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Missoula County planners report red hot housing, commercial permitting

Housing Construction
Posted at 2:16 PM, Oct 19, 2022

MISSOULA — Housing and subdivision activity across the Missoula Valley is moving at a red-hot pace, prompting one county planner to declare that it's like nothing he's ever seen.

Since January 2021, the county has reviewed more than 1,050 land use and zoning permits. The number of permits reviewed through the first three quarters of 2022 is up 5.5% over the same span in 2021.

County planner Nicholas Zanetos said new construction of single-family homes represents the largest share of new permits at 34%, followed by accessory dwelling units at 18%. Remodels, commercial construction and additions round out the others.

However, Zanetos said, while overall permits are up 5.5% the first three quarters of this year compared to last, the actual construction of new single-family homes is down 26%.

“Anecdotally, this drives what we've been hearing for the cost of labor and materials,” he said. “But we're still up on the new dwelling count.”

Since 2021, Zanetos said the county has approved 534 new dwelling units. Of those, 69% represent single-family homes and 18% include multi-family projects. The rest include duplexes, townhomes and mobile homes.

“Even though we're down on single-family, new home construction, we're up 18% on new units approved through the first three quarters in 2022 compared to 2021,” Zanetos. “That's driven largely by some larger multi-family development projects we're seeing that put a lot of units on the ground, or are going to put those units on the ground.”

County planner Tim Worley said the county has seen five major subdivisions come through the system this year. Some years have gone by without one such project. Of those five, county commissioners have already approved four. The last is still pending further review.

Those approved subdivisions include 89 lots, though some lots call for a density of eight dwelling units per acre. That means the potential for home construction on those 89 lots is great, Worley said.

“That's significant potential density for the future if water and sewer get to that location,” he said of one project planned near the Wye. “It's not merely 89 lots. It's lots with significant residential development potential, and that's just for 2022.”

Worley said the county has seen a “significant uptick” in the number of subdivisions filed under the current housing boom. In some cases, some subdivisions have been “sitting on a shelf” and are a decade old or older.

Only now are some of those older projects moving forward.

“The boom went bust in 2008, and a lot of those lots just sat on the shelf,” Worley said. “We didn't even know if they'd come to fruition. But they're definitely coming to fruition now. Having significant infrastructure has been a key element in what we've seen since January 2021.”

Worley said the combination of new subdivisions and old projects that were placed on hold don't represent “a random filing” of projects in far-flung places. Rather, they are mostly centered around Missoula and Lolo.

“This has really been the greatest development activity that we've tracked since the previous housing boom, which ended in around 2008,” Worley said. “Developers are filing subdivisions that were approved during the last boom years, and most have access to infrastructure.”

While the potential for new housing is great, those older subdivisions present concerns for some planners. Back in 1998, policies and building standards weren't what they are today. Goals set by the city and county around growth, density, transportation and sustainability have changed.

So has Missoula's housing market. In 2000, the median price of a home was $138,000, according to the Missoula Organization of Realtors. It now stands at $535,000.

“On the older (subdivisions), there's not a lot that can be done,” Worley said. “We're a little worried that as they come online, it might not be the product that's needed for 2022. But there seems to be demand. Those things are moving for sure.”

Worley said the last housing boom occurred before the 2008 recession ended the cycle. Activity remained relatively quiet until recent years, but the pandemic has since accelerated that activity.

“After the crash, there was just a complete lack of demand for residential projects,” Worley said. “What really heated things up is what's happened since Covid. It's like nothing I've ever seen. We've had entire two-or-three-year spans where we never saw a major subdivision post 2008. This summer, we saw three in a month. I think it's this super-heated housing situation that we find ourselves in.”