Montana needs more affordable housing units, and the Villagio, pictured here, and Trinity both opened in 2023, together bringing 402 new homes to Missoula. (Keila Szpaller/The Daily Montanan)
BOZEMAN — It’s not in the Bible, but it might as well be.
If Montana’s affordable housing has vanished, it has many different reasons, but there’s still one thing that most local and state leaders can say for certain: Whatsoever a city zones, the city gets.
Missoula Mayor Andrea Davis, who spent more than two decades advocating, researching and planning affordable housing projects before becoming mayor, said that her city, which has become the epicenter and poster child of Montana’s affordability conundrum, has to own its part of the blame.
For years, the city focused on single-family homes, gobbling up more land in the valley hemmed in by mountains, while options for multi-family units or rejuvenating Missoula’s beloved downtown languished.
Simply put, it wanted single-family suburban housing; Missoula zoned it; and that’s what it has currently: A number of larger, stand-alone homes in neighborhoods with streets named after what once stood in those places.
The median home price in Montana’s “Garden City” is pushing nearly $1 million, while the average median household couldn’t afford half of that price. The various reasons for the lack of affordable housing seem lengthy, and the solutions seem more sparse.
But Davis doesn’t seem fazed because she has zoning and recent history on her side — clear examples of the things Missoula, and by extension, other cities can do to help change the local dynamics of unaffordable housing.
In the zone
Most people’s eyes glaze when officials talk about zoning — a series of complex rules that seem to govern everything from where a house can be built to what color the house is painted.
But Davis points out that zoning has played a huge role in the housing crisis. In 1932, 75% of Missoula was zoned for housing that included multi-family dwellings, which encompassed apartments, as well as housing connected to business. Only 15% of its space was zoned for single-family houses.
Ninety years later, only 14% of the land was zoned for multi-residential, while nearly two-thirds of the space was zoned for single-family residences or lots that had no more than a duplex.
That has translated to huge demand for things like apartments and condos, as inflation and property prices rose, with virtually no way to meet the demand. Rental prices in Missoula increased 88% from 2017 to 2024.
But because the cost of living had outpaced any incremental gains the workforce was making, it began to become clear to Missoula what the result would be: Fewer workers, overpriced housing, and a diminished work force.
“We’ve lost our labor force,” Davis said.
The median home prices increased even more, as housing prices rose 110%, from $268,000 to $563,000, in the same period, meaning that single-family housing was also moving out of range. Meanwhile, after an influx of residents, spurred largely by the COVID-19 pandemic, the population of Missoula rose 10% while the inventory of housing rose just 7%, widening the gap.
The good news
Davis said the statistics were clear to Missoula city leaders: It wasn’t just single-family residences that were struggling. The city was in danger of losing its workforce, too.
But, surveys of younger residents, many of whom were just entering the workforce, showed a renewed interest in downtown urban areas, less of a desire to own a single-family residence, and a willingness to limit vehicle or travels, if amenities like public transportation were nearby.
While the gap between what the average resident could afford in a home far outpaced the median household income, rents were still close enough to make a difference, Davis said. For example, the average household income in Missoula faces a nearly $70,000 yearly income gap for affordable single-family housing, but the average renter is looking at just a $1,000 per year difference, making apartment living more realistically attainable.
And that’s where Missoula leaders started focusing.
“It’s not the same where people are just moving from renter to homeowner,” Davis said.
However, she said that home-ownership along with all the trimmings, including a “white-picket fence” shouldn’t be the only type of housing city leaders can — or should — envision.
Instead, Missoula started relaxing and changing the zoning requirements, especially around apartments and multi-family housing, even as some residents saw it as a threat to property values.
In the past year, more than 400 affordable housing units have come on the Missoula market, driving the vacancy rate from 0.5% to 4%, cooling the market and offering more possibilities for the workforce. Davis said in her experience, a 5% vacancy rate is a healthy “landlord-renter equilibrium.”
