Is Montana “Ruined?” We’re Not So Sure

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Maggie Collister

Is Montana “Ruined?” We’re Not So Sure

We heard Montana is ruined! But we’re not so sure…

An overheated housing market has some people claiming Montana is ruined.

And while the state is Montana is famous for its wide-open spaces, don’t let that fool you. In some of our most popular cities, space is at a premium as these markets experience unprecedented population booms. It’s this population boom that some claimed has ruined Montana. It’s true that housing and rent prices have spiked across the state. That’s led to compressed cap rates for multifamily assets as well.

In Bozeman, the average house price increased 60% from 2012 to 2019.

The Wall Street Journal identified Billings as one of the hottest housing markets in the country, noting that out-of-state buyers were likely propelling demand.

For mountain towns like Missoula and Kalispell, extremely low vacancy is causing rent prices to jump by 10% or more over last year. Even smaller towns like Butte are experiencing the squeeze as vacancy drops and apartments become harder to find.

But while some markets are feeling the squeeze, claiming that Montana is ruined overlooks some extraordinary places with reasonable markets. 

So how did we get here? Montana didn’t even crest one million residents until 2012. Competition for houses and apartments was known to be reasonable. Some of our staff recall paying four or five hundred dollars for their one-bedroom apartment in Bozeman just a decade ago. Now, that same apartment is likely to come in much closer to $1000 a month.

It wasn’t just the pandemic that pushed people to Montana. The rise of remote workers and a cultural shift towards being outdoorsy had encouraged population growth for years.

You know, even before the pandemic, there was a tilt towards places like Montana. The Department of the Interior noted a 16% increase in national park visitation from 2008 to 2018. And among the top parks for growth were Glacier and Yellowstone, both seeing double-digit boosts in visitation. The appeal of outdoor recreation and rural spaces translated beyond visitation and more out-of-state residents began the transition to Montana.

If you ask a long-time Montanan, they might tell you this started much earlier than most think pieces would have you believe. Back in the 1990s, the film A River Runs Through It created a veritable boom in the popularity of fly fishing in Montana. Producers acknowledge that some Montanans believed the film had a hand in “ruining” the state by inspiring folks to move and visit Montana in droves.

Potential in Montana Markets

But as much as doom and gloom feature prominently in most narratives about the housing market, we see the potential. A recent survey in Missoula showed multifamily and residential construction heating up, with a 203% increase in building permits. Just over a thousand units had broken ground as of Q3 2021, with even more in the planning pipeline. That seems to be the case for most of the biggest cities in the state.

And while opportunities in markets like Missoula and Bozeman are tightening up, it’s a big state with plenty of growing cities. We’re seeing more activity in places like Helena, Kalispell, and Billings. It’s no surprise that these areas are gaining traction. Billings is preparing to welcome the state’s first medical school, Helena features a low cost of living, and Kalispell has room to expand that Missoula might lack. And all of these places are under the same spectacular big sky.

Long before we became familiar with the term social distancing, Montana’s growth had begun. The pandemic simply pressed the gas on an existing demographic trend. To get more targeted market intel on multifamily and development opportunities across the state, call Matt Mellott.

Matt Mellott
Matt Mellott, CCIM/SIOR

Is Montana “Ruined?” We’re Not So Sure