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Rising Home Values and Stable Ownership in Colstrip, Montana: A Coal City's Housing Market
CATEGORY
Property Value
DATA
Percent Owner Occupied
Housing Prices
Median Rent
Population
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Property Value
Percent Owner Occupied
Housing Prices
Median Rent
Population
Colstrip, a small urban center in Montana with a population of 2,501 as of 2022, is known for its coal-fired power plant. The city has experienced fluctuations in its homeownership rates and housing market over the past decade. Colstrip has maintained a high rate of homeownership, with average home prices showing a significant upward trend, particularly in recent years. Average rent prices have also seen increases, albeit with some volatility.
The homeownership rate in Colstrip has remained consistently high, ranging from 81% to 90% between 2013 and 2022. This trend aligns with the trajectory of average home prices, which have seen substantial growth. In 2016, the average home price was $154,027, and by 2022, it had risen to $234,830, representing a 52.5% increase over six years. This upward trend in home prices coincided with a slight decrease in homeownership, from 90% in 2017 to 83% in 2022, suggesting that rising prices may have impacted affordability for some residents.
Federal interest rates have played a role in homeownership trends in Colstrip. The period from 2013 to 2016 saw historically low interest rates, ranging from 0.09% to 0.40%, which corresponded with high homeownership rates of 84% to 90%. As interest rates began to rise more significantly from 2017 onwards, reaching 1.68% in 2022, there was a slight decline in homeownership to 83%. This pattern suggests that lower interest rates may have contributed to higher homeownership rates by making mortgages more affordable.
Renter percentages in Colstrip have fluctuated inversely to homeownership rates, ranging from 10% to 19% between 2013 and 2022. Average rent prices have shown an overall upward trend with some volatility. In 2013, the average rent was $532, increasing to $1,041 in 2018, before decreasing to $802 in 2022. This represents a 50.8% increase over the nine-year period. The fluctuations in rent prices and renter percentages may be influenced by the city's changing population, which varied from 2,268 to 2,632 during this time frame.
In 2023, the average home price in Colstrip reached $246,719, with interest rates at 5.02%. The trend continued into 2024, with average home prices further increasing to $248,347 and interest rates rising to 5.33%. This data indicates a continued upward trajectory in both home prices and interest rates, which could impact affordability and homeownership rates in the near future.
Looking ahead, predictive models suggest that average home prices in Colstrip may continue to rise over the next five years, potentially reaching around $280,000 by 2029 if current trends persist. Average rent prices are also expected to increase, potentially approaching $950 per month by 2029. However, these projections are subject to various economic factors and local market conditions.
In summary, Colstrip has maintained high homeownership rates despite rising average home prices. The relationship between federal interest rates and homeownership has been evident, with lower rates generally corresponding to higher ownership percentages. The rental market has shown volatility in both prices and occupancy rates, influenced by population fluctuations and housing market dynamics. The recent increases in both home prices and interest rates suggest a potentially challenging environment for new homebuyers in the coming years.
