Housing permits up in Missoula as demand for high-end homes remains strong

Construction crews work on new homes at the Cowboy Flats subdivision off Dore Lane in Missoula. Single-family housing permits increased in fiscal year 2018 over the prior year. (Martin Kidston/Missoula Current)

The city of Missoula issued more building permits for single family homes in fiscal year 2018 than it did in 2017, though the uptick was less remarkable than the increase witnessed the prior year.

With FY18 now in the books, the city issued 253 permits for single-family homes valued at $25.6 million, according to data released by Development Services. The prior fiscal year, 246 permits were issued for $25 million.

That’s compared to 195 permits in FY 2016 and 176 in FY 2015.

Mike Haynes, director of Development Services for the city of Missoula, said the figures can be misleading, given that duplexes are often recorded as single-family units, and many of those are being built in Townhome Exemption Districts.

“We have seen quite a lot of duplex development in TED projects,” said Haynes. “The building type is a duplex, but we have recorded them as single-family units because each, by definition, is separately owned and on its own ownership parcel. We’re revising the way we report residential development to account for this added wrinkle.”

At the end of FY18, the city had issued 10 permits specifically listed as a duplex compared to 18 the prior year. Multifamily permits were also down, with 22 issued in FY18 compared to 24 the prior year.

The actual number of units included in those multifamily permits dropped substantially, however, with 300 units in FY18 versus 718 the prior year.

“Levels of multifamily development fluctuate more year to year based on when larger projects are permitted,” Haynes said. “We saw fewer multifamily units permitted in FY18 than in FY17, but there are some large multifamily projects in the planning stages, including affordable housing projects.”

Larger affordable housing projects now in planning include the 200-unit Madison Crossing development and a 102-unit senior housing project, both located on the city’s northside.

A site map of the Ranch Club development west of Missoula. (Berkshire Hathaway Properties)

While talk in local government has slanted toward affordable housing in recent years, home construction at the upper end of the scale remains strong, according to Mike Bryan of Berkshire Hathaway Properties.

Bryan, who serves as the listing agent for the the Phase 9 development at the Ranch Club, said interest in the project’s lots are strong, even with home sites starting at $140,000.

“We’ve got a pretty high degree of interest in our new phase,” said Bryan. “They’re the best and largest lots of all the remaining lots. We’ve already sold three or four and will probably be building a spec house in the newer future. There’s a lot of demand from out-of-town people and some in-town people.”

The Missoula Organization of Realtors placed the city’s median home price at $268,000 when it released its annual housing report in April. Bryan now places the median price at roughly $302,500 – a figure also listed by MOR.

New construction gearing up at the Ranch Club and its next phase, which includes 19 lots, will likely fetch a higher price. The listing bills the development as “the best of all worlds” and promotes its location and amenities.

“In construction, it’s a little more expensive than the average home price,” Bryan said. “There’s actually a fair amount of higher-end homes around in construction, because people are choosing to build higher-end homes, even on less expensive lots, just because there aren’t many lots available.”

According to MOR’s latest housing report, 169 resident lots sold in 2017 at a median price of $92,000 – an increase of 8.1 percent over the prior year. Infill within the city has shifted away from traditional subdivisions toward multifamily and TED projects, the organization said.

That has left many who are interested in new home construction looking west of the city to projects like the Ranch Club. The city is expected to annex land west of Reserve Street later this year, a move intended to guide future growth.

“If you look at the city limits map, it’s a checkerboard on Mullan Road,” said Bryan. “You’ve got some that are in, some that are out. The city is going that way. You’re going to see more and more growth to the west, because there’s more land there than anywhere else.”

The Ranch Club is looking to meet that need, Bryan said.

“They’re already making plans for the next phase on a soft basis,” he said. “They’re doing engineering work and pricing.”