2024, making data for that year not
comparable to previous years. The exception is
the data shown in the Figure for Bozeman,
which was provided by the city of Bozeman
and has a consistent geographical definition.
Figure 12: Active Short-Term Rentals
Selected Areas
2019-2024
Sources: AirDNA, City of Bozeman
Source: Gallatin County Mobile Home Park Preservation Program
Table 3: Mobile Homes on Leased Property
Selected Municipalities
2024
In recent years more attention has been paid to mobile homes and the impact that
disruptions to their access to land has had on the availability of affordable housing.
From Table 3 we can get more information on the exposure of Gallatin County
residents of the municipalities shown to this potential threat going forward.
13
Figure 13: Occupied Housing Units by Tenure and Municipality
Gallatin County
2023
Sources: U.S. Census Bureau American Community Survey, 5-Year Estimates
The median year of construction for occupied
housing units in the county is 2001, up from
1997 in 2022, indicating that over half are less
than 20 years old, and the housing stock is
quickly becoming younger (Figure 14).
Figure 14: Occupied Housing Units by Year Built
Gallatin County
2023
Sources: U.S. Census Bureau American Community Survey, 1-Year Estimates
6
Within Gallatin County the share of housing
that is renter-occupied is quite variable, as
shown in Figure 13. The city of Bozeman and
the town of West Yellowstone have relatively
high fractions of renters, while in the
unincorporated balance of the county the
share of housing units that are owner occupied
is the highest.
14
Source: U.S. Census Bureau Building Permits Survey
Table 4: Housing Units Permitted
Gallatin County
2024
For the city of Bozeman, we have more
detailed information on the intermediate
stages to new housing production. As seen in
the lower panel of Figure 15, there was a very
modest increase in the number of residential
parcels of land created in 2024, while the two
new subdivisions created last year was a
marked decrease from previous years.
Figure 15: New Subdivisions and Parcels
City of Bozeman
2014-2024
Sources: City of Bozeman
2.2 Housing Development
Construction in general and residential
construction in particular are a robust part of the
Gallatin Valley economy. Gallatin County has a
higher share of worker earnings in construction
than any other county in the state. Given the
strong employment and population growth in the
region, this is not surprising. But has the
production of new housing been adequate to
service demand? This data sheds light on this
important question.
The total number of new housing units permitted
in 2024 was 1,706, as shown in Table 4. For
residential construction the issuance of a permit
ultimately results in the completion of new units
in a relatively short interval of time. Bozeman’s
permits were predominantly for larger, multi-
family housing units, while Belgrade saw more
permits for single-family housing.
1915
Figure 16: Permitted Housing Units
Gallatin County
Sources: U.S. Census Bureau Building Permits Survey
Costs of construction on a per-unit basis are
influenced by materials costs as well as overall
project scale. Costs as measured by the dollar
value associated with building permits for the
most expensive type of housing, single family
homes, have risen strongly in recent years in
Gallatin County, as seen in Figure 17. For multi-
family housing, particularly for structures with
more than 5 units, the costs are significantly
lower and have exhibited a slight downward
trend.
Figure 17: Permitted Value Per Unit
Gallatin County
Sources: U.S. Census Bureau Building Permits Survey
For the entire county, the response of
residential construction to economic and
population growth has been strong,
particularly for multi-family units, as shown in
Figure 16. There was a noticeable decline in
building in 2024 as higher interest rates, lower
rates of population in-migration, and the
impact of high rates of building in preceding
years influenced building decisions.
16
Figure 18: New Construction Median Sale Prices by Structure Type
Gallatin County
Sources: Big Sky Country Multiple Listing Service
Sources: Big Sky Country Multiple Listing Service
Figure 19: New Construction Sales by Structure Type
Gallatin County
Within the newly constructed single-family
units there are three main types: single-family
detached homes, condominiums, and
townhomes. Trends in prices of these types of
newly constructed units is dependent of
several factors, including demand, location
and type of lot or development, and size and
characteristics of the unit. The behavior of
sales prices in 2024, as shown in Figure 18,
shows sizable variation in how prices behaved
for these different structure types last year.
