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For a growing number of people, homeownership is simply impossible

WHITEFISH - Terrie Savage looks at her paycheck. She picks up the real estate classifieds. She looks back at her paycheck, picks up her bank statement.

"No way is there enough affordable housing in the Flathead," she concludes. "Housing is high, rents are high, paychecks aren't so high. I've been looking. Even the dumps are way out of my league."

Savage, however, is lucky.

Hers is one of 16 families learning to build their own homes this summer, part of an affordable housing program aimed at leveling the playing field for the working poor. They are the exceptions to the home ownership rule.

Home ownership, that cornerstone of the American Dream, is increasingly out of reach for wage earners in western Montana. It is as Savage said: Prices are high and paychecks are low.

In Savage's neck of the woods, the average price of a Flathead Valley home is nearly $174,000, according to the 2000 census. But it does not take many "starter castles" to skew the average upward.

A better gauge of what her paycheck will buy is the median price, rather than the average. The median price is a true middle ground; half the homes sold for more than the median, half for less.

The median in the Flathead is $126,000, considerably below the average but still well above the means of most locals.

The rule of thumb among state and national housing agencies says housing costs that suck up more than 30 percent of household income are considered a financial "burden."

That roughly translates to mean a family making $30,000 before taxes should not buy a house that costs more than about $90,000.

But in the Flathead, where the median income is $34,400, the median house costs $126,000.

"There is an enormous gulf," said Doug Rauthe, who heads up Northwest Montana Human Resources. His outfit helps people find affordable housing, among other things, and is behind the Mutual Self-Help Housing program Savage tapped into.

"It would be very hard to overstate the affordable housing problem," Rauthe said. "We know from statistics obtained in the last few years that in the Flathead a much higher percentage of residents do not have an income high enough to pay for average housing costs."

Many of the statistics Rauthe relies upon are detailed in the state Board of Housing's five-year Consolidated Plan.

The inch-thick plan sets the stage with a bit of socio-economic history: Montana was sunk in recession six of the 10 years that made up the 1980s, and by 1998 had dropped to 50th among states in annual average wages per job.

In the 1990s, Montana enjoyed "robust expansion and growth," with the statewide population jumping by 10 percent. Thousands of new jobs were created for those new residents.

But "average earnings per job are not faring as well," the report concludes, and wages remain well below the national average even as "poverty continues to grow."

During the years between 1989 and 1995, the number of Montanans living in poverty shot up by 19,500. In 1990, about 12 percent of the state's population lived in poverty. By 1997, more than 16 percent - more than 140,000 people - lived below the poverty line.

In addition, all those newcomers, poor and wealthy alike, needed houses, and under that supply and demand pressure, prices soared.

According to the state report, "the housing inventory does not appear to have grown proportionately with Montana's population and incomes. The implication is that the affordable housing market, whether for rental properties or home ownership, has been constrained."

The impact of growing demand is clearly evident in prices. In Kalispell, where demand has skyrocketed amid a population boom, a two-bedroom rental runs an average $712, according to Board of Housing reports. In Wibaux, where population is decidedly not booming, that same two-bedroom rental averages $146.

Likewise, with 20 percent down, a three-bedroom home in Missoula comes with a $1,000 monthly mortgage. Back in Wibaux, that three-bedroom mortgage is about $265.

"Overall," the report concludes, "the gap between Montana's lower-income citizens and available, affordable and suitable housing continues to grow."

That's especially bad news for the state's elders, as senior citizens are among those most in need of affordable housing. That fact is particularly concerning, Rauthe said, as it brings with it something of a double whammy.

On the one hand, seniors' incomes are not keeping up with housing costs. On the other hand, the number of seniors is going through the roof.

In the next 25 years, the number of Montanans 85 and older is expected to increase by about 98 percent, according to the Board of Housing report. During that same time, those 65 and older will come to make up some 20 percent of the population, compared to 13 percent today.

The combination of an aging population and a lack of affordable housing, according to the report's authors, "raises serious concerns about future implications for our state and federal governments."

Already, some of that anticipated supply and demand problem is being addressed.

"Northwest Montana Human Resources has participated in the preservation and or development of 156 affordable senior apartments in the past four years, with 24 more on the drawing board," Rauthe said.

But still more are needed.

Nationwide, rents are rising at twice the rate of general inflation, and the number of affordable housing units is shrinking relative to the overall population.

