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Renters displaced by rate hikes as prices escalate in Missoula

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Rent increase

Mackenzie Cole had his rent increased from $590 to $1,100 on his downtown Missoula apartment in May.

Mackenzie Cole could hardly believe his eyes when he read the email he got from his property management company at 10 p.m. on Saturday, May 1, 2021.

Ominously, the subject of the email read, “Rent increase.”

The email stated that in 30 days, the rent on his downtown Missoula apartment was going up to $1,100.

Cole had been paying $590 per month on the two-bedroom place, so that was an 86% increase in just one month. He was shocked, because he’d been living there for eight years and knew that he was now at the mercy of Missoula’s sky-high rental market.

Of course, the rent increase was in line with what a two-bedroom downtown apartment would go for on the open market. New tenants who were willing to pay the price soon moved in.

Cole had been insulated from Missoula’s escalating rent prices for eight years because his elderly property owner had kept prices low. That owner passed away, though, and the new owners realized they needed to spend $30,000 on a new roof.

For Cole, it felt like being uprooted.

“I got pretty emotional about it,” he said. “I think of myself as someone who helps out in the community whenever I can. So I went from someone who was able to save enough money every month to donate to some good causes out there to just wondering how I was going to stay in Missoula where my job is.”

A quick search of available rentals showed Cole that he was facing a tough market, with very few apartments for rent and prices that shocked him.

He recalled complaining to Veritas Property Management that the roof was leaking.

The company responded with the rent increase soon after.

“Due to current circumstances, unfortunately, rents on the property are going through a rehab,” stated the letter from Veritas. “With the continued need for maintenance on an older building, such as this one, and costs such as taxes, which continue to rise, the new owners have no choice but to raise rent.”

Records show that taxes on the property have gone up from $6,529 per year in 2017 to $9,004 in 2021. The complex houses multiple apartment units in two separate buildings.

Cole would have been fine with a modest increase in rent, but he had complained many times about maintenance that needed to be done and had to fix a few things by himself, he said. He also would have appreciated more than 30 days notice.

“Some sort of rental increase would have been understandable,” he said. “Also, I had no real notice to prepare for it. I feel like they were not straight up with me throughout the whole process.”

Jeremy Milyard of Veritas Property Management said the previous owner had been subsidizing the rental rates at the complex because he owned it free and clear.

He tried to warn Cole after the original owner died two years ago that the rent Cole was paying was not going to last because the new owner would have to pay for expensive repairs, he said.

“We didn’t get any response from him,” Milyard said. “He had been paying way under market. I told him this is not going to be lasting. But the new owner has a heavy mortgage and had an inspection done and there’s a ton of maintenance that needs to be done."

Cole disputes that Milyard or his office warned him in advance.

Milyard noted that taxes, insurance and maintenance costs have all surged recently.

"Materials have tripled in costs, labor has doubled, and property taxes are a significant chunk," he said.

The new owner is already losing money because of the $30,000 roof, even with rent increases, Milyard said.

“We all live here, too,” Milyard said. “We feel awful about raising rates and we all hate seeing costs like this. Locals are being displaced. I hate the term ‘out-of-staters,’ but people with more money are coming here from different geographical locations and working online with California wages. They have so much more money compared to us.”

The rental vacancy rate in Missoula fell from about 6% in early 2019 to .38% in the second quarter of 2021, according to Sterling Commercial Real Estate Advisors. In that same time period, the average rent increased from $862 to $1,098, an increase of over 27%.

The median home sales price in the Missoula urban area in September of 2021 was $489,950, an 83% increase from September of 2017, according to the Missoula Organization of Realtors.

Cole’s situation is not unique, as a report on the housing landscape released by the city’s Office of Community Planning and Innovation found that many low-income residents are paying a huge share of their paychecks to landlords.

“Rental affordability remains a critical issue facing the community and is a problem that disproportionately impacts residents with the lowest incomes,” the report found.

There are nearly 8,000 households in Missoula that earn less than $50,000 a year that are paying more than 30% of their income toward housing. And 82% of those households earn less than $35,000 a year.

Cole eventually found a place to live in Missoula, although he said it took a lot of luck.

"And so having secure housing was a bigger deal than I realized when it just disappeared out from under me," he said.

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