Lots Abound as Home Construction Tapers Off

By Beacon Staff

Growth throughout much of the valley slowed dramatically last year, leaving a glut of open home lots and at least some city officials wondering if their town is stretched too thin.

In Kalispell, permits for new residential construction have been decreasing since 2004, when there were 480 new residential units – a record number – constructed within the city, according to the city’s 2008 Construction, Subdivision and Annexation Report.

The number of building permits issued for new home construction showed an even sharper decline. There were only 186 housing starts in Kalispell last year, a 42.2 percent decrease from 2007. Duplex units, popular for their affordability, were the only area to see an increase last year, up from 14 to 21.

As expected, the majority of new housing construction occurs in newer subdivisions, but as permits have declined buildout has slowed, leaving empty lots throughout the city and some city councilors balking at further annexations.

The number of new lots in Kalispell created has outstripped the number of residential units built every year since 2003, except 2007 when it was nearly equal. Also, the geographic area of the city has more than doubled since 2000, including the annexation of 570 acres in 2008 and 1,100 acres in 2007.

According to the city report, the large annexations in 2007 “were likely in anticipation that the rapid housing and population growth of the past decade would continue.” But at the end of last year, those annexations had still seen very little development.

In the face of another major annexation last week, the numbers left city councilors questioning whether they’d stretched too far. Ultimately, the council approved another 207-acre annexation on the south side of the city. But that jump may mark the end of a period of rapid expansion.

Meanwhile, lot creation and building have stayed closer to each other in Whitefish where subdivision activity decreased last year to 105 lots – less than half the number of lots created in 207.

Overall building activity also slowed – from 74 total new units in 2007 to 35 in 2008 – but new single-family home construction numbers jumped slightly and commercial permits were the highest since 2004.

Whitefish annexed about 376 acres last year compared to just 32 acres the year before. But several of those annexations were in response to the jurisdiction battle between the city and Flathead County over the planning doughnut surrounding the city, according to Whitefish’s annual report.

In Flathead County, far more lots have been created than homes were built every year since 2001. Last year, there were 1,098 lots created, according to a number from Jim Kelley, a local appraiser. In comparison, Kelley counted just 482 housing starts, judging by county septic permit applications.

In all, Kelley estimates the trend has left more than 3,400 lots sitting empty across the county by the end of last year.

But because the county doesn’t have to provide services like sewer every time it approves a new lot, the slowdown doesn’t stretch the county’s resources as much as others, County Commissioner Joe Brenneman said. The most noticeable budget effect of less building will be a decrease in planning and plat fee revenue.

“This slowdown will be tough on everyone in some way,” he said.

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