There’s a residential building boom happening in Missoula as the city rushes to make up for a huge shortage of housing that has sent prices surging in recent years.
The city’s office of Community Planning, Development and Innovation permitted 1,338 new homes in 2021, a 140% increase over 2020.
The total market value of all that residential construction is a whopping $196.6 million. To put that number into mind-shattering perspective, the total value of all construction in Missoula, including commercial construction, was $243 million in 2020.
“We’re thrilled with what we’re seeing,” said Eran Pehan, the director of the office. “It’s an incredible increase and we think it’s going to make a tremendous difference in the community.”
It’s by far the most housing units permitted in any single year going back at least a decade. The two most recent years with the most new construction, 2016 and 2017, never saw more than 800 homes permitted.
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Another 1,219 dwelling units are expected to be created through subdivision and annexation activity that occurred in 2021, which created new lots.
“Each lot (created through planning) represents a future home or apartment building to be permitted and constructed over the next several years,” Pehan said. “These numbers only represent the development of homes for projects that require land use review. They do not capture infill development or the construction of homes on lots throughout the city that are already appropriately zoned or subdivided. In that sense, these numbers only represent a fraction of the total development pipeline.”
This explosion in development is a sea change for the community.
A city report showed that only 1,636 housing units were built between the start of 2018 and the end of 2020 in the Missoula area.
That relatively slow pace of new residential construction, combined with an increase in demand due to the pandemic and other factors, has led to record-shattering housing prices. The median home sales price of all homes sold in the Missoula urban area in January of 2022 was $485,000, an 82% increase over January of 2018.
Karen Hughes, assistant director of the county’s community and planning department, told county commissioners early this year that there is a dearth of listings available for people with low and moderate incomes. Missoula simply hasn’t built enough housing to keep up with how many people live here for many years now.
“We’re in an under-supply of about 2,400 units,” Hughes explained earlier this year.
The building permit boom in 2021 will actually take a while to materialize, because once a permit is issued it takes time for builders to prepare and finish a project.
Of the new homes permitted in 2020, a total of 1,064 were apartments in multi-unit complexes.
The $42-million Villagio Apartments, a 200-unit affordable housing project being constructed on the Northside, accounted for 200 of those permits because the city counts each home that is being built as a permitted new home. Similarly, the $54 million, 202-unit Trinity Apartments, an affordable housing complex being built partly in Missoula’s Westside neighborhood and partly on Mullan Road, counted as 202 of those permits.
Pehan reorganized her office in November of 2020 in the face of crushing development.
“We had a development capacity plan and added staff, which is the fastest way to get permits out the door and the fastest way to build new homes,” Pehan said. “We did add several planners to our team and we also developed a new prioritization policy for getting building permits issued for shovel-ready projects as a first priority.”
Missoulians should start getting used to the smell of fresh-cut sawdust and the sound of nail guns, especially if it means any sort of relief from skyrocketing prices.
About half of all Missoula County renters are now paying more than a third of their income to housing costs, which means they aren’t spending that money on health care, education or at local businesses.
“In 2021, a variety of land use review activities supported a strong pipeline of new homes for years to come,” Pehan said.