21
In terms of sales volume, the dominance of
single-family detached home new construction
sales over the other two types of single-family
units has eroded significantly since 2020, as
shown in Figure 19. Perhaps owing to price
concerns, sales volumes of the lowest cost
structure type, townhomes, have risen for each
of the last two years.
17
Figure 20: Housing Price Index
Select Counties
2000 - 2024
Source: Federal Home Finance Agency County Housing Price Index
How markets have responded to these difference forces that influence outcomes is the central focus of this report. We begin
with the owner-occupied side of the marketplace.
3. OWNER-OCCUPIED HOUSING MARKET TRENDS
23
3.1 Sales Price Trends
A useful perspective on price trends for owner-
occupied housing comes from the U.S. Federal
Home Finance Agency’s Housing Price Index
(HPI) for Gallatin and nearby counties, shown
in Figure 20. The index attempts to assess
housing values using repeat sales information
for the same homes over time, and is less
affected by which end of the market is
contributing most to sales at any point in time.
As an index, it measures housing prices relative
to a specific year, which is the year 2000 in
Figure 20.
It is striking how the rapid price growth in
Gallatin County is echoed in other southwest
Montana counties, especially in Park County.
Even those counties considered to be more
affordable, such as Butte-Silver Bow, have
home prices that are more than three times as
high as they were in 2000. Gallatin County’s
price growth has been strongest, with 2024
prices more than four times higher than 2000
levels.
Figure 21: Single-Family Sales and Median Sale Price
Gallatin County
Source: Big Sky Country Multiple Listing Service
Figure 22: Single-Family Sales Per Square Foot
Gallatin County
2018 - 2024
Source: Big Sky Country Multiple Listing Service, BBER Analysis
Of course, the segments of the market that are
most active, and the characteristics of homes
have a bearing on price outcomes. It is useful to
consider the price per square foot of each sale
as a first attempt to correct for some of these
influences. The two panels of Figure 22 show
that the ranges of square footage prices that
contain half of the homes sold – the area
between the vertical dashed lines in each panel
– have moved up considerably since 2018. The
prices in both panels are expressed in terms of
2024 purchasing power, which correct for
changes that are due to overall inflation.
6
Sale price information from the Multiple Listing
Service (MLS) summarize the actual sales
prices, as well as sales volumes, for REALTOR®
assisted sales. The trend in median sales prices
for Gallatin County shown in the top panel of
Figure 21 show a significant deceleration in
price growth. Although the median price of
$810,000 for single-family homes in the County
in 2024 is the highest on record, the relatively
modest 3 percent growth last year marks a
pause in the much more rapid price growth
before 2023.
Sales volumes, shown in the bottom panel of
the Figure, has remained relatively constant
from 2023 to 2024. This reflects the continued
constraints on supply, which have been
influenced by higher interest rates.
19
The distribution of sales volumes by price
per square foot in the four largest
municipalities shown in the panels of
Figure 24 gives more insights into the price
differences between the various
geographies. Bozeman in particular has a
prominent “tail” in the high side of the
distribution, reflecting the number of very
high prices homes that changed hands last
year. This “tail” likely reflects the small
footprint luxury new condo market in
downtown Bozeman, which tend to be
high quality small residences.
Figure 24: Single-Family Sales Price Per Square Foot
Selected Municipalities
2024
Source: Big Sky Country Multiple Listing Service, BBER Analysis
Figure 23: Single-Family Median Sales Prices
Selected Municipalities
2013 - 2024
Source: Big Sky Country Multiple Listing Service
4
There are some considerable differences in
single-family home price trends in the
municipalities within Gallatin County, as shown
from the MLS data shown in Figure 23. While all
prices have registered significant growth over
the last 10 years, the spread between the
highest (Bozeman) and the lowest (Three
Forks) places has widened considerably over
this time.
