MISSOULA - Once locked at historic lows, apartment vacancies across Missoula have begun to rise, spelling possible relief for renters. The median price of a home also fell over the winter.
According to Sterling Commercial Real Estate, which recently released its annual Market Watch, vacancy rates in Missoula have risen to 2.6%. That’s up from a vacancy rate of less than 1% reported last year – a figure that pinched the rental market and those looking for a home.
“While 2.6% might seem low, it’s a big jump from our last survey that pegged local vacancy at under 1%,” said Claire Matten, an advisor with Sterling.
According to recent data, nearly 600 market-rate units are under construction this year, along with nearly 200 affordable units. Another 200 market-rate units are set for construction next year, along with another 200 affordable units.
Sterling said an additional 600 market-rate units poised for next year are currently in planning permitting while 800 more are in planning and permitting for 2024.
“There are hundreds of new apartment units in the pipeline, which might signal some relief for renters,” said Conner McMahon, also an advisor with Sterling. “It might also cause some developers to cool on building more apartments.”
However, the demand for industrial buildings, retail space, high-end office and single-family rentals in Missoula remains high. As a result, McMahon doesn’t anticipate a slowdown in construction.
The growth has served as a boon to the construction industry, which has gained nearly 4,000 new jobs statewide over the past two years, according to the Montana Contractors Association.
“It’s unlikely we’ll see any change around the construction in Missoula,” said McMahon
As housing demand increases, Missoula County’s planning department said the number of development projects that entered the pre-application phase more than double last year when compared to prior years.
The county this month reported that 68 projects were filed in 2021 compared to a range of 14 to 33 annually over the past five years. Data tracked by the Missoula Organization of Realtors also suggests that home prices may be softening, at least temporarily.
The median price of a Missoula home hit a record-high $520,000 last November. However, MOR said it has slipped each month since and stood at $475,000 in February.
But the winter months don’t represent Missoula’s top season for transactions, with just 68 homes sold in January and 59 sold in February. In comparison June, July and August of last year saw more than 150 sales completed in each month.
