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Housing report shows continued decline in affordability in Gallatin County

A new report by the Gallatin Association of Realtors shows a shift toward higher-density housing development.
DianeBentleyRaymond/Getty Images/iStockphoto
A new report by the Gallatin Association of Realtors shows a shift toward higher-density housing development.

Continued high prices and mortgage rate increases have further deteriorated housing affordability in Gallatin County, according to the 2023 Gallatin Valley housing report released earlier this month.

According to an affordability index in the report, housing is no longer just out of reach for median income earners — households making around $76,000. People making above that, in the 75th percentile of income, are now squeezed too.

“We’ve gone from a bit unaffordable, to ridiculously, unsustainably unaffordable, and that’s been exacerbated by these high interest rates," said former Gallatin Association of Realtors board president Joanna Harper. "That’s the punitive nature of double the interest rate and what that impact is to a buyer is pretty serious when you already have record high prices."

Last year the cost of a newly constructed single family home in the county reached $950,000. That and other factors deterred a lot of new buyers.

“There is a population that would normally be entering in as homeowners that are having to stay as tenants and that is keeping rental rates fairly high in spite of a lot of investment building of apartment buildings,” Harper said.

While Zillow data in the report shows rental rates starting to soften in the second half of last year, for median income earners rent is still in the unaffordable range.

The report shows Gallatin County is continuing to move towards higher density housing development. For the third year in a row permits issued for multifamily units exceeded those issued for single family homes.

“We’re certainly seeing a lot of multifamily construction that is due partially to high cost of land and availability of single-family lots, but I also think that the larger scale investors are recognizing that Gallatin County is an attractive place to put a larger complex,” Harper said.

Harper says one factor that could help bring down prices is municipalities adding more infrastructure, so that more shovel-ready lots are available for construction.

During a panel discussion on the housing report City Manager Jeff Mihelich says Bozeman is using federal COVID relief dollars to build a new $5.2 million lift station for wastewater. The project, in northwest Bozeman near Billings Clinic, could provide infrastructure for 600 acres of land suitable for residential development.

The neighboring town of Belgrade is poised to see explosive growth in its housing supply. According to the report's analysis of building permits issued in 2022, Belgrade’s housing stock grew 8.5% in one year.

City Manager Neil Cardwell says in the last 18 months, the amount of land the city has annexed has doubled Belgrade's size. During that time the city approved around 13,000 housing units to be built out over the next decade.

“The scale that we’re seeing here is what makes this so challenging for us is this hasn’t happened in Montana anywhere else and a lot of the infrastructure that’s in place in places like Bozeman who are county seats that grew to 20,000 plus over decades, we’re making this jump from 8,000 - 25,000 people in a decade,” he said.

Speaking after a panel discussion on the Gallatin Valley Housing report, Cardwell says Belgrade no longer wants to be a bedroom community to Bozeman. He says they are at a point of growth where they can be more independent.

Olivia Weitz covers Bozeman and surrounding communities in Southwest Montana for Yellowstone Public Radio. She has reported for Northwest News Network and Boise State Public Radio and previously worked at a daily print newspaper. She is a graduate of the University of Puget Sound and the Transom Story Workshop.