For the first time in three years, the cost of living in Bozeman has gone down, according to a local nonprofit economic development organization.

Although still 2 percent higher than the national average, Bozeman's cost of living is lower than it has been since the first quarter of 2007, when it was 1.8 percent above the average, according to Prospera Business Network, which released results of the ACCRA Cost of Living Index Tuesday.

From 2007 until now, the cost of the living here has wavered between 3 and 9 percent above national averages, said Stuart Leidner, Prospera's executive director.

"Atypically lower housing costs" contributed most to the dip in cost of living in the second quarter of 2010, Leidner said.

From April to June this year, housing prices were about 2 percent higher than national averages. But in the past three years, they have ranged from 8 percent to 20 percent above U.S. averages.

"Our housing costs, in the past, have been higher (than other areas of the state), simply because there was a big building boom," Leidner said. "With the recession, some of those prices have been pushed down a bit."

Prospera has been tracking local cost-of-living data since 2006, using price data on goods and services gathered at specific points in the year, Leidner said. Prospera then turns the data over to the national ACCRA Index, which compiles such data from 315 urban areas to determine cost of living around the country.

The index is based on more than 90,000 prices for such things as housing, utilities, groceries, transportation, healthcare and other miscellaneous goods.

The index doesn't measure inflation, Leidner said.

"It's a relative set of costs for this particular snapshot in time," he said.

Colette Lang, executive vice president of the Gallatin Association of Realtors, said single-family housing prices have declined for about two years, along with actual sales volume.

But since the first half of the year, they've stabilized somewhat, she said, and so have sales.

Doug East, a sales associate with ERA Landmark Real Estate, went further, saying there was actually an uptick in the number of houses sold in the first six months of the year.

In fact, the number of homes sold on a month-to-month basis in the Gallatin Valley as of June 2010 was nearly double the number sold at the same time last year, he said. This was probably partially attributable to the federal first-time homebuyer tax credit, which has since expired.

Since then, there has been a "precipitous decline" in the number of homes sold in July, East said. This July, 55 houses were sold; in July 2009, 74 were sold.

"We don't know how that trend is going to look going forward, but certainly when you see that kind of decline, you ask questions," he said.

ERA's data pegs the average price of homes in the immediate Bozeman area at about $275,000. That increases the further out from the city you go, he said, and some of the higher-priced properties, averaging $432,000, are starting to move again.

But homes in the $200,000 to $350,000 price range have become the "bread and butter" of the local market, he said, especially in some of the newer subdivisions in Bozeman and Four Corners.

These are homes that are affordable to families with one or two incomes who either can't afford or aren't willing to purchase the more expensive homes, he said.

"I think there's always been a demand for affordable homes," he said.

Plus, more stringent lending regulations have diminished the group of people who can purchase the larger, more expensive homes, he said.

East said ERA doesn't really track national housing prices because the Bozeman market has always been different. Historically, home prices in the Gallatin Valley have been higher than other areas of the country. But Bozeman also avoided the worst of the foreclosures and short sales plaguing other urban areas, although Belgrade has been particularly hard hit by both.

"What we don't know, going forward, as our housing value environment continues to be soft, is whether the (trend noted by ACCRA) will bring us more in line," with the national average, he said. "I suspect it probably will."

Cost of living is one of many factors that employers look at when thinking of relocating or starting a business in a new location, Leidner said. Compared to other participating cities of similar size in the Rocky Mountain region, Bozeman's current cost of living falls somewhere between Laramie, Wyo. (3.3 percent below average), and Bellingham, Wash. (13 percent above average).

Missoula and Kalispell are the other two Montana cities that participate in the study, and each reported an overall cost of living about 1 percent below the national average.

The challenge in Bozeman, Leidner said, has always been maintaining and balancing an attractive business environment and competitive wages with the standard of living Bozeman is known for.

"Obviously, one of our great strengths here is the quality of life we're trying to maintain," he said.

Lauren Russell can be reached at lrussell@dailychronicle.com or 582-2635.

© 2012 The Bozeman Daily Chronicle. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.