Bozeman Real Estate
Investment Report
A review of investment real estate conditions in Bozeman and southwest Montana for 2022, including market conditions, rent prices, residential outlook, and the global appetite for real estate as an investment class.
On a national level, the rapid real estate appreciation and profits that property investors and managers enjoyed following the pandemic fell back to earth and began normalizing in 2022. Real estate investments faced cyclical headwinds including rising interest rates, declining gross domestic product, and declining deal flows.
Despite those conditions, investing in real estate remains the most sought-after investment globally, and Bozeman remained a strong market throughout 2022. The primary story for Bozeman real estate was strong demand against very limited supply. The number of active buyers was down from 2021, but the underlying fundamentals of the market remained compelling for long-term investors.
Optimism for the long term
The real estate investors Delger Real Estate works with remained optimistic through 2022. There is no immediate solution to the lack of housing in Bozeman, and investors continued seeking quality investment properties with the expectation of sustained growth and strong returns over the long term.
Cash flow pressure
The biggest challenge investors faced in 2022 was the cost of capital putting pressure on cash flow. Inflation drove up property prices while increased financing costs made it difficult to achieve positive cash flow. Rent prices were rising but had not yet caught up to the increase in acquisition and financing costs.
Mortgage rates increased more than 3% in 2022, making it significantly more difficult to find investment properties in Bozeman that generate positive cash flow. Despite that environment, investors with a long-term perspective remained active in the market. As one investor put it: “We will look back in 10 years, and the prices that seem astronomical today will seem like a bargain.”
Real estate is the most searched investment type globally
When many people think about investing, they think of the stock market. But a 2022 global investment report published by Forex Suggest measured which investments received the most Google searches worldwide. Search volume is a reliable indicator of where investor interest and curiosity is actually focused.
Real estate was the most searched investment type globally, with over 1.16 million searches in the prior 12 months. It ranked as the number one investment search term in 11 different countries, including the United States.
| Rank | Investment type | Search term | Search volume |
| 1 | Real Estate | invest in real estate | 1,164,000 |
| 2 | Stocks | invest in stocks | 867,000 |
| 3 | Gold | invest in gold | 850,500 |
| 4 | Cryptocurrency | invest in cryptocurrency | 814,700 |
| 5 | Mutual Funds | invest in mutual funds | 744,500 |
| 6 | Property | invest in property | 717,500 |
| 7 | Crypto | invest in crypto | 560,900 |
| 8 | Commodities | invest in commodities | 443,200 |
| 9 | Bonds | invest in bonds | 377,100 |
| 10 | ETFs | invest in ETFs | 317,600 |
Types of real estate investments
There are several types of real estate investment that investors should be familiar with. Each comes with unique advantages and disadvantages that should be evaluated in the context of your goals, risk tolerance, and available capital.
| 01 | Residential real estate |
| 02 | Commercial real estate |
| 03 | Raw land and new construction |
| 04 | Real Estate Investment Trusts (REITs) |
| 05 | Crowdfunding platforms |
Bozeman residential real estate investment outlook
Delger Real Estate is primarily focused on residential real estate. Quality of life plays a significant role in where people choose to live, and Bozeman continued to be one of the fastest-growing real estate markets in the country throughout 2022.
The median price for single-family homes sold within Bozeman city limits increased 14.4% over 2021 and 109.44% over the five-year period from 2017 to 2022.
Gallatin County remained the fastest-growing county in Montana, growing at more than 37%. Demand for residential rentals was very strong in 2022 and the supply of quality rental properties remained low.
43% of Bozeman households are owner-occupied and 57% are renter-occupied. Statewide, 68% of households are owner-occupied, making Bozeman’s renter-heavy composition unusual and advantageous for rental property investors.
Bozeman rent prices (December 2022)
Rent prices in Bozeman continued to rise in 2022 across all unit types, reflecting the ongoing imbalance between housing supply and tenant demand.
| 1-bedroom | $1,874 | +5% year over year |
| 2-bedroom | $2,150 | |
| 3-bedroom | $2,650 | |
| 4-bedroom | $3,700 | +18% year over year |
Interested in investment real estate in Bozeman?
Contact Delger Real Estate to learn more
about opportunities in southwest Montana.