MISSOULA - In a push to address affordability, Missoula County on Wednesday contracted a legal firm to study the feasibility of launching a new down-payment assistance program, along with a strategy to bank land for future affordable housing.
While the program is little more than a concept at this point, the assistance of Dorsey & Whitney LLP could help the county leverage its current land holdings to fund future purchases earmarked for affordable housing.
The funds could also aid first-time home buyers with down-payment assistance.
“The idea is to figure out if we can do this and what route we need to take to make it a reality,” said John Wilke, head of the county's development district. “This will allow us to take the next step for making this concept a reality.”
A survey of county lands requested by the Board of County Commissioners several years ago found 265 county-owned parcels covering around 1,580 acres. The average size of each parcel is only 6 acres, though some are larger than others.
Wilke said the feasibility study will determine if the county-owned parcels could be sold to a non-profit partner for the development of affordable housing, or sold on the open market, with the proceeds going to other uses aimed at affordability.
“We want to see if it makes sense to sell these on the private market to generate some capital that we can use for the down-payment assistance program, or if it makes sense to keep this money and purchase greenfield land at the Wye that may not have infrastructure now but will in ten years,” Wilke said. “We could hold on to that until it's ready to develop, and then we could work with a nonprofit partner.”
Since 2010, median home prices in Missoula County have more than doubled, reaching $540,000 as of last year. The rapid increase in costs has outpaced the growth in local incomes, placing homeownership beyond the reach of many buyers.
Rental prices also have risen, with median rents increasing by 12% between 2010 and 2019. Vacancy rates also hover at around 4%.
Commissioner Josh Slotnick said the feasibility study could open new doors to help address the issue.
“To this point, most of our efforts to address our housing crisis has been on the production side,” he said. “When we bring infrastructure to areas to facilitate the construction of new homes, it helps change the dynamic with inventory going up and the supply and demand, and hopefully have an impact on prices.”
But so far, even with supply slowly increasing, it has had little impact on affordability. The county entered the pandemic with a housing shortage estimated at around 2,400 units. According to the county, recent data indicates that the supply gap has only worsened.
Slotnick said the county needs another tool in its belt.
“This is our first foray into looking at the consumer side and if there is something we can do for the first-time home buyer to help them break into a market where the median home price requires twice the median income,” said Slotnick.
While the concept holds promise, commissioners said the county has little money for the programs. As a result, the feasibility study will determine if the sale of county land could fund a down-payment assistance program and enable the county bank land for future housing.
“The big problem we have is revenue,” Slotnick said. “We're looking at how we can partner with other entities, maybe the free market, and how we can access non-traditional sources of revenue to create a model to help someone get into a house.”
The state also offers a down-payment assistance program, though it limits the amount of equity the buyer can take out of the home over time. Slotnick said the appreciation cap hinders a family from creating “generational wealth.”
“That's fine. That's the rules of that program. It makes a tremendous amount of state money available that otherwise wouldn't be available,” Slotnick said. “We're looking toward something that would have a less intense appreciation cap. A whole bunch of the generational wealth we see transferred in the U.S. is embedded in real estate. What we're hoping to do is capture some of that.”