20
Table 5: Characteristics of Median Homes Sold for Selected Municipalities
2024
Source: Big Sky Country Multiple Listing Service, BBER Analysis
Figure 25: Housing Affordability Index by Household Income Quartile
Gallatin County
2014 - 2024
Source: U.S. Census American Community Survey, Big Sky Country Mulitple
Listing Service, Freddie Mac, BBER Analysis
6
The characteristics of homes, not to mention
the value of amenities, schools, and physical
locations, are important factors in these
price outcomes. Some of the characteristics
of homes sold in 2024 are shown in Table 5.
3.2 Home Ownership Affordability
Home affordability in general involves a
comparison of home prices and income that is
available to support the purchase. Broadly
speaking, as defined by the U.S. Department of
Housing and Urban Development (HUD), the
housing affordability index (HAI) for purchases
of single-family homes compares the monthly
payment for a median priced home to median
household income. A simple interpretation of
the index, shown in Figure 25 for Gallatin
County, is that it is the percentage of the loan
payment a median earning household can make
on the median priced home without becoming
“housing stressed.” Housing stress is defined as
devoting more than an agreed upon fraction of
pre-tax income to pay for servicing housing
debt, typically 30 percent. A HAI of 100 means
that the median house is “just” affordable by
this measure.
Thus, the lower line showing affordability index
for the median earning household hit a low of
39 percent in 2024 means that median earners
fall far short of being able to service a mortgage
payment that a median priced Gallatin County
home would require. The top line depicting the
situation of those earning in the 75 quartile of
the income distribution in Gallatin County
similarly does not come close to affording a
median priced home. Affordability has clearly
declined over the last decade, particularly in the
years immediately following the pandemic. It
remains at very low levels.
th
21
Source: U.S. Census American Community Survey, Big Sky Country MLS,
Freddie Mac, BBER Analysis
Figure 26: Housing Affordability for Selected Municipalities
Gallatin County
2014-2024
Table 6: Single Family Home Sales by Method of Purchase
Gallatin County
2024
Source: Big Sky Country Multiple Listing Service
This situation has spread across the larger
municipalities in Gallatin County, as shown in
Figure 26. Communities like Three Forks had
been very affordable, has gained higher home
values, which means in recent years homes
have becom unaffordable by HUD’s measure.
Declines in affordability are not all due to
changes in home prices, although those
changes are a big influence. The recent rise in
mortgage interest rates has significantly
impacted monthly payments, which is reflected
in the HAI’s shown.
3.3 Housing Finance
The financial community is closely linked to housing markets as buyers seek to finance the home purchase price with a
variety of methods. From the data on the share of each financing option used for the 1,051 single-family homes that were
purchased through REALTORS® in 2024 shown in Table 6, the impact of higher interest rates is apparent. The 6.5 percentage
point decline in the use of conventional mortgages was offset by gains in virtually every other purchase method. The largest
gain in share was cash purchases, which were 2.2 percentage points higher in 2024 than three years ago.
22
Table 7: Rental Housing Stock Summary
Gallatin County
2023
Source: U.S. Census American Community Survey 5-Year and 1-Year Estimates, BBER Analysis
The growth in conventional interest rates is
well known, but the longer-term behavior of
conventional, 30-year mortgage rates shown in
the top panel of Figure 27 makes it clear that in
a longer historical perspective, current rates of
about 6.8 percent are only slightly elevated
from historical norms. As the focused view in
the lower panel of the figure shows, there was
little significant change in interest rates over
the course of last year.
Figure 27: Interest Rates on Conventional, 30-Year, Fixed Rate Mortgages
Source: Freddie Mac Primary Mortgage Market Survey
4. RENTAL HOUSING MARKETS
4.1 Trends in Rents and Vacancies
Bozeman is by far the largest rental market in the region. It accounts for two-thirds of the Gallatin County’s 22,802 rental
units in 2023, as shown in Table 7. Rental vacancy rates in Bozeman are well below the healthy range. On the other hand,
the higher vacancy rates in the only resort community shown in the Table, West Yellowstone, reflect the seasonal and more
transitory duration of rent contracts.
