Is Missoula’s housing market really becoming ‘the next San Francisco’?

Posted: April 18, 2022

Source: Montana Free Press

While the median home price in the city nears $500,000, officials believe a record number of housing permits last year is reason for hope.

Missoula’s shortage of homes on the market, growing population, skyrocketing rents, and record sale prices have residents questioning what the area’s housing market will look like in the years to come and whether many will be able to afford to stay in the Garden City.

In just two years, the median single-family home price in Missoula increased more than 50%, according to the Missoula Organization of Realtors. In January 2022, the city’s median home price soared to an all-time high of $485,000, compared to the median price of $315,000 in 2019, according to MOR data that was shared at a forum last month.

The drastic uptick in prices on the heels of record low supply of available housing is what earned Missoula first place among the country’s other metro areas in an analysis the San Francisco Chronicle published in March, which featured 10 real estate markets “on the cusp of a San Francisco-style affordability crisis.”

The Chronicle used data from Zillow to see what areas of the U.S. were experiencing a housing market similar to that of San Francisco, which became infamous when home prices nearly doubled in a decade due to a low inventory and high demand.

But there may be some hope. In 2021, Missoula issued a record number of permits for new homes, and housing experts say the city may avoid an even more unaffordable market if it focuses on strong development in the next few years.

Missoula is one of many metropolitan areas where the real estate market looks increasingly like San Francisco’s, especially after the pandemic and the rise of remote work led some people to leave cities in search of more space and cheaper home prices.

“We saw a shift in the pandemic with people moving here from higher priced markets,” said Andrea Davis, executive director of Homeword, a Missoula-based affordable housing nonprofit. “Missoula has been on that list of great places to relocate for a long time, but the pandemic just accelerated that change.”

In Missoula, home values shot up 57% from January 2020 to January 2022, while housing inventory declined 58%, according to the Zillow data.

Other cities on the list include Provo and Salt Lake City in Utah; Port Angeles, Washington; and Raleigh, North Carolina. Helena rounded out the top 10 markets with a 40% increase in home value and a 43% decline in inventory.

Gallatin County, which was in an affordable housing crisis well before the pandemic, did not make the list, although the median sale price of single-family homes in Gallatin County hit an all-time high of $896,000 in March, according to the Gallatin Association of Realtors. The San Francisco Chronicle narrowed its analysis to areas where home values rose 40% or more from January 2020 to January 2022 and inventory during the same time period fell by 40% or more.

Brint Wahlberg, an agent with Windermere Real Estate and vice president of the Missoula Organization of Realtors, has lived in Missoula his entire life and worked in its real estate market for more than 20 years. He said the current market is unlike anything he’s ever seen.

“It’s wild to say that if someone wanted to buy a house under $750,000 in Missoula, you probably have less than 15 options, and those 15 options are probably all going to be under contract by the end of the week,” Wahlberg said. “It’s a market that has made it incredibly frustrating and disheartening for buyers.”

Wages have not kept pace with those skyrocketing prices and rents, and first-time homebuyers are now competing with the wave of remote workers and retirees with higher wages and savings moving into the area.

A prospective homebuyer would need to make almost $147,000 a year to afford a mortgage on a home with the median price of $485,000, yet the median household income in Missoula was about $72,000 in 2021, according to MOR data presented at the city forum.

Meanwhile, the median renter makes just about $27,000, according to MOR data. In 2020, the most recent year data is available for the American Community Survey, the median monthly rent paid by individual renters in Missoula was $908. Rents rose even more in the past year as Missoula saw a new all-time low annual average vacancy rate of 1.3% in 2021, according to MOR data.

“What scares me is when I talk to people who I went to high school with and grew up with who just got approved for a $300,000 mortgage and literally cannot buy anything,” Wahlberg said. “So they’re looking at moving out of town.”


Missoula was already on a path to an affordable housing crisis prior to the pandemic. Though the demand to live in Missoula increased in recent years, the area was slow to add new housing, apartments and townhomes, in part due to zoning regulations and difficult approval processes for the city and county, Wahlberg said. Nearly a decade of underbuilding after the Great Recession also contributed to reduced inventory and less construction of entry-level homes, Davis said.

In response to the accelerated housing crisis, the city of Missoula and Missoula County have each started working on affordable housing initiatives and overhauling their zoning codes with propelling development as one of the primary goals.

Over the last year, the city reorganized its office of Community Planning, Development and Innovation to dedicate more resources to reviewing and approving building permits, and began prioritizing residential permits over commercial permits or other land use activity.

As a result, the city permitted a record 1,338 new homes in 2021, a 140% increase over 2020.

Eran Pehan, director of Missoula’s office of Community Development, Planning and Innovation, said the city will review its new prioritization process for residential building permits on a year-by-year basis to ensure the timely building of new homes. She said her office will also need to make certain it continues to allocate enough resources to land use activity and review to create a pipeline for building permits to come in.

Pehan said she doesn’t think Missoula is at the point of being the next San Francisco yet because there is still land to build on and room for infill development. But she agreed that Missoula needs to significantly increase the level of development now and in the years to come to avoid becoming even less affordable.

Many of the building permits issued in 2021 were for small duplexes, townhomes or single-family homes across the community that are under construction right now and should come on the market for sale or rent within the year, according to Pehan.

Another 1,219 dwelling units are expected to be created through subdivision and annexation activity that occurred in 2021, which created new lots. More infill development and construction of homes will occur on lots throughout the city that are already appropriately zoned or subdivided.


The building permits issued in 2021 also include larger projects, such as Trinity Apartments, a 202–unit affordable housing rental project that is a collaboration between Missoula Housing Authority, BlueLine Development and Homeword, and is being built on two parcels of land. Most of the apartments will be located on Mullan Road and Broadway, and the others will be built in Missoula’s Westside neighborhood.

Davis said the apartments on Cooley Street in Missoula’s Westside neighborhood will start to become available at the end of 2022, and the full project will be available for lease early next year.

The Trinity project will create sorely needed, deed-restricted affordable homes, meaning the rents will have to remain affordable for people earning 30% to 70% of the area median income for Missoula, which is adjusted annually and is currently about $17.74/hour ($36,890/year) or less for one person, according to the Missoula Housing Authority.

The Villagio Apartments, a 200-unit affordable housing project being constructed on the Northside in conjunction with the Missoula Housing Authority, accounted for another 200 of the building permits and should be available for rent in the next 18 to 24 months, Pehan said.

The projects are financed using a combination of housing tax credits, tax-exempt loans, state and federal grants, and other sources.

Davis said she thinks the developments in the pipeline will help address some of the immediate housing shortage. However, she said, the expansion of public-private collaborations will need to continue while the city and county consider changes to zoning codes that increase the density allowed by new developments in some areas.

Pehan agreed and said everything points to the need for strong housing development for “many years to come.”

“There’s some guesswork, but we are projecting out that for the next three to five years, we will likely continue to see this level of demand and growth,” Pehan said.