Room for 65,000 More

By Beacon Staff

The numbers are telling, but they don’t tell the whole story.

Twenty-six thousand lots are approved for homes in Flathead County. It’s a massive amount – enough new elbow room for roughly 65,000 additional residents. At face value it conjures up metropolitan images: smog, traffic and other urban delights.

Of the public officials and real estate agents who pay attention to the numbers, few are panicking. Many view the glut of lots as little more than an artificial number, suggesting the vast majority will remain undeveloped farmland for years, even decades.

To be sure, there is some concern. The number of lots could affect the real estate market and attract transplants before the county infrastructure and government services are in place to support them. It’s the potential for a situation Flathead County Commissioner Gary Hall described as “scary.”

Hall has formed a group to study long-term growth, specifically transportation, which is often a thorn in the side of local planners. But he was reluctant to say the sky is falling. After all, he said, growth has slowed a bit in Flathead County. In 2006, 420 final lots were approved in Flathead County, down from 512 in 2005 and 893 in 2004. Yet in the next breath Hall acknowledged that no other Montana county has the potential for such an immediate population surge.

The 26,000 vacant residential lots in Flathead County don’t include those waiting to be developed in the county’s cities, which abide by different rules, like requirements to pay for curbs, gutters and sewers up front. In the cities, speculation also runs less rampant.

“In Kalispell, we have expectations that development should pay for itself,” Kalispell Planning Director Tom Jentz said. “Kalispell is not looking over its shoulder.”

And while planners in other counties agree Flathead’s number of undeveloped lots is high, they have few numbers with which to compare it.

Several counties, including Missoula, Gallatin and Ravalli, had no tally of vacant residential lot numbers on hand. In Southwest Montana’s Madison County, where the population is 7,500, there are 9,000 lots lying in wait according to Planning Director Doris Fisher. “It could represent a major change in our landscape,” she said of the surplus.

The key word, in Madison and Flathead, is “could.” Flathead Realtors differ on how the lots will affect their industry. According to the Northwest Montana Association of Realtors, between 1,000 and 1,500 residential lots are sold each year in Flathead – which would not support a lot rush to market.

“We could have 100,000 lots available to build on and that doesn’t concern me at all,” Ted Dykstra, president of the NMAR said.

Many of the properties will sit on the shelf for years, he said, and speculators won’t devalue their investments by putting them all on the market at once. Still others have subdivided their farmland to have one less hurdle to clear if they do opt to sell or develop down the road.

Not every Realtor is as optimistic.

“To me, it’s just basic economics,” Tom Brown, the co-owner of Trails West Eagle Bend Realty in Bigfork, said.

Demand has to drive the market. If you have too much inventory the price goes down, he said, affecting both those who own and sell real estate.

“What’s happened lately,” Brown said, “is they’re just approving everything.”

Kalispell may also add to the inventory. The 3,000-home Starling project was recently recommended for approval by the Kalispell Planning Board. If City Council takes the board’s advice, the development will be phased in over the next two decades, adding up to 8,000 people to the west side of town.

“Maybe the demand will increase,” Brown said. “But is it going to increase close to the rate of lots on the market?”

Answers vary, but some see benefits to more development: the often-elusive prospect of affordable housing. Kathleen Schulte, CEO of NMAR, said the type of lots reaching market matters as much, or more, than the number sitting on the sidelines. Smaller homes on smaller lots are still in high demand, she said.

“Every year I thought ‘we’ve gone too far now’ and every year I’ve been proven wrong,” Schulte said.

While city planners are less concerned, Flathead County Planning Director Jeff Harris keeps his eye on the numbers. He knows if people come, county government will have to play catch up. The county has already been cited for dust violations, he said, and traffic on the roughly 700 miles of unpaved county roadway is increasing. Developers are now asked to pitch in for paving projects.

Hill has seen a gradual decline in the number of final lots approved. Still, in 2006, only Gallatin County gave a green-light to more lots. And it’s the current stock that have him and other government officials concerned.

“It’s a sleeping giant and when it awakens we have to deal with the consequences,” Hill said.

And, according to Hall, counties are often gypped in growth deals when each new tax dollar costs $1.30 in services.

Flathead County is in a unique situation compared to other Western counties, with the potential to grow fast with little notice. For example, Larimer County, Colo., home to 276,000 people according to the U.S. Census, has just 5,500 undeveloped county lots.

But as Rick Brunette, a Realtor with Coldwell Banker Wachholz, pointed out, potential for growth and actual growth are different. And housing costs won’t slide because of potential.

“I don’t know how many people would discount their inventory when it doesn’t meet their cost of initial land development and infrastructure costs,” Brunette said. Speculators will sit on their property before that happens, he said.

Flathead is destined to become busier, he added, but not overnight.

Or, as Dykstra said, “there’s no need to panic.”

The sleeping giant remains asleep.