23
Figure 28: Zillow Observed Rent Index
Selected Montana Cities
2020-2025
Source: Zillow
There are two publicly available sources of
rental data used in this report. The Zillow
Observed Rent Index (ZORI), derived from
proprietary data and shown in Figure 28,
indicates continued rent growth through 2024,
but at a much slower pace than the sharp
increases earlier in the decade. This
deceleration in rent growth aligns with recent
additions to the multi-family housing stock
since 2021 and a slowdown in population in-
migration
Figure 29: Median Rent Estimates by Number of Bedrooms
Gallatin Gounty
Source: U.S. Department of Housing and Urban Development
By contrast, rental data from the U.S.
Department of Housing and Urban
Development (HUD), shown in Figure 29,
indicate a sharp increase across all unit sizes in
2024. This divergence between the two sources
stems from key differences in methodology
and timing. Zillow captures real-time rent
changes by tracking units that turn over and
are re-listed on its platform, whereas HUD’s
estimates are based on survey data from the
previous year, adjusted for inflation. HUD data
are more representative of the full rental
market—including all property types and both
new and existing leases.
Although Zillow captured the surge in rents
between 2021 and 2023 in real time, its data
also show that rent growth has since leveled
off. This suggests that HUD’s 2024 estimates
may be reflecting the earlier spike in prices.
While still likely a bit conservative, HUD’s
figures now appear more in line with current
market conditions.
Changes in vacancy rates for rental housing
units shown in Figure 30 are broadly consistent
with the rise in rents. The source of data for the
aggregate vacancy rates shown is the Census
Bureau’s American Community Survey, which
is only available up to the year 2023. Generally
speaking, they suggest that Bozeman
vacancies have remained below 5 percent – the
lower limit of the range of rates that produces a
healthy balance between demand and supply -
- since before the pandemic.
Source: U.S. Census American Community Survey 5-year estimates, Housing
Vacancy Survey, BBER Analysis
Figure 30: Rental Vacancy Rate
Selected Cities
2013-2023
25
4.2 Rental Affordability
The rental affordability index shown in Figure
31 is analogous to the home affordability index
presented previously - it considers the financial
burden that the median rent places on a
median income household. The median
household income is computed separately for
renting households. A similar calculation is
carried out for households earning at the 25th
percentile of the renter households’ income
distribution in recognition of the fact that all
households at all income levels need housing.
Both measures show deterioration in
affordability in 2024, with median renters only
able to afford 85 percent of the median rental
payment without becoming financially stressed
by housing costs.
Source: U.S. Census American Community Survey, U.S Department of Housing
and Urban Development, BBER Analysis
Figure 31: Rental Affordability Index by Household Income Quartile
Gallatin County
2014-2024
Source: U.S. Department of Housing and Urban Development FY 2024 Income
Limits, U.S. Census Bureau American Community Survey 1-Year Estimates, U.S.
Bureau of Labor Statistics Consumer Price Index for All Urban Consumers, BBER
Analysis
Table 8: Renter Households by Income
Subsidized, or affordable housing programs
aim to assist those in need of housing that are
challenged by the ability to pay for it. The
need for such programs is reinforced by the
recognition that behind the overall statistics,
there are a considerable number of
households with low or extremely low
incomes, as shown in Table 8. This income
distribution reflects the fact that in aggregate,
the income of those who rent is lower than
the income of homeowners.
5. AFFORDABLE HOUSING
2626
Unsurprisingly, there are a considerable
number of households in Gallatin County that
pay more than 30 percent of their pre-tax
income on rent, as shown in Figure 32. Just
under 11,000 were considered to be cost
burdened by that threshold in 2023, with
almost half of that number paying more than
50 percent of their income in rent.
