The median sales price of a home in Missoula went up roughly 5.1 percent last year to a record $268,250, which means a family would need an income of $70,000 a year to afford it.
In all of 2017, there were only nine detached houses that were listed for under $200,000 at a time when an estimated 6,000 people were looking to buy a house.
Missoula’s lack of affordable housing, relative to the wages that people earn here, has become one of the most pressing issues for the community. That was evident on Tuesday as the Missoula Organization of Realtors and a bevy of other public and private entities presented a study to a crowd of over 100.
In the report, called “Making Missoula Home: A Path to Attainable Housing,” consultant Daniel Werwath laid out the reasons why Missoula has such a housing crunch, as well as specific policy recommendations that he suggests could help alleviate it.
He found that Missoula’s home ownership rate is 19 percent below the statewide average and 16 percent below the national average.
Rental vacancy rates also are extremely low at 2.9 percent, well below the 5 percent mark that economists think is healthy for a stable market to keep prices down and allow people to save up for a down payment.
Werwath said that the county and city government have made some good headway at addressing the problem, but he found that there are numerous reasons why Missoula’s home prices have gone up 32.3 percent since 2010 —and more than 120 percent since 1990.
Among the reasons Werwath found:
• The city has not completely aligned its land use codes with the goals of infill and providing affordable housing.
• There are no standards for private developers to meet community housing needs.
• There is limited land zoned densely enough for affordable development.
• Infill land-use policies are at odds with neighborhood preservation.
• High up-front or uncertain infrastructure requirements.
• Neighborhood push-back to infill development.
• Rising development costs driven by labor shortages and materials cost inflation.
• State subdivision regulations are considered burdensome by builders, particularly in the county without base zoning. And local processes are layered on top of that.
Werwath started the report in March, interviewed dozens of people, collected data from the Multiple Listing Service and surveyed nearly 1,000 people.
He said developers feel that infrastructure requirements are costly and unpredictable, and there is a lack of community-level understanding of housing needs.
He made a series of recommendations and listed several actions that local governments can take, including a deferral of impact fees for units that serve households below the area's median income.
He also said the city and county should consider providing low-cost or deferred loans for infrastructure on affordable housing developments or a waiver of application and review fees for affordable building projects.
Some of his suggestions would clearly take some compromises from the community, such as reduction of parkland set-asides for subdivisions as long as prices are affordable, bonuses for high density designs and reduced street and sidewalk infrastructure requirements.
“The current streets infrastructure in the City of Missoula focuses on a complete streets approach with wide boulevard street requirements,” Werwath explained. “This can place a considerable infrastructure burden on smaller infill projects.”
He recommended convening a study group that includes planners, architects, engineers and builders to assess the ways in which narrower streets and rights of way could be allowed in specific types of developments. He also suggested a reduction in setback requirements and parking requirements, which could allow for denser, more affordable housing.
One of the policies recommended by Werwath was to reduce the fees for accessory dwelling units, which is something the city council and planning board are already looking at doing.
County Commissioner Jean Curtiss said she recognizes that affordable housing is needed for both the people that already live here and the people the city wants to attract to fill new jobs.
“We all recognize that attainable housing is important to families but it’s also important to economic development,” she said. “As we look to new businesses or expanding businesses looking to relocate here, we always hear about the need for a strong workforce and workforce housing. It happens every time. The employees need a place to live and they need a choice of housing types.”
Curtiss said there are “thousands” of approved lots in the county that haven’t been developed.
“Why are they just sitting there?” she asked. “I remember before the recession when there were three subdivisions a week.”
Curtiss wondered if the lots are the wrong size or maybe if developers are hesitant because there’s a lack of infrastructure. She said the county needs to employ land use strategies and update zoning, but the community has to challenge its own assumptions and be collaborative.
“We will have to find a balance between what are often viewed as conflicting family values,” she said.
Eran Pehan, the city’s director of the Office of Housing and Community Development, said housing prices in Missoula are rising “steeply” in comparison to the rest of the nation and the rental vacancy rate keeps hovering around a low 2 percent despite a boom of construction the last two years.
“This report will serve as a helpful tool,” she said. “We are currently working with a diverse group of stakeholders and really just gathering information and talking about what these recommendations mean for our community. So we’re in the first phase of our housing policy development. We’ll use this report to continue our work and reach out to all those community members to figure out how we move ahead.”
The report was compiled with the help of the Missoula Building Industry Association and many others. The full report can be found online at missoularealestate.com/MakingMissoulaHome/.