MISSOULA — Vacancy rates in Missoula's multi-family housing market nearly doubled in the last quarter and rent prices have begun to fall, a local brokerage and research firm said Wednesday.
Research director Sara Townsley with SterlingCRE of Missoula said vacancy rates have risen to 6.13%, nearly double the 3.37% reported earlier this year and roughly 1% of several years ago.
The building boom in Missoula's housing market is beginning to move the needle.
“This change is welcomed by renters as it provides more choices,” said Townsley. “Most unit types have experienced slight rent decreases from a year ago, except for two-bedroom options, which saw minor rent growth.”
According to the latest data, the current average rent in Missoula stands at $1,388 per month, ranging from $970 for a studio to $1,914 for a three-bedroom unit.
With vacancy rates up, property owners are again beginning to offer incentives, including a half months free rent, or the same as a 4% discount, Townsley said.
The incentives suggest a slowdown in leasing, though that doesn't come as a surprise to market watchdogs.
“The increase in vacancy rates and stagnant rent growth were anticipated by the end of 2023 due to the substantial number of unit deliveries,” said Townsley. “A total of 1,019 units, including both market-rate and affordable options, were delivered in 2023. That's more than the combined total of units delivered in the last three years.”
Much of that growth is occurring in the greater Mullan Area, as well as the South Hills.
Several hundred new units have opened off Mullan Road over the last year, and several new subdivisions have recently been approved and are expected to move forward.
The number of deed-restricted or affordable options also climbed this year. The number of new units built this year amounts to what's been delivered over the last decade, the city has said.
“One contributing factor is the completion of 438 dedicated affordable housing units, as several new complexes opened and quickly filled up,” said Townsley. “Many of these renters were previously in market-rate units that consumed a high percentage of their incomes, or were inadequate for their needs.”
Townsley said as many as 589 new units are currently under construction and 163 are in permitting. As a result, she said, the vacancy rate is expected to climb through next year.
“What the numbers don’t show is the relief that new options will bring renters,” she said. “The past few years have been challenging for people with a big dog, a mark on their credit report, or dealing with an unresponsive landlord. A balanced market in Missoula may not bring substantially lower rents, but having options can bring a big bump in housing security and peace of mind.”
