MISSOULA - As anyone who's tried to buy a home over the past couple of years can tell you, it's been a very challenging time in Montana's housing market. And new research is showing that's likely to continue, although with some "cooling" of the market.
Researchers with the Bureau of Business and Economic Research (BBER) at the University of Montana say in their 2022 report that we've seen a collision of "fast-growing demand and low inventory", accelerated by population growth — basically supply and demand.
In Missoula alone, there's a shortage of 2400 units just to meet current demand, not future growth.
The report says "the broadest-based measures of housing prices" rose 21.3% in Missoula, 13.1% in Billings, 12.3 % in Great Falls. Then of course there's Gallatin County, where the median home price soared 30% to nearly $700,000.
"Right now we have a market that is very unusual in the sense that with such rapid price growth, it's actually had some not long-lasting, but temporary changes, in supply," said BBER Director Patrick Barkey.
"Because people who would ordinarily shift out of their three or four-bedroom home towards something that was a little bit more manageable as they get older are afraid to do that because, oh yeah, they can sell their house in a day. But how are they going to find another one?" Barkey continued.
Combined with a lack of childcare, and employee burnout, that's made hiring tough, even for well-paying jobs.
"I mean, there's any number of things that are our challenges from hiring any type of skilled labor you know," notes BBER researcher Robert "Tino" Sonora. "And it's not just a Montana-centric thing. It's kind of a nationwide problem."
So given the robust nature of the market over the past couple of years, MTN News asked the researchers whether they expect that to continue into 2023 and beyond.
"Most of us have a problem in that we can't really perfectly forecast the future. I mean, we can't," Barkey freely admits. "We can think about it and we and let's face it, we can't forecast it perfectly either."
"So I think with respect to housing, yeah, there was a great acceleration in demand in a market that was supply-constrained for a number of reasons. Is that going to go on forever? I think no," Barkey said.
"Alright, it doesn't mean that housing problems are going to be solved or we're going to go back to having affordable housing. But I think that's a little bit of the issue, and of course, that itself is a forecast," Barkey continued.
The report acknowledges the "COVID effect" of people moving to Montana for refuge. But Sonora wonders if that will last, given people's actual experiences might have them missing a previous "home", or even able to afford to sell and move with climbing interest rates.
"There is a pretty large divide. I mean I think for some communities housing is a problem 'cause the prices are rising. But for other communities, the problem is prices are falling and extremely low. And if they want to move from a low-cost community, they can't, because you can't buy into a higher-cost community. And that kind of makes you stagnate a little bit and restricts that flow of labor around."
"Housing is still going to be a major problem in countless parts of Montana. But going across all markets, fast growing, slow growing, urban, rural, double digit price growth? No, that's not going to continue," Barkey told us me with confidence.
The Montana housing crisis is the focus of the cross-state seminars which continue Friday in Missoula, Monday in Billings and Tuesday in Bozeman. Details and signups are available at www.economicoutlookseminar.com.