Back in Montana, the Board of Housing says, "the number of houses and apartments that families with low-wage incomes can afford to rent is shrinking, burdening more families with high housing costs and threatening many with homelessness."

Of course, in places like Wibaux, price is not a problem.

Not so, however, in Savage's neighborhood.

Flathead Valley home prices are among the highest in the state, and resort towns like Whitefish are the highest of the high.

In Whitefish, the 2000 census pegged median income at $33,000 - well above the state average. But some 20 percent of residents make between $15,000 and $25,000. A full 12 percent make less than $10,000.

Yet the median price of a new home is a quarter million dollars.

No wonder, then, that one-third of the community's residents live with a housing "burden," according to the census, paying more than 30 percent of their income to the bank or the landlord.

In these sorts of resort towns, however, the price spike often has less to do with a population boom and more to do with big prices attached to big resorts like the Big Mountain.

In fact, population in Whitefish's blue-collar neighbor Columbia Falls grew by 25 percent during the 1990s, compared to just 15 percent growth in Whitefish. Yet housing costs twice again as much in Whitefish as it does in Columbia Falls, proving that not all jumps in land values are the result of population pressures - some have more to do with what real estate agents like to call location, location, location.

Last month, the Big Mountain announced it would become part of the solution by building 10 affordable apartments, with perhaps 20 more later if there was a need.

The one- and two-bedroom apartments will rent for between $350 and $560 per month, a price tag Rauthe says falls well within the affordable range.

The local weekly newspaper commented on the 10 new units in an editorial, noting that affordable housing "wasn't a priority in the early 1990s, when it seemed unlikely the housing crunch experienced by places like Aspen or Vail, Colo., would ever happen in Whitefish.

"Slowly, but surely, the same dilemma has developed here."It has developed, some argue, because the same outfits that developed Colorado's big resorts have in more recent years been developing the Whitefish resort.

Not long after the Big Mountain announced those 10 affordable apartments to be built by an Idaho developer, the same Big Mountain press office announced that international real estate developer Hines Resorts had sold more than $35 million in single-family home sites at the resort in the past year and a half.

The Houston-based Hines has developed real estate at a number of Colorado resorts, and is currently involved in a $300 million project at the Big Mountain. Other recent sales on the Mountain included 46 condominiums built by Seattle-based Callison, one of the largest architectural firms in the nation, and five "townhome" sites, built by one of Australia's largest real estate companies, Walker Inc.

The architects and developers and real estate firms all work with Hines, an international company with more than 2,800 employees and assets in excess of $13 billion.

A Big Mountain press release heralding the $35 million in recent land sales notes that those sales came amid record regional real estate sales that totaled half a billion dollars in 2002, or a 20 percent increase over the previous year.

The release goes on to note that the folks buying the Big Mountain lots are "both traditional second-home buyers and affluent primary buyers who are relocating from major metro areas for quality of life reasons."

In other words, out-of-state firms are developing land for out-of-state buyers who want a bit of the local quality of life, while locals are increasingly unable to participate in that quality of life.

Many in the affordable housing business have stepped up to applaud the Big Mountain's efforts, including Whitefish City-County Planning Board chairman Mike Jopek. His planning board recently held a half-dozen work sessions to draft local zoning that includes affordable housing initiatives.

"Big Mountain is among the first businesses in Whitefish to acknowledge the need for work force housing," Jopek said. "Good for them for following through on their overall development plan with this initial construction of affordable housing."

Jopek, however, remains concerned about the future impacts of the resort on affordable housing. Currently, he said, the resort's internal development plan includes affordable housing requirements. That plan, however, is being updated, and he worries the affordable housing clause might be dropped.

"If you examine what happened in Aspen and Vail," Jopek said, "you see that it happened in one decade. In 10 years, they went from a median home price of $225,000 - right where we're at - to median prices well over a half-million dollars. We have 10 years to get this housing situation under control. After that, we're toast. It's too late."

The problem, he said, is "as they develop these high-end resort neighborhoods, they're driving up the whole market. It's happening so fast, no one can get out in front of it."

The last two years, he said, saw $92 million pumped into new construction within the Whitefish city limits.

"You can't keep ahead of a curve that steep," he said.

So while Jopek applauds the resort's affordable housing announcement, he also acknowledges it falls far short of the mark for meeting demand. And he is not alone in that criticism.