Source: U.S. Census Bureau American Community Survey 1-Year Estimates
Figure 32: Share of Household Income Spent on Rent by Percent
Gallatin County
2023
There are a number of programs that are aimed at helping
households with housing costs. In Gallatin County, several
key federal programs are working to address this issue,
including:
Low-Income Housing Tax Credit (LIHTC): A program
designed to encourage the development of affordable
rental housing for low-income households by
providing tax incentives to private developers.
Section 8 Housing Choice Vouchers: A subsidy program
that helps low-income renters afford rental housing by
paying part of their rent directly to the landlord.
Rural 515 HUD-Insured Loans: A program providing
funding for the construction, rehabilitation, and
operation of rental housing in rural areas, aimed at
increasing the availability of affordable housing for
low-income residents.
Moderate Rehabilitation (Mod Rehab): A program that
offers rental assistance for units that are rehabilitated
to meet housing quality standards, assisting low-
income renters.
HOME Investment Partnerships Program (HOME): A
federal program that provides grants to states and
localities to fund affordable housing projects,
including the construction and rehabilitation of rental
housing for low-income households.
The number of households receiving benefits in Gallatin
County are shown in Figure 33. As shown in the Figure, the
number of households receiving assistance is much
smaller than the number of households that are housing
cost burdened (rent exceeding 30 percent of income) or
extremely cost burdened (rent exceeding 50 percent of
income).
Source: National Housing Preservation Database
Figure 33: Rent Subsidies or Rent-Restricted Units
28
This imbalance in terms of the need and the
availability of housing assistance is shown from
the renter’s perspective in Figure 34. There are 9
cost burdened households for every subsidized
unit available in Gallatin County, with a ratio of
4 to 1 for those severely cost burdened. Looking
at the imbalance in terms of inco me, as shown
in the lower panel of the Figure, yields the same
conclusion.
Figure 34: Number of Renters by Income and Housing
Cost Burden Category
Source: National Housing Preservation Database
As the fastest growing economy in Montana reaches the mid-point of what has proven to be an
extraordinary decade, the question of whether the challenges to housing markets resemble the
proverbial glass half full or half empty remains unanswered. This report illustrates how intractable
affordability has been during the years of rapid population growth in our communities.
The forces that shape our housing market are moving towards a new and somewhat frustrating
equilibrium. High housing costs have impacted the rate of in-migration and our demographic
distribution. Which in a context of higher borrowing costs has had a cooling effect on both
appreciation and rental rates but by no means has the nature of our housing market been altered.
We have a lower volume and higher cost marketplace that does not generate near enough
opportunities for attractively priced homes.
The important reality is that all of us in southwestern Montana are in this marketplace together.
Maintaining vibrant, diverse and healthy communities requires us to search for ways for more people
to benefit from the opportunity for home ownership and make rental housing more attainable as
well.
As we move forward into the new year, we can anticipate another force shaping outcomes: changes
in the political landscape. Land use in general and housing in particular have risen to prominence at
all levels of government and calls for action are getting louder. As we wrestle with ways to improve
outcomes, this annual report can inform the dialogue with objective data and systematic analysis.
The Gallatin Association of REALTORS® has invested in this report creation to assist in informing
these discussions and improving everyone's understanding of our multifaceted housing market.
6.
C
O
N
C
L
U
S
I
O
N
29
Elderly
Homeowner/Renter
Credit
Montana Disabled
Veterans Assistance
Program
Land Value
Property Tax
Assistance Program
Property Tax
Assistance
Program (PTAP)
Learn more about these programs and your eligibility at
MTPropertyTaxHelp.com
Montana Property Tax Relief Programs
Each relief program is suited to alleviate the burdens of property taxes for Montanans.
Property taxes are rising quickly, creatingchallenges for many Montana homeowners.
ASSISTANCEPROPERTY TAX
If you're struggling to pay your property tax bill, help is available!
REALTORS® not only advocate for home ownership and private property rights, they help build vibrant communities,
PREPARED BY
THE BUREAU OF BUSINESS AND ECONOMIC RESEARCH
UNIVERSITY OF MONTANA | WWW.BBER.UMT.EDU | 406-243-5113