New Year, New Real Estate?

By Tim Ford, Real Estate Broker

Happy New Year! I hope that 2021 treated you well and that the 2022 will treat you even better. Many will use the New Year as a time to make some new goals to improve their life. While weight loss or fitness goals are common, perhaps its time to look at what resolutions would help foster a new real estate purchase. Whether one is renting and hoping to get into homeownership, or for the homeowner that is hoping to get into investment real estate, the steps and resolutions are very similar.

The first resolution along the journey to a real estate purchase should be to have one’s credit score checked. If its low, start making a resolution to improve it. For someone with low or no credit, this can sometimes take months, so getting started on it early is crucial. The resolution to check, monitor, and improve one’s credit score can help in more areas of financial life than just mortgage approval and the efforts will be well worth it.  

If affording that real estate purchase seems daunting, it may be necessary to track or organize one’s finances. Whether it’s simple or detailed, make a resolution to know where all the money is coming from and going to each month. Are their items that can be removed or cut back on?

Similar to a business, there are two ways to add to the bottom line; decrease expenses or increase income. While expenses are often easier to change, the other lever that can be pulled is income. Perhaps this is the year to make a resolution to make more of it. Are their certifications or additional educational opportunities that can boost one’s income? Are there extra shifts or side businesses that can help add to the take home?

One idea that is helping a lot of millennials is often called “house hacking”. A new name for an old concept – which is getting roommates to help pay the mortgage payment for the first few years. While the extra income may not help qualify for a mortgage, it will definitely soften the monthly outlay.

Once the finances are in order, its time to start saving for that down payment. Generally, a borrower or homebuyer will want to plan on putting down between 5% and 20% of the purchase price. The larger the down payment, generally the better the loan terms will be. When looking at non-owner-occupied investment real estate, plan to put down between 20 and 25% of the purchase price. If finding enough money each month to add to the savings is tough, it may be necessary to go back to resolution number two. Are there any other subscription services, memberships, or luxury expenses that can be cut out? Consider setting up an automatic transfer into a separate savings account to put the savings on auto-pilot.

After one has resolved to start saving for the down-payment and they have their finances in order, take the next step and meet with a lender. This step has become very simple and can be done almost entirely remotely with a lender you trust. Getting pre-qualified might not sound like the fun part, but starting this process early can really help to move the needle forward on the home buying journey.

As usual, I have included data for the number of homes sold in Bozeman during the first 11 months of 2021. In addition to the 910 homes sold during this time period, another 97 homes are currently pending, or under contract, as of the date of writing this article.

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, Condominiums, or Townhouses. 

2021 Real Estate Market Data

January 1st through December 1st, 2021

Single Family Homes

  2019 2020 2021
Total Sales – Bozeman 935 1058 910
Median Sales Price $495,000 $580,000 $750,000
Average Sales Price $601,768 $729,498 $972,618
Average Days on Market 68 57 20
Median Days on Market 20 15 6

Total Sales – Bozeman

Single Family Homes

January 1st through Dec 1st

Year # Homes Sold
2004 697
2005 765
2006 615
2007 519
2008 485
2009 428
2010 479
2011 552
2012 684
2013 779
2014 819
2015 953
2016 1009
2017 930
2018 953
2019 935
2020 1058
2021 910