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They Come by Choice

Publication: Bozeman Daily Chronicle
Date: March, 2007

Although the numbers that generally interest people are the average prices of in-town homes, it is always intriguing to break down the figures further and look at the actual demographics that shape our market. Where do the buyers come from, and why do they come? Since 1984, ERA Landmark has been annually tracking demographic information on sales regarding where the buyers came from and more recently, the use of the property. We will look at the “where” in a moment. The “why” is simple - they come by choice. They follow family members, both parents and children. They follow the dream of small town values, slower-paced lifestyle and independence. They come for outstanding year-round recreational opportunities.

As for the origin of buyers who purchased residential properties in 2006, we categorized them as local (residing in the Gallatin Valley for a minimum of one year), Montana (residing within the state but outside the Gallatin Valley at the time of the purchase), and the out of state buyers were broken down by time zone. Understandably, many of the “local” buyers simply moved here earlier and were not captured in our tracking. So our “out of state” buyers could statistically be lower than reality. For residential buyers, 58% were reported as local with an additional 8.9% coming from other areas in Montana . The Pacific time zone brought in 14.6% of buyers, followed by 6.8% from the Mountain time zone, 5.7% from the Eastern time zone, and 5.5% from the Central time zone. The remaining .8% was from foreign countries. (Totals do not equal 100% due to rounding of some numbers.) The same information was extracted from the Multiple Listing System and the numbers were reported at 74% of buyers from Montana (combining two of the categories above), 10% from the Pacific time zone, 5% from the Eastern time zone, 5% from the Mountain time zone, 4% from the Central time zone, and 1% listed as “other”.

The national trends of the past few years show that nearly 30% of all mortgages are for second homes and investment property. Our marketplace parallels that trend very closely. We analyzed how the buyers use the properties and categorized them as owner-occupied (those who use the property as a primary residence), investment, or second home (property used on a part-time basis only). Of ERA's sales, 70.3% of the homes purchased were owner-occupied, followed by 20.3% being used as an investment property, and 9.4% were categorized as second homes. Of the owner-occupied properties, 64.4% were local buyers. Montana buyers represented an additional 9.6% with the remainder being those moving to the area from out of state. The numbers for investment properties show a bit higher of an out of state influence with 58.8% of the buyers from the Gallatin Valley and 4.4% from Montana , thus leaving the remaining 36.8% as coming from out of state. The origin of second home buyers intuitively shows even more out of state influence with only 32.6% reported from Montana , and the balance from other states.

Similar data was obtained for the Park County market with ERA Western Land 's numbers projecting those for the market as a whole. In Park County , local buyers represented 43% of residential home purchasers with an additional 28% coming from within Montana . Twelve percent were reported from the Pacific time zone, 6% from the Mountain zone, 5% from each the Central and Eastern zone, and 1% foreign. The property use numbers quite closely reflect Bozeman 's numbers with 76% of the properties being owner occupied, 18% used as investments, and 6% for second homes.

The second home market, which has a significant impact on our high-end market, is always an interesting segment to watch. The Baby Boomers continue moving towards retirement with healthy disposable income and significant assets, making them generally less reactive to the changes in interest rates or even real estate prices. This market segment is continuing to expand at even more rapid rates.

Montana and the Rocky Mountain states as a whole are experiencing above-average economic growth with this region containing seven of the nine fastest-growing states. Wyoming , Montana , Idaho , New Mexico , Utah , Arizona and Nevada all have experienced recent economic activity growth at well above the national average due in part to high net immigration and strong job markets. Our area continues to grow and add jobs with our emerging regional health care and retail trading centers, the construction industry, MSU, agriculture and a strong technology sector. Yes, the buyers will continue to come, and they will come by choice.

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