The issues facing working class Montanans seem daunting – struggling to afford a basic middle class life with historically low wages and soaring housing costs. It’s an issue seen across the country where nearly 43 percent of households don’t earn enough to afford their monthly budget of food, rent, child care, health care and bills. In the microcosm of a city like Missoula, it’s even more apparent.
There is a growing disparity between those who own a home and those who rent. According to the American Community Survey performed by the U.S. Census Bureau in 2017, Missoula County saw a dramatic yearly increase of 17.5 percent in the median household incomes of those who own their homes compared to a 4.5 percent decrease for those who rent. As 41 percent of residents in the county are renters, that means almost half the community is seeing rising incomes while the other half are seeing their incomes drop.
It’s a widening gap that is concerning. Homeowners have seen a jump in their estimated median household income to $75,940, while the estimated median household income for renters is now $29,793. While the average price of rent dropped nearly 1.5 percent, affordability has worsened. The percentage of renters in Missoula who are cost-burdened climbed to 49 percent. In other words, half of the residents who rent are spending more than 30 percent of their income on housing (Figure 1).
In 2016, the median priced home in Missoula was $255,000 – meaning the household income required to purchase a home in this price range was around $81,000. That figure has continued to grow to a record $290,000 in 2018 (an 8.1 percent increase over 2017), while the median price of a newly constructed home rose 26 percent to $383,500, according to a report from the Missoula Organization of Realtors. Today, the Missoula Organization of Realtors estimates that Missoulians would need an income of at least $95,731 to purchase a median priced home.
There is a correlation between income and home ownership. Patrick Barkey, director of the Bureau of Business and Economic Research at the University of Montana, recently noted that the price-to-income ratios for 38 Montana counties revealed affordability worsened as one traveled west. Median home sale prices in Ravalli and Lake counties, the least affordable in the state, were six times as high as median household incomes there.
He found that while Gallatin County has seen housing prices increase by 50 percent since 2012, their median household income was the third highest in the state ($60,439) making it more affordable than most counties in northwest Montana, including Missoula. The median sales price of a home in Missoula has increased by 39 percent in the last 10 years (Figure 2).
In 2017, Montana placed 45th among all states for median earnings, while the estimated median income for all households in Missoula County was $54,311, a 17 percent increase from $46,550 in 2016. This marks the first time in recent years that Missoula’s median income has exceeded that of Montana households ($53,386). In comparison, the U.S. median income for all households was $60,336 in 2017.
Since 1990, Montana’s affordability advantages have eroded. A 2018 Gallup study found that 45 percent of Montanans were dissatisfied with the availability of good affordable housing. This tied Montana with Maryland and Oregon for eighth worst in the country.
The issue has heightened as a growing number of people have moved to Montana who have the means to live wherever they choose. These are people who have income from non-wage sources (e.g., capitalists and retirees). The Treasure State has always had a larger share of this demographic. Twenty-three percent of the state’s personal income comes from dividends, interest and rent. This is higher than the U.S. level (19 percent) and ranks third highest among all states. But it’s more significant in places like Missoula where over 40 percent of residents have incomes from non-wage sources.
Typically, more people move to Missoula than move away, giving it positive net migration. Net migration in Missoula County, while still positive in 2017, decreased for the first time since 2013 (Figure 3). In 2017, the net migration was 1,174 people, compared to 1,758 in 2016. Since 2000, Missoula County’s population has grown by over 20,000 people, currently making Missoula the second largest city in the state. The majority of people moving into Missoula County came from outside of Montana while 41 percent came from within Montana. Almost half of those who migrated from out of state came from the western United States.
The number of Missoula residents living in poverty has remained around 15 percent for the last several years. But the issues surrounding poverty for Montana families have been long-standing. Back in 1959, 40 percent of all Montanans living alone had incomes below the poverty level and half of the families classified as poor had at least one child.
Today in Montana, 19 percent of children live in poverty, while 28 percent of parents lack secure employment. In Missoula, an estimated 500 children were homeless or in unstable housing during the 2017-18 school year, according to Missoula County Public Schools.
Economically, Missoula experienced a strong 2018 with lots of new building, including the new Marriott Hotel at the old Missoula Mercantile location. The county is currently replacing the bridge on Russell Street over the Clark Fork River and plans to widen the street to five lanes.
In an effort to address affordability, Missoula County has donated a 4-acre plot of land near the Missoula County Detention Center for affordable housing, coupled with a 200-unit project on the Northside and a 75-unit project on the Westside. Even so, affordability in the Garden City remains challenging.