Supply and Demand

Will a residential building boom be enough to provide more affordable housing?

By Kellyn Brown

Construction season is upon us and, for those looking to rent or buy a home, it can’t come soon enough. It’s no secret that housing, especially more affordable options, has struggled to keep pace with demand. But what the latest data released by the U.S. Census Bureau makes clear is that it’s probably worse than we even thought.

Those numbers show that between July 1, 2016, and July 1, 2017, Flathead County added some 2,300 residents to reach 100,000 people, according to the agency’s estimate. And it has certainly added hundreds more since that tally.

There is, of course, tangible evidence of the valley’s growth: subdivisions filling in with homes, new retailers opening their doors, schools under construction or reconstruction. But if the Census numbers are relatively accurate, the rate at which our population is growing is only accelerating.

While we’ve added about 9,000 residents since 2010, our population has ballooned by more than 4,000 in just the last two years. In fact, since 2012, the county has grown annually by well over 1,000 residents and every indication suggests that will continue.

So, where is everyone going to live? That’s the discussion underway among elected officials, business owners and those searching for homes. More people are attracted to the area than ever before, from families to retirees to second-home owners. And, so far, home construction has lagged behind.

In January of this year, Flathead County had just 4.9 months of home inventory, below the six-month supply that is largely considered a balanced market. And the inventory of homes on the more affordable end is smaller still. For example, that same month Columbia Falls had just 1.2 months of inventory.

None of this takes into account the competitive rental market. I often wonder how pet owners even find a place to rent with the increasing number of applicants.

Workforce housing has become common vernacular across the region as prices increase along with the population and employers voice their frustration about staffers priced out of the market.

We are, however, at the beginning of a residential building boom as construction starts or continues on hundreds of new housing units over the next several months. In Kalispell, a 324-unit apartment complex will be built just west of town near Two Mile Drive. South of town, a 55-unit apartment complex called The Lofts at Ashley is under construction. Southside Estates also broke ground last year. In Whitefish, a developer plans to add 137 new townhomes near North Valley Hospital.

Meanwhile, local municipalities, especially Whitefish, are cracking down on short-term rentals in the area. That city has contracted with a rental compliance company that will track and monitor property owners to ensure they are following the new rules and regulations.

How these factors, and others, such as increasing mortgage interest rates, will affect the market remains to be seen. But 2018 is already outpacing last year’s record-breaking numbers. Residential sales in January and February eclipsed the total from the same two months in 2017. And the medium sales price increased by 11 percent to $277,500.

Even with so many units expected to come online, if population growth continues to accelerate, demand will likely outweigh supply for the immediate future. And local officials will continue to search for solutions to the affordable-housing paradox.

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