What’s the long-term housing growth plan for Missoula?
I have to believe such a plan would have to be joint between the city and county, and there are such plans now.
The MOR has some good insight on the problems developers are having in the Missoula area. For instance, they tell us that the city needs around 300 new homes annually to match population growth, yet the city has not been able to keep up with that.
That’s why we currently have a 1,156-unit housing deficit, which by the MOR’s own estimates, would take us nearly 4 years to build our way out of.
But that’s not quite accurate, because if we wanted to meet existing demand while playing that game of catch-up, we’d really need to be building 600 homes a year, not 300.
How on earth is that going to happen?
I have to believe such a plan would have to be joint between the city and county, and there are such plans now.
- One some people might be interested in is the 215-page 2019-2013 Consolidated Plan for Hud-Funded Programs. Sounds exciting, doesn’t it?
- Another option is the 95-page report titled A Quiet Place to Call Home: Meeting Missoula’s Housing Needs that came out in 2019.
- The Missoula Organization of Realtors (MOR) offers an interesting, 13-page report on their site called 2021 Five Valleys Housing Report.
The MOR has some good insight on the problems developers are having in the Missoula area. For instance, they tell us that the city needs around 300 new homes annually to match population growth, yet the city has not been able to keep up with that.
That’s why we currently have a 1,156-unit housing deficit, which by the MOR’s own estimates, would take us nearly 4 years to build our way out of.
But that’s not quite accurate, because if we wanted to meet existing demand while playing that game of catch-up, we’d really need to be building 600 homes a year, not 300.
How on earth is that going to happen?
The Canyon Creek Village Experiment
I think one strategy is looking to the past to see what’s worked before. That’s why I like the story of the Canyon Creek Village.
The whole project got its start when luxury builder Perry Ashby moved to Missoula from California in 1994. The next year he met county commissioner Barbara Evans and the two began to discuss a large subdivision of quality homes at decent prices.
This was called the New Urbanism form of construction, and by 1998 the two had managed to convince the county to approve new zoning regulations for such a subdivision.
Ashby had already made the ‘model’ community that would form the inspiration for Canyon Creek when he built the 29-unit Bridge Court Village subdivision the same year the county approved the larger Canyon Creek development. The latter called for the eventual construction of 254 homes on 35-acres of land, and in 2000 the project broke ground.
By 2003, 96 homes had been built and plans were in place to put in another 142. They were priced $110,000 to $135,000 that year, and considering that two people usually live in a house, that means around 500 Missoulians eventually realized the dream of homeownership because of this project.
We Must Build More
To my way of thinking, we need to build another 4 to 5 of these Canyon Creek-syle subdivisions.
We can’t price our way out of this problem; we can only build our way out. The more homes we build, the more supply, and the more prices will come down. It’s the only hope for working-class families in this valley.
“It is a solvable problem. A very solvable problem, but it's not solvable in the space of six months or even a year,” UM economist Patrick Barkey said. “What is solvable is that the gap between demand and supply, allowing you to persistently grow year over year. That's a solvable problem.”
A big problem is that people don’t want that level of development ‘in their backyard,’ and we saw that clearly with some larger projects this year, primarily in the South Hills.
The Fate of Hillview Crossing
Unfortunately, large housing starts like the Canyon Creek Village are a thing of the past, and might not be built for years, if ever.
Much of it comes down to the October 2019 decision by the city council to limit future town home developments to 20 units or less. This all came about with the failure of the Hillview Crossing project in the South Hills that year, which was to be a 96-unit mix of housing units and townhomes.
Neighbors got together, said not in my backyard, and pressured city council members to add loads of new conditions onto the project, such as green space, additional parking, and a lot more.
“Those conditions do nothing but increase costs, decrease the likelihood that it will get built, and signal to other developers looking to build housing in Missoula to not bother, because the city’s rules don’t mean anything,” a representative for the Hillview Crossing said after the project had fallen through.
And all of this happened after the project had met all the permitting and regulatory needs set out by the city’s current laws and policies, and a year after it first came before the city council. A year of wasted time for that developer, all for nothing.
And still our housing crisis persits, with no signs of abating.
Increased Building Costs
Building costs aren’t making things any easier. Last year a sheet of OSB building material went for $11. Today it’s $56. To put it another way, last month lumber futures were $1,686/1000 before falling back to $1,400/1000 this month. Last year it was $400/1000.
This has resulted in construction costs for a single-family increasing 184% over the past year, adding $48,000 to a new home’s cost, which in turn affects its tax valuation, ensuring its owner will pay a higher tax bill than normal, and for years.
To absorb these costs, builders are building for the high-end of the market. Sales of homes over $500,000 have increased by 26% this past year. On the other end, sales of homes below $300,000 have reached a 10-year low, at 27% of all home sales.
Housing Hyperinflation
Missoula is suffering just as much as the rest of the state, and country, when it comes to increasing prices for homes, rents, and building materials.
This is hyperinflation, and it’s fueling the immense housing bubble we see across the land.
Nationally, existing home prices are up 24% from this time last year and new home prices are up 18%. Labor and material bottlenecks in the supply chain are contributing to these increases.
What else is contributing? We know that low home prices aren’t a reason to buy anymore, with just 9% of homebuyers listing that as a prime reason to buy right now. The main motivator, at least for 29% of buyers, are the current low interest rates, which many are refinancing their mortgages for or using as an excuse to buy despite the high prices.
On the flip side, those saying it’s a good time to sell have risen to 41%.
Conclusion
Whatever we do, we have to begin building more to relieve the pressure on homebuyers and renters. The price of a home is now over $400,000 and time on the market is just 77 days. Rents have gone up by 9% over the past year, though some report 50% jumps. The rental vacancy rate is 0.4%.
Good businesses are losing long-time workers because these workers are losing their rental apartments and can’t find another one.
Homeowners are seeing huge increases in their home’s value, which results in much higher taxes, a situation that will only get worse when the next valuation comes through in 6 months, or January 2022. It’s going to be a real shock for many.
We can’t price our way out of this problem, and dictating rental and eviction terms to landlords is not a long term solution.
No, we have to build our way out of this hole, and we know that it will take 600 new construction starts every year for the next four years.
And that just gets us back to square one.
Do we in the city of Missoula have the will to do this, to solve this problem?
If we don’t want new townhomes or new apartment buildings ‘in our own backyard,’ then where do we want them? Which areas of town are acceptable for new growth, which are not?
This is a conversation we as a community need to have.
I’m afraid if we don’t, we’ll see so many priced out of the housing market that our businesses can’t find the workers they need. Ultimately, as the 5th oldest state in the union, there simply won’t be enough young people to cater to and take care of the older folks.
This is an existential crisis. Luckily we have the opportunity to solve the situation right now.
