A 2020-2025 Montana migration story
Illustrating what, where, and why people came to Montana, how the real estate market reacted, Bozeman's growth spurt followed by vacancies, and what’s next.
Southwest skyline of Bozeman, MT from the Kimpton Armory Hotel surpassing the height of 130 ft Hotel Baxter
The Bozeman boom coincided with Covid-19
In 2020 the coronavirus ran its course inspiring some to flee their home cities, attracted to the culture of freedom and lured to open spaces, here they came! This article was the result of my Montana migration curiosity coupled with a phone call conversation with a property manager mentioning they currently have record vacancies. Today, we’ll cover why Bozeman boomed, how many people are really here, what happened in the real estate/rental market from 2020 through 2025, vacancies, and what's next?
Migration
April 2024 Bozeman Montana grew so large that it changed its classification from “hidden gem” to “metropolis”. The U.S. Census employs a unit called a metropolitan statistical area (MSA) which includes either (1) a city with a population of at least 50,000. Given this metropolitan definition provided by the U.S. Census, Bozeman was officially reclassified. As a result, I-90 between Belgrade and Bozeman lowered the speed limits from 80 to 65.
Bozeman wasn't the only Montana city that boomed. Take a look at the chart below comparing some staple Montana cities. Over the last 5 years from 2019-2023, Billings grew 10.14%, Bozeman 17.04%, and Kalispell 22.78%.While the entire State of Montana welcomed an additional 62,689 residents growing 6.51% over that timeframe, that’s enough to fill 2.5 Washington-Grizzly stadiums.
Neilsberg - Montana Population by year
The student body population of Montana State University stayed relatively fixed and set a record Fall 2024 with a total enrollment of 17,144, up 895 students from the Fall 2020 enrollment of 16,249
Where’s everyone coming from?
According to a Stacker article titled “States sending the most people to Montana” and “Where people in Montana are moving to most” published February 22, 2024, Montana receives more residents from Washington than any other state. Montana’s that leave the state favor Arizona.
Why did people start flocking to Montana/Bozeman?
What were the primary reasons people packed up and moved here? Lets focus on remote work, outdoor recreation, Yellowstone, jobs, coastal quality of life, and why not.
Increase in remote work. Now settling some as many employers are calling their employees back to office.
Spike in outdoor recreation throughout the nation from 100M to 150M participants over 3 years. What better place to play than in Montana?
Outdoor Industry Association - Outdoor Participation Trends Report
Other reasons include..
Yellowstone (American TV series) first premiered June 20, 2018. (wiki)
Job boom in the construction, education, and tourism sectors. (Indeed)
Restrictive Covid policy, high taxes, crime, in larger out of state cities inspired many Montana newcomers
Montana is cool, no source needed
Now that we covered the 21st century Montana pilgrimage, let's find some bunks for these folks and figure out how the housing market and builders reacted.
Housing Market
2020 sparked a housing boom in Bozeman, new units were erected in the West side of town faster than a badger can borrow, 19th avenue became a primary artery, downtown became a corridor for high end boutique shops and mixed-use developments, mom and pop restaurants were leveled making way for condos, outdated homes in attractive neighborhoods were selling for seven digits, a farmer now plows their field next to a 5 story apartment, and wow things happened fast. This section will cover the topic of costs, units, multi family, and vacancies.
Classic example of some downtown development. Homeowners holding on for dear life until an offer is indisputable.
Here's a snapshot of Bozeman’s 2x real estate market in less than four years. We have been stuck in a sideways trend since hitting a first peak in February of 2022.
(Bozeman Real Estate Group - Data provided by the Big Sky Country MLS)
What contributed to the Bozeman real estate price spike?
Inventories of homes for sale continue to be extraordinarily low across the county, resulting in lower volumes of sales and escalating prices.
Developable lots saw prices surge by 84% in 2021, due to high demand and continued low levels of new lot creation.
Conventional mortgage rates averaged less than 3% during 2021 as the Federal Reserve Bank pursued a highly stimulative monetary policy. These rates are lower than anything experienced in the past 50 years.
