Bozeman economy slowing, but not in hot water

By DANIEL PERSON Chronicle Staff Writer

Bozeman’s economy is slowing, especially in construction and real estate, but the area is well positioned to weather the downturn: the banks are still solvent, storefronts are still open and housing prices are not tanking.

That was the general assessment given by bank, business, construction and real estate managers at a Thursday-morning Bozeman Area Chamber of Commerce conference that explored how Bozeman is faring amid gloomier and gloomier national economic outlooks.

“We’re just going through a business cycle. Life will go on. We’ll get over it,” Bruce Gerlach, executive vice president of First Security Bank, told a packed house at the conference. “Life is not as bad as some tell you it is.”

Gerlach said the media attention heaped on troubled areas, and troubled banks, in the United States has exaggerated the severity of the slowdown. Although the federal takeover of IndyMac n a giant bank in California n has many in the country questioning the solvency of their banks, Gerlach said there was little to be afraid of in Montana.

According to one recent analysis, Gerlach said, 99 percent of Montana banks are “well capitalized.”

“Depositors should remain confident,” he said.

Shops in downtown Bozeman, too, are for the most part doing well, Chris Naumann, executive director of the Downtown Bozeman Partnership, said.

“Downtown is doing well despite the national economy,” he told the group. “We’ve seen considerable reinvestment in the downtown area.”

He cited the remodeling of the Baxter Hotel, including the opening of Ted’s Montana Grill, and noted that attendance at downtown gatherings like Music on Main is far surpassing that of years past.

Earlier this year, a Chronicle story profiled downtown business owners who said they had struggled since heavy renovation n which included new street pavement, crosswalks and stoplights - closed Main Street to traffic for most of last summer.

But Naumann said downtown businesses will always vary in success, even in the best economic times. Plus, he said, the benefit of last summer’s renovations outweighed the hardships endured by all downtown businesses during the renovations.

Nevertheless, construction and real estate, two powerful engines in Bozeman’s economy, are slowing, managers in that field said.

The number of building permits issued in Bozeman has dropped 44 percent this year, a clear sign that people are building less, Claire Daines, owner of Claire Daines Construction, said.

And June house sales at ERA Landmark have dropped 40 percent since 2006, from 148 sales that year to 81 this June, Denise Andres, an ERA real estate agent said.

The upside of the slowdown, Daines predicted, will be that land and housing price inflation will ease.

However, Andres said that, so far, housing prices had not dropped in proportion to the reduction in sales. Many sellers are willing to take their homes off the market or turn them into rentals rather than cut the sale price.

Daniel Person can be reached at dperson@dailychronicle.com or 582-2665.

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