Missoula sees record growth in new home construction | Local News

Missoula is on a record pace for new home construction this year.

“We are seeing incredible activity,” said Eran Pehan, director of the city’s Office of Community Planning, Development and Innovation.

Until the end of July 2021, the city has processed 921 permits for single-family homes and rentals.

“It’s more than what we’ve dealt with in a single year going back the last decade, and we’ve done it in the first seven months,” Pehan explained. “And he shows no sign of stopping.”

She said her office fully plans to end the year with over 1,200 or 1,300 new homes approved.

“Just to give you an idea, the highest years we’ve had in the last 10 years were around 2016 and 2017, and in those two years we haven’t licensed more than 800 homes,” Pehan said. “We are really seeing a record development of homes in our community. “

The $ 42 million Villagio Apartments, a 200-unit affordable housing project under construction in the Northside, accounted for 200 of those permits, as the city counts every home under construction as a licensed new home. Likewise, the 202 $ 54 million Trinity Apartments, an affordable housing complex under construction in the Westside neighborhood of Missoula and partly on Mullan Road, accounted for 202 of those permits.

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“Absolutely, these two great numbers of rentals contributed to the record number,” said Pehan.

Missoula is in the midst of an affordable housing crisis, with the prices of rental and buyable homes rising far beyond wage increases.

Pehan said all new types of housing are needed.

“These are desperately needed homes on the ground,” she said.

The city will not benefit from an increase in new land tax revenue from the entire development for a few years, she noted, but that benefit will eventually trickle down to the community.

She attributes the rise to a mix of developers responding to demand and bringing long-planned projects online.

“We see the updating of the subdivisions underway, the second, third or fourth phase of upcoming subdivisions that are developing slowly,” she said. “We are also seeing new collaborations and we are also seeing a response to very strong demand. “

She said there has been a lot of infill development of new rental homes.

“The demand is so strong that there is more investment and these are different types of homes, including townhouses and secondary suites,” she said. “It brings a little more diversity to the market. “

In October 2020, Missoula City Council revised the city’s zoning laws to allow accessory housing units in each city zoning district as long as all other regulations and building codes are followed. The overhaul also increased the maximum height of these units to 25 feet and removed the off-street parking requirement. Additionally, units can be located on property that is not owner occupied.

“We’re not seeing a huge increase in the number of ADUs being built, but we’re seeing stable numbers, which is great,” said Pehan. “The financing of ADUs is still very delicate for owners. “

Earlier this year, the city council also approved increased development costs for the Pehan office to hire three new planners.

Pehan said local developers are fully in favor of the move because it allows his office to move faster in approving new projects.

“If we hadn’t taken this step, we would be completely underwater,” she said. “We are happy to have had the support of the development community to increase capacity this spring. These three planners are operational and thanks to this we are keeping pace.

In July alone, the city issued permits for 15 new homes with a combined market value of $ 1.5 million and permits for 125 new apartments with a combined value of $ 6.5 million. There were permits for three townhouses and two secondary suites that month. The total of building permits issued in July by the city was 469, up from 417 last July and only 93 issued in July 2019.

A local company, Sterling Commercial Real Estate Advisors, also tracks building permits for the whole of Missoula County.

Their third quarter market research of collective housing showed that 1,145 building permits had so far been issued in the county in 2021. This would represent a 203% increase from the previous year. However, their survey shows that demand for housing continues to outstrip supply, with the rental vacancy rate standing at 1.04% in Missoula.

“Even as we see more products coming to market, rents continue to rise,” said Nick Chaussee, advisor to Sterling CRE.

The average rent over the past 12 months has increased 16%, he said.

“But, it is likely that landlords will have to become more competitive in their offerings as more apartments are available for tenants,” he added.

The highest rent growth was recorded for two-bedroom apartments, and the lowest rent increases for studios and one-bedroom units. Chaussee said there are 1,120 new units under construction and of these, 40% are subject to income restrictions. 826 other apartments are under planning review.

“While we see many new products coming to Missoula, it is possible that the current facilities will make additional improvements to their complexes now,” said Chaussee. “For tenants, prices shouldn’t go down, but there will be more options.”

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