(2022 Gallatin Valley Housing Report)
What’s happening in the building space?
Here's the market's reaction to Bozeman's housing shortage in terms of units of production. The most notable trend is the decrease in single family builds and the increase in multi family builds that started around 2020 enough so that multi family became a tracked metric in the table below starting in 2021.
Between 2019 and 2020, multi-family building permits exceeded single family permits for the first time in Bozeman history, a trend likely to continue.
2023 GAR Housing Report data - Figure 2.6 Permitted Housing Units, Gallatin County
Multi family glut coming home to roost in 2023
Large quantities of multi-family units started to drive prices down for renters hitting a form of price stabilization transitioning from a landlords market to a renters market around the Fall of 2023. Here's a few excerpts from Sterling Creadvisors in an article titled Big Changes in Bozeman’s Housing Market written March 13, 2024 regarding Bozeman’s current multi family inventory levels.
“Bozeman’s multifamily vacancy rate inched its way over 7% in the 3rd quarter of 2023. Vacancy rates will likely continue to rise as 1,476 units are under construction in the market. Rents are dropping and concessions are picking up, as the market shifts from a landlord’s market to a renter’s market.”
“With a full development pipeline, the vacancy rate in Bozeman is expected to climb. How high the rate gets will depend on the delivery timing for the units under construction. Based on the recent pace of absorption, it could take more than 2 ½ years to lease up the units currently under construction. A continued drop in rental rates or an increase in demand could speed the process.”
“For developers and owners, particularly of new properties, it could be a difficult time. Ongoing growth in Bozeman and delays on projects in planning should allow for a return to more normal market conditions. But, for those who used underwriting assumptions based on the extraordinary conditions of 2020-2022, it may prove difficult to recover.”
At what levels are rents projected to settle?
The 2023 median rental price dropped significantly year over year topping off at $3,250 falling 23% from its February highs bottoming out around $2,500 in December of 2023. Throughout the year 2024, the median rental rate remained stable between the $2,250 to $2,500 within range of 2023’s December lows. Bozeman’s rent at the time of this article written December 2024 hints at a balancing point around the $2,250 price point. I’ve also heard of property managers advising landlords against raising rent throughout 2024. 2021-2023 it wasn’t uncommon for tenants to receive notice of rent increase letters in the mail.
Zillow Rentals - Bozeman, MT Rental Market
Temporary glut in multi family drives record vacancies
From 2010-2021 Gallatin Valley has maintained a vacancy rate below the 5% range bottoming out at 3% in 2019. ACS data indicate vacancy rates well below the 5-8 percent range considered healthy in Bozeman.
Record high vacancies in 2024
It’s not unusual to have vacancy cycles around Bozeman. October-Holiday is considered to be a pre-winter get outta town cycle and the second occurs in May when MSU classes adjourn. The ERES published two numbers at the first half of 2024 in the ERES Market snapshot of Gallatin County report painted a clear picture of vacancy that goes beyond seasonality.
Bozeman has a few more years to work out its glut of multi family, people will continue to come and go and Bozeman will likely continue to grow. Lets put on our 20 year lens taking a peek at the Gallatin County Population Projections through 2045.
Envision Gallatin Growth Policy Study adopted September 21, 2021
How will Montana fill in?
It’s difficult to speculate on the future of Montana population growth however it might be easier to map out where these populations will expand around. The maps below show population density by square mile for US Census blocks for 1990 and 2020. Green indicates a density of between 1-25 people per square mile, purple from 25-500 people per square mile, and yellow is over 500 people per square mile. White spaces indicate no persons in the Census block.
People will continue to be attracted to the State of Montana until the Yellowstone volcano is forecasted to go. Quality of life and traditional Montana values will change some as it embraces the gradual immigration of I generation frontiers.
Thanks for taking the time to read! If you liked this content, I strongly encourage you to check out the Bozeman Build Report, a newsletter sent out every Monday covering Montana business and blue collar news, visit bozemanbuild.com to subscribe, its free.
Finger wave - signing out,
Daniel - Bozeman Build Author and operator of Blockbiome.com