Despite building boom, figures suggest Missoula still faces a rental shortage
The city’s vacancy rate remains well below the national average, suggesting that despite a large increase in apartment construction over the last two years, Missoula still faces a shortage in rental housing.
Developers delivered more than 765 apartment units in Missoula last year and roughly the same number the year before. That marked a noted increase in construction over prior years, when new units never exceeded 493 in a given year and were as low as 261 in 2012.
According to recent statistics from the National Association of Rental Property Managers, the city’s vacancy rate was just 2.9 percent in 2016. A preliminary review of last year’s rental numbers suggests the 2017 vacancy rate was only a touch higher.
“This indicates that we continue to have a shortage of rental housing in the Missoula market, despite the increased construction of new apartments over the last few years,” said Sam Sill, public affairs director for the Missoula Organization of Realtors.
While the organization gears up for its annual housing report, preliminary indications suggest the city still faces a housing shortage. That may have impacts on the average cost of housing at a time when the city is grappling with affordability.
Average rents increased slightly in 2017, though they could move higher if the housing shortage persists.
“It seems likely this trend of rising rents will continue as long as the supply of rental housing falls short of demand,” said Sill. “More specific information about the housing market, including rental statistics, will be available in MOR’s Missoula Housing Report.”
That report is scheduled for release in April.
The rental shortage has been a factor in each of MOR’s annual reports dating back to at least 2013. The affordability of the local market, driven largely by demand, has also fallen on the city’s radar.
In 2016, the city launched its Office of Housing and Economic Development, which has since created a housing task force to identify and work toward solutions to affordability.
“In terms of housing, it really is a comprehensive approach,” said Eran Pehan, the office’s director. “We know we need adequate rental housing at all levels if we want people to find housing that meets their needs.”
Pehan, who addressed City Club Missoula on Monday, said her office looks to address affordability by ensuring a stream of options that enable residents to move from subsidized housing to the next tier as their income level changes.
To achieve that, housing diversity is key – and according to the figures, the city needs more of it.
“A healthy housing market is diverse,” she said. “We need diversity of options, and that includes homeowner options for townhouses, condos and single-family detached homes. It needs tiny homes or small cottage homes and ADUs. It needs a lot of options that can make our market diverse.”