MISSOULA — While Missoula's stock of housing remains in limited supply, the vacancy rate in the city's rental market has begun to soften, according to the Missoula Organization of Realtors.
However, prices continued to climb in 2023 with a median increase of roughly 12%.
“We're seeing vacancy rates back up to a point we haven't seen since 2017 and 2018 when we also had a big delivery of multi-family housing,” said Josh Plum with Plum Property Management. “We saw a 19.5% percent increase in growth in the number of units from January 2022 to December 2023.”
The Missoula Organization of Realtors (MOR) this week released its annual housing report, offering insight into the health of the metropolitan housing market.
Among other things, the median rent cost in Missoula continued to trend slightly higher than the statewide average.
The latest data placed the median cost of a studio in a multiplex facility in Missoula at $780, a 1-bedroom apartment at $1,120, and a 2-bedroom unit at $1,273.
While rent prices are up, Plum and others believe they may begin to level off with vacancy rates on the rise. Renters may also see concessions for the first time in years.
“We'll start to see concessions, rental incentives and move-in specials on multi-family housing,” he said. “I wouldn't expect that to flex into the single-family space, simply due to the lack of inventory there.”
Two years ago, the vacancy rate in Missoula's rental market was under a scant 1%. It made one's search for an apartment difficult and also helped drive up prices.
But with the recent wave of construction, vacancy rates are on the rise, reaching levels not seen in nearly seven years.
According to MOR data, vacancy rates topped 4% in the first quarter of 2023 and rose to 4.9% by the fourth quarter of last year.
A healthy vacancy rate is considered between 5% and 8%.
“We've been waiting on the delivery of units through supply chain issues, labor issues and the pandemic,” said Plum. “Units that might have been slated for launch in 2021 to 2023 hit the market at the same time as people completed them.”
One- and two-bedroom units had the highest vacancy rate of 6.10% and 4.40% respectively.
“That's the highest vacancy rate of any of the asset types we've seen,” said Plum.