It is not difficult to find, along Central Avenue in Whitefish, any number of locals who wonder why, with such booming real estate sales, the developers could find room for only 10 affordable apartments. It is not difficult to find people who believe the international resort developers are the problem, not the solution.

"They're all about money in a town that never really had any money," said Amy Reynolds, who used to work for the resort, pulling in no more than minimum wage and sharing a three-bedroom rental with her daughter and five housemates.

"If they can sell a ski-in, ski-out lot for a million," she said, "then the high prices just trickle down the mountain. Five years ago, the house we rented sold for $85,000. Now, it's for sale at $155,000. That's an old house downtown with no yard, no trees."

And so Reynolds and her new husband are moving to Columbia Falls, a quiet town 10 minutes away where housing costs can be about half again as cheap.

The Reynolds' are one of many young families leaving Whitefish for Columbia Falls to escape high prices, and they are among those who will commute back to Whitefish for work. That trend has local planners nervous, as it results in increased traffic, increased parking problems, increased school funding inequities and increased housing demand in outlying areas, which will only push prices there higher.

Those planners took their concerns to the recent Montana Legislature with proposals to get a handle on affordable housing, especially in places like the Flathead. One bill aimed at making discussion of affordable housing a required part of subdivision review. Another would have created a "blue ribbon" panel to explore the state's need for affordable housing.

Both measures died.

Previously, the last special session of lawmakers drained all the cash from Montana's affordable housing revolving loan account, and a subsequent Legislature killed a bill to allow Treasure State Endowment funds to be used to build infrastructure (sewer, water, roads) for affordable housing projects.

"We need something better than that from our leaders," said Tim Davies, executive director of the Montana Smart Growth Coalition. "There's a tremendous supply and demand problem, and it's only getting worse. There's nowhere near enough affordable housing in Montana. Should an old railroad town like Whitefish become exclusive to the very wealthy?"

Already, an estimated 15 percent of Whitefish workers cannot afford to live there, and Jopek predicts a labor shortage if the trend continues.

Asked Davies, "Should communities become isolated so people who work there don't live there? Should senior citizens wait years for an affordable apartment? How long until Columbia Falls becomes unaffordable? Should average Montanans be priced out of every desirable town, the same town they built and worked in?"

Davies' questions do not, of course, come with firm answers.

Developers rightly point out that they would earn less money building affordable housing, and make no apologies for asking whatever the market will bear.

And there can be no doubt that all the wealth flowing into towns like Whitefish has brought with it community amenities - a new community center and a riverside park and an ice rink and soccer fields and a library and a soon-to-be-built swimming center.

Most were built by way of the generosity of the newly arrived wealthy. Some of those people had previously donated to community causes in other resort towns, their former hometowns in places like the Colorado Rockies.

They left those places as the quality of life deteriorated, and, in the words of the local editorial, "Slowly, but surely, the same dilemma has developed here."

Whether the solutions also will develop here is yet to be seen.

In Telluride, Colo., for instance, a half-cent sales tax is earmarked for affordable housing. In other places, city law requires developers building a certain number of units to make a percentage of those units affordable as defined by local statute. Other towns use tax credits to prompt developers to build affordable housing, while others put a special tax on second homes and vacation rental properties, using the revenue to fund affordable housing.

Some of those same communities come at the problem from the other direction, as well. When a new business comes to town and wants an incentive package from the community, the town in turn requires the business to offer solid wages and affordable employee housing.

Similar ideas have cropped up in places like Whitefish and Helena, but so far have failed to take root.

"There are a growing number of agencies and developers working on Montana's affordable housing problem," said Rauthe, whose outfit has been chipping away at it for 25 years. His agency has built apartments and houses, units for seniors and for families. His agency has partnered with federal, state and local governments, with developers and with banks and finally with the families themselves.

Most recently, he has partnered with the likes of Terrie Savage, who, despite the gulf between her paycheck and housing costs, plans on being in her own home by year's end. But make no mistake - she remains the exception that proves the rule.

"We're building eight homes," Savage said of her affordable housing program. "We could build 800 and fill every one. I don't need studies and statistics to tell me that. All I have to do is look around at my friends and neighbors. We just don't have anywhere near enough affordable housing for Average Joe in this state."

Reporter Michael Jamison can be reached at 1-800-366-7186 or at mjamison@missoulian.com

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