Study: Land, regulatory constraints in Missoula County drive up housing costs

Building constraints presented by local geography and regulatory hurdles leaves just 7 percent of Missoula County available for development, according to a study released Tuesday by the Missoula Organization of Realtors.

Building constraints presented by local geography and regulatory hurdles leave just 7 percent of Missoula County available for development, according to a study released Tuesday by the Missoula Organization of Realtors.

As the population grows and the demand for housing increases, those constraints could play a role in pushing up housing costs. The median sales price of a Missoula home has increased $70,000 since 2010, and the increases are expected to continue, forcing many residents to move to surrounding counties.

But that, the report added, will present its own costs as the commute intensifies, impacting air quality, infrastructure costs and lost income.

“The supply of housing for sale hasn’t kept up with demand at all,” said Sam Sill, public affairs director with MOR. “We’re seeing a real struggle for a pretty substantial number of folks in the community to keep up with what housing prices are doing.”

To get a fact-based handle on the challenge, MOR and the Missoula Building Industry Association commissioned WGM Group to study the building constraints on land across the county.

While the simple solution to the affordable housing challenge sounds easy – build more homes – there are challenges in doing so, including the constraints detailed in the report.

“The biggest conclusion is that we have an undersupply of housing, especially in for-sale homes at a more attainable price range, and we need to build more of them,” said Sill.

“When we think how we’re going to do that and where we’re going to do that, we run into some challenges. Some of these homes are going to have to be built in the urbanized area of the county, right outside the city limits. But there’s still a limited amount of land suitable for housing development in the county.”

Nick Kaufman of WGM Group said 65 percent of Missoula County is covered by public land, and 4 percent is covered by conservation easements, which restricts a property’s development. Nearly 60 percent of the county includes slopes greater than 25 percent, and 8 percent has been identified as farmland of importance.

However, just 13 percent of the county’s identified farmland is being used for agriculture, and 35 percent is currently used for private grazing. Other constraints identified in the report include the floodplain, which accounts for 2 percent of the county, and the airport influence area, which covers 1 percent of the county.

In all, 93 percent of Missoula County has constraints that limit development.

“If you look at the immediate Missoula Valley, there’s not a lot that’s unconstrained,” Kaufman said. “When you see the land that’s developed and then you take a look at what’s remaining and what the constraints are, we’re down to a pretty small percentage.”

According to the report, Missoula serves as an employment anchor, providing more than 60,000 jobs. But as housing prices increase, the rate of home ownership has fallen from 62 percent in 2000 to 58 percent in 2015.

As it stands, Kaufman said, roughly 25 percent of Missoula’s workforce lives outside the county.

“One of the largest costs to Missoula County is a loss of property tax revenue,” Kaufman said. “We’ve estimated that the lost property tax to Missoula County from commuters who live outside the county is around $6.6 million a year.”

That may also place a greater strain on local infrastructure, which doesn’t come cheap. In 2016 dollars, the per-mile cost of highway construction topped $1.5 million. The widening of U.S. Highway 93 from Lolo to Hamilton from two lanes to four also chewed up roughly 400 acres of ag land.

“Using a density of 6 units per acre, 400 acres of developable land in Missoula County could potentially accommodate 2,400 housing units,” Kaufman said. “We have a fairly limited amount of land, and how we use it carries social and financial consequences.”

Derek Smith, vice president of MOR, said balancing the needs of Missoula County with wise land-use decisions may be a difficult task. The study is intended to aid in that process as policy makers look to address the rising cost of housing and its social and environmental impacts.

“We wanted to elevate the conversation, so as we pick ideas, we have all the information,” said Smith. “Ultimately, it’s going to be the community that decides how we grow. Affordability is part of that conversation, and one of the elements of that is land cost. As we start taking away that land or restricting what you can do on that land, land prices are going to increase.”