The trick, Davis said, was increasing the types of housing, while not just building more stand-alone, single-family homes — which sounds like an oxymoron. She said zoning helped dictate what kind of new housing comes on the market.
Research tends to bear out Davis and Missoula’s approach out. According to information presented by Benjamin Horowitz of the Minneapolis Federal Reserve Bank, for every 100 new apartment units that come on the market, it has a trickle-down effect that opens up approximately 70 other apartment units. In other words, new housing development doesn’t just attract or provide new housing for residents moving into the area, it helps expand the market.
Missoula also relaxed and changed parts of its zoning, including more refinement of parking codes, which had often been used to thwart multi-family housing.
The city council also looked at making it easier to build accessory dwelling units, like apartments in already existing houses or converting part or all of a garage to a living unit. That even meant readjusting city codes that dictated the number of feet in between houses or number of feet a house has to be set back.
Davis said that cities have to be more flexible and creative about how they provide incentives for development — not everything happens in the form of cash or tax breaks. For example, one housing project, Villagio, was built against a hillside. However, in order to make the project pencil out and add more units, the City of Missoula agreed to contribute a retaining wall for the structure.
“We have to be more creative,” Davis said.
Other examples include taking a 9-acre site in the heart of Missoula, which used to be a former industrial area, and helping to remediate it. Now, the land will become part of mixed-use area that has single-family, multi-family housing, as well as green space and parks.
By pushing for land, Davis said the city was able to transform a barren piece of property into a recycled area for residents. Sometimes, Davis said, cities have land, which can help turn projects from out-of-reach to affordable.
Another example she cited was a collective in a historic, quirky apartment complex, the Wolf Avenue collective. Tenants in the apartment building, which is nearing a century old, were concerned when the owners put the property up for sale. Residents knew that new owners would increase the rents to cover the purchase, and many residents couldn’t afford where they thought rents would wind up.
Instead, through the use of a temporary private investor, the group of residents was given enough time to form a cooperative, and managed to buy the apartment at a competitive rate. Now, the apartment units are cooperative units, with tenants becoming owners.
From one city to another…
Davis understands that Missoula telling other cities what it’s doing sounds rich — the western Montana city rivals Bozeman for being among the priciest places to live. But, she said it’s one of the few places where property prices have cooled, or at least calmed.
She said that most cities haven’t begun looking at their land-use plans, which are often used as the basis of zoning rules and laws.
Secondly, Missoula has reduced regulations, and that has allowed developers to move faster with fewer administrative hurdles.
“Also, residents are concerned about things like climate change and want to be closer to things,” she said. “Bikes, walking and trails are important to prospective residents.”
And, if Missoula’s research is correct, the area could continue to grow to as many as 128,000 by 2045, which means there’ll be 85,000 workers in Missoula. Just to meet that estimate, Davis said Missoula will have to build or develop 1,400 houses per year.
“We have to be streamlining the permitting process,” she said. “This is a major part of what a municipality does, and it’s most intense in what it does to neighborhoods.”
Davis summed up the problem this way: A retiring University of Montana professor lamented all the changes she had seen in Missoula and the neighborhood in which she grew up, but later in the conversation with the mayor, the professor complained that her adult son couldn’t afford to move back.
Davis said that conflict perfectly summed up the challenge: Many Montanans don’t want to let go of the state they remember, but also want a state where their kids can live.
“These two truths exist at the same time,” Davis said. “But our household sizes are getting smaller and yet we’re still building the same size houses with a quarter acre, three bedrooms and two baths. Can supply meet demand? Yes, but it’s going to take some time, and it’s going to take all sorts of different housing.”
Editor’s note: Darrell Ehrlick is on the board of the Burton K. Wheeler Center, a nonprofit organization housed at Montana State University in Bozeman, whose mission it is to bring together Montana residents, leaders and experts to discuss and explore topics facing the Treasure State.