The median cost of a home in Yellowstone County increased 1.9 percent between 2022 and 2023, a marked decrease from recent years, according to data collected by the Billings Association of Realtors (BAR).
But, after a few years of massive price jumps including a 16.1 percent increase between 2021 and 2022 and 19.2 percent increase between 2020 and 2021, homes were 50 percent more expensive last year than in 2019, with a median price of $367,000.
So far, in 2024, 246 homes have been sold, with a median sales price of $358,950.
According to Bob Leach, a local realtor who tracks housing market data, the median family income in Billings is $72,300, making the affordable price of a home somewhere between $143,700 and $237,000. And that’s with 20 percent down, which few first time home buyers even have.
These days, there isn’t much inventory that falls within that range.
Between 2018 and 2023, there was an 85 percent decrease in homes under $200,000, and a 75 percent decrease in homes between $200,000 and $300,000, according to Leach.
Meanwhile, there was a 51 percent increase in homes between $300,000 and $400,000, a 360 percent increase in homes between $400,000 and $500,000, and a 644 percent increase in homes over $500,000.
Yet last year the market showed signs of cooling. It was the first year since 2021 in which sales prices were lower than list prices. Houses also were on the market for longer, with a median of 16 days on the market, compared with 5 and 6 days for 2021 and 2022 respectively.
And there were just 2,115 homes sold in 2023, the fewest number of homes sold in a year since at least 2018. Home sales are down 30 percent last year compared to 2020, according to Leach.
This is partially due to higher interest rates, according to Mikayla Kovash, President of the Billings Association of Realtors.
“We got used to seeing the four percent interest rate, but historically, seven percent is not a terrifying interest rate,” she said.
Kovash said that if buyers hold out for lower interest rates, they may end up paying more in a more competitive housing market.
“Even if they’re paying a seven to eight percent interest rate today, they may be getting a home for 10 percent less than they would in a lower interest rate market,” she said.
NEW HOMES
An additional 1,122 new housing units were built in Billings last year, including 272 single family homes, 94 duplexes, 62 townhouses, and 687 units in multifamily complexes.
This was more units built than in 2021 and 2022 combined. There were no more than 500 residential building permits per year from 2018 through 2022, though the city averaged 675 new units from 2003-2008.
“We’ve been underbuilding for a long time,” Leach said.
There were 2,670 new housing units built from 2020 through 2023. Of these new homes, 44.6 percent were single family homes and 35.6 percent were in multifamily complexes. The remaining 20 percent were townhouses and duplexes.
The city’s Building Division does not track whether multifamily units are rentals or condos, but Jessica Fust, the department’s director, said the majority are rentals.
This is a cause of concern for Leach, who believes there should be more pathways to home ownership, such as building more “entry level” homes, or homes under 1,400 square feet.
There has been an average of just 39 entry level homes built per year in Billings over the past eight years.
Meanwhile, there are 6,791 households in the city on waitlists for affordable and public housing. This is up from 6,200 on wait lists in 2020, according to a report by the city’s Community Development Division.
“There is a housing deficit of over 4,700 units for households with incomes less than 30% of the AMI [area median income],” the 2020 report reads.
And behind all the markets and development is zoning, or the regulations created by the government about what can be built on a given piece of land. The city overhauled zoning in 2021, the first major update in 40 years.
And yet this past January, City Council passed an initiative to explore 10 new zoning changes, including getting rid of minimum parking requirements and encouraging mixed residential/commercial development.
“There have been big changes in the housing market since recode was adopted,” said Councilman Tom Rupsis, who proposed the initiative.
At the state level, zoning changes to promote development that passed through the legislature last year are facing legal challenges.
“I’m not really of the mindset that we should wait for the state to figure their stuff out,” Rupsis said. “This is us taking fate into our own hands.”
