Beth Hayes, an attorney in Missoula, decided she was tired of renting this past March and started looking to buy a place of her own. Little did she realize how frustrating the process would be.
“Oh boy,” she recalled. “It seemed like literally within minutes of getting listed, the places I looked at would have multiple offers. It was discouraging.”
Hayes said she looked at between 12 and 15 different houses, and all her offers throughout the spring got rejected because someone else offered to pay more.
“You would see a house listed at $179,000 and you knew you could never get it for that,” she said. “You would have to offer $10,000 more than the listing price. It became a joke. I was basically trying to buy a house a week.”
It’s a story that is not unique to Hayes. A lack of housing inventory in Missoula combined with a rising population and rising wages means that more and more people are clamoring for fewer places to live. It’s an easy recipe for rising prices.
Hayes said in one of the places she rented in Missoula, the landlords would jack up the price between $50 and $100 every year.
A total of 54.3 percent of renters here spend more than a third of their income on housing, and in Missoula, renters make up 52 percent of all occupants.
According to the Missoula Organization of Realtors, rents for all types of housing increased across the board in Missoula by 2.7 percent in 2015.
However, the average rent for a one-bedroom apartment in a multiplex rose from $615 to $664 per month, or about 8 percent. A two-bedroom in a larger complex increased from $752 to $767, or about 2 percent.
Rental vacancy rates are low in Missoula. In 2015, the overall vacancy rate increased slightly from 3.9 percent to 4.1 percent. But Lori Davidson of the Missoula Housing Authority says the rate is now hovering around 3 percent.
That means landlords have all the leverage when they want to raise rents and people have an extremely tough time finding a suitable place to live within their budget, especially if they want a certain location or have pets.
“It’s a jungle out there,” Davidson said. “It’s really tough.”
The national average vacancy rate last year was 7.1 percent and the state average was 3.9 percent. The Missoula Organization of Realtors puts it succinctly: “The vacancy rate would likely have to increase significantly to slow or reverse the rise in rental prices.”
Davidson said the vacancy rate for affordable housing in Missoula, which is subsidized by the government, is virtually zero. Low-income people are given vouchers by the MHA to help them offset market-rate rentals, but even they can’t find places to live.
“For the first time I can remember, voucher holders are having trouble finding places to rent because there are so few available,” Davidson said. “I couldn’t give you statistics, but anecdotally rent prices have gone up 10 (percent) to 14 percent this year.”
Davidson said not enough housing is getting built to keep pace with demand.
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“That’s partly because land prices are so high,” she said. “And not enough land is zoned for multi-family. We’ve been singing this song for 15 years, maybe longer, but it’s never been more true. When developers are actively seeking land to build a project on they are not having luck finding anything. It’s not on the market.”
Mayor John Engen recently announced the hiring of a new city-wide housing director and the City Council is in the process of rewriting some zoning laws. Davidson said she’s hopeful those moves help address the issue, but the bottom line is there needs to be more housing built here.
“We need to add to the stock, there’s no doubt about it,” she said. “The funding sources for building affordable housing are really limited. And many funding sources are competitive at the state level. It’s really hard to compete for those.”
The Housing Authority is in the process of remodeling more than 200 of its units to make them more modern and bring them up to code, but it’s not going to help as much as a new development would. Davidson said her office would be able to start construction on new housing if she could find land cheap enough to make the project pencil out. So far though, that hasn’t happened.
“We are always looking for land that is big enough that we could build,” she said. “But one of the things that can tank a project is not having land. That can kill a project right off the bat. Because you also have the architectural fees and the cost of financing and things like that.”
Davidson said more than 40 percent of Missoula residents could qualify for low and moderate-income housing.
“Something like 30 (percent) to 40 percent of the population is overburdened, meaning they are paying more than 30 percent of their monthly income to housing,” she said. “I saw someone post a picture of a discarded mattress. The caption said ‘home for rent in Missoula for $1,400 a month, bring your firstborn for a security deposit.’ That’s one of my favorite anecdotes because it’s a joke but it rings true for so many people.”
For those who want the stability of owning their own place so they can’t be subjected to evictions or price hikes, the options are limited. Hayes said that her real estate agent, Shannon Hilliard, warned her that it was a seller’s market.
“I knew in the price range I was looking in, stuff would move pretty quickly,” Hayes recalled. “My realtor prepared me for that. But every time I made an offer, it seemed like five or more other offers came in. I tried to buy three houses before the one I actually bought.”
Hayes said the process was draining.
“Everybody said don’t be emotional,” she said. “But you start to envision your life in a house and then, nope, you can’t have it. It was very discouraging. It was kind of depressing.”
More and more people might be tempted to go above and beyond what they can actually afford in a market like this.
“I can see how people would very easily get caught up in ‘what’s another $5,000 or $10,000?’ and go over their budget,” she said.
For a lawyer to have so much trouble finding housing doesn’t bode well for Missoula’s economy if workers decide not to move here due to the tight market.
“If a young professional person has a hard time buying a house, what does that mean for everyone else?” Hayes asked.