Montana and Idaho are experiencing significant challenges within their housing markets, driven largely by rapid population growth and high demand against the backdrop of limited housing supply. Both states are grappling with affordability issues as rent and home prices soar, often outpacing the incomes of prospective renters and buyers.
Beginning with Montana, the state's housing situation is often referred to as 'frozen,' particularly as many homeowners find themselves locked out of the market due to favorable low mortgage rates from years past. Approximately 80% of mortgage holders boast interest rates between 2% and 3%, which is far lower than the current rates—resulting in reluctance to sell and buy new homes. This stagnation contributes to soaring prices, with median home costs more than doubling over the last decade, leaving prospective buyers struggling to find affordable options.
Missoula's Mayor Andrea Davis highlights this concern by sharing the anecdote of the University of Montana's difficulty hiring its top choice for the dean position. The offered six-figure salary proved insufficient for housing, sending ripples of apprehension throughout the community. Such concerns resonate widely, indicating how entrenched the housing challenges are across multiple demographics.
Benjamin Horowitz, associated with the Minneapolis Federal Reserve Bank, noted the interconnectedness of housing stability and broader economic development, emphasizing how high rents can hinder workers from pursuing jobs elsewhere. Horowitz explained, "We're seeing the concern everywhere. We're connecting the housing problem with problems in economic development." This perspective sheds light on how housing difficulties can stymy growth not just individually, but collectively as regional economies falter.
The dynamics of housing supply and demand reveal stark contrasts when Montana is compared with its neighboring states. Despite seeing continued population influx, Montana's housing production has not kept pace, culminating from its failure to build enough homes to meet rising demand. From 2010 to 2020, the state experienced nearly 10% growth, but housing only grew by about 6%—a disparity heightened during the pandemic years.
Interestingly, rather than being solely plagued by outsiders, the competitive housing demand within Montana largely stems from its own residents. Most housing competition arises locally, as families already living within the state vie for the limited supply. Horowitz points out, "Most competition for housing happens from other Montanans, and because of housing shortages, prices have escalated dramatically. Every metro region now experiences its lowest affordability levels on record, with areas like Bozeman and Missoula becoming almost as expensive as much bigger markets like Seattle or Portland.
Turning to Idaho, the rental market is no less complicated. Many residents face difficulties affording rent, particularly as new apartment complexes continue to emerge—all aimed at keeping up with the surging demand from the Treasure Valley's exploding population. According to state guidelines, individuals should ideally spend no more than 30% of their income on rent, which can become increasingly difficult as prices soar. For example, renters in Blackfoot manage to spend about 19.95% of their income on housing, whereas those living near Kootenai face rates approaching 40.43%—a significant discrepancy.
Idaho's rental market requires new strategies for affordability. Many residents are being urged to explore rural areas or become more active within local housing networks to discover available rentals. Adjusting rental timings could also help; for example, landlords may be more flexible during the winter months, allowing for potential price negotiations.
For those considering the broader picture, problems with both Montana and Idaho's housing markets stem from poorly managed supply issues. According to Horowitz, the current unit gap for housing sits around 14,000, triple from just three years earlier. To put it more simply, it would take roughly three years of continuous building at the current rate to simply keep up with the existing demand, not accounting for any newcomers.
The empty-nester phenomenon suggests another potential infusion of housing listings to help mitigate affordability problems. Many believe these older homeowners—who have raised their children and sometimes found their homes too large—could lead to increased inventory if they decide to downsize. Yet, Zillow reports indicate these households mostly exist away from the high-density markets where young families are trying to buy homes. This suggests any increase from this demographic might not substantially influence broader pricing trends.
With all these factors considered, solutions seem to still be far off for both states, with political discussions and housing policies likely needing to adapt to address this growing crisis. Stakeholders across both Montana and Idaho recognize they face not just housing shortages, but predictably rising rents, and their impact on different community members. The pressing need for affordable housing continues to loom, leaving many families wrestling to secure the basic element of shelter.