Economic recovery in 2021 didn’t help Montana’s housing crisis

‘You can’t have 10% population increase and 7% housing increase and not expect a shortage’

By: - February 2, 2022 5:40 pm

Affordable housing illustration (Flickr/CC-BY-SA 2.0).

Industry leaders and economists have been on something of a roadshow to cities across the state this winter with a singular message: Poor housing affordability continues to dog Montana and Montanans into the third year of the COVID-19 pandemic, even amid economic recovery in other areas, and when relief might come isn’t clear.

It’s a problem that the state could have seen coming, contends Abigail St. Lawrence, a land use attorney, lobbyist for building interests and the keynote speaker at this year’s annual Economic Outlook Seminar, an event hosted by the Bureau of Business and Economic Research at the University of Montana. For its 2021-2022 series, the multi-city event has focused on what’s become one of the state’s signature problems: housing.

For years, Montana has seen rapid population growth — 10 percent as a state between the 2010 and 2020 U.S. Census, and much higher in areas like Gallatin County — but hasn’t built the homes to catch up, only increasing the number of housing units by 7 percent in the last decades, St. Lawrence said. The result is an obvious one.

You can’t have 10 percent population increase and 7 percent housing increase and not expect a shortage,” St. Lawrence said on Wednesday at the seminar’s stop in Bozeman — a community with a whopping 6,000 unit housing deficit.  

When COVID hit, the gap between growth and housing supply became more readily apparent, she said: tourists once expected to spend money and leave decided to stay, and corporate relocations and remote workers snapped up stock in desirable markets. In the background, the number of households has gone up, while the number of people in an individual household has decreased, spreading more people across a limited number of homes; meanwhile, the number of homes purchased as investment properties has increased nationwide.

But so far, the steady march of growth in Montana has not stirred development significant enough to accommodate the need for housing, nor have wages kept up with the increased cost. In 2019, many of Montana’s high-growth western counties, including Gallatin and Missoula, saw median housing costs that were more than 50 percent of the area median household income, according to data shared Wednesday by Patrick Barkey, the director of BBER — and that’s before the strain brought on in the ensuing two years.

It’s in Bozeman and the surrounding communities where this crunch has perhaps been most acute. Prices increased 41.2 percent in Three Forks between 2016 and 2020, according to Barkey, and by 36 percent in Bozeman and 34 percent in Belgrade over the same period. Even with massive population gain in 2021, new housing starts only gradually increased, he said, and the number of home sales declined from the previous year.

What we anticipate seeing more of, unfortunately, is a lot more people without housing,” said Heather Grenier, president of the Human Resources Development Council of Bozeman, during the event Wednesday. “Unless something shifts, we don’t see that changing.”

Grenier said community development organizations like HRDC are investing what resources they have into creative solutions — converting existing properties like hotels to multifamily housing, for example. But those are only half-measures without a dramatic increase in supply.

She pointed to federal emergency rental assistance funds that many small states, including Montana, had difficulties actually distributing, as another illustration.

“There was a significant amount of rental assistance dollars to the state of Montana, but the problem is there’s no housing units available for people to get in and pay rent,” she said. 

Population growth in the state is here to stay, St. Lawrence argued, and it’s up to Montana communities to accept that and shape a sustainable future by building more and more diverse housing. She pointed to a lack of supply and a reticence towards development as key culprits, and called for more openness to new neighbors and new types of housing at all market segments.

“We need to embrace density, we need to embrace infill, we need to embrace housing at varying income levels, we need to embrace different ideas of how we are regulating and reviewing housing,” she said. 

Until some relief comes, the price of housing will continue to be a limiting factor on Montana’s economic health, at least for the growing number of people in the state who don’t already own their own homes, Barkey said. It will limit economic development, mobility, the ability for low and medium-wage earners to work in the communities that need them and more, he said. 

High housing costs are an engine of economic inequality,” Barkey added. “In a manner of speaking, older people are getting richer and younger people are getting poorer.”

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Arren Kimbel-Sannit
Arren Kimbel-Sannit

Arren Kimbel-Sannit is an Arizona-bred journalist who has covered politics, policy and power building at every level of government. Before getting his dose of northern exposure, Arren worked as a reporter in all manner of Arizona newsrooms, for the Dallas Morning News and for POLITICO in Washington, D.C. He has a special interest in how land-use decisions affect working-class people, which he displayed through reporting on the epidemic of pedestrian deaths in the U.S. for the Los Angeles Times and PBS Newshour. He's also covered housing, agriculture, the Trump presidency and more.