MISSOULA, Montana – In a residential area on the northern edge of the city, numerous condominiums and semi-detached houses have been built over the past three years.
This is part of a larger effort that includes new zoning plans to provide affordable housing to Montanans who can no longer afford housing on the market, says DJ Smith, president of the Montana Association of Realtors.
“It is becoming increasingly difficult for Montana residents to find a home that meets their needs and is affordable,” he said.
The influx of out-of-state residents moving to the Big Sky State has driven up demand, while labor shortages keep housing supply limited. The result is not only more condos and duplexes, but also a sensitive issue in the Senate race that could ultimately determine who holds the majority in the Senate.
While some Democrats across the country are vying for their vote in tight races, no incumbent has a harder time getting re-elected than Democratic Senator Jon Tester, who must win a state that Trump won by 16 percentage points in 2020.
Political forecaster Cook Political Report recently switched the race from a neck-and-neck to a Republican-leaning race, and AARP's latest poll showed an 8-point lead, just within the margin of error.
Tester has made housing a cornerstone of his campaign, particularly how to help Montanans who have seen the housing market become increasingly less important due to immigration to the state and the associated rising real estate prices.
“We're seeing a lot of people coming into the state, rich people, who want to try to buy our state, to turn it into something it's not,” Tester said at a June 9 debate hosted by the Montana Broadcasters Association.
Tim Sheehy, the Republican candidate, is a former Navy SEAL who started an aerial firefighting company in Montana. He blames high housing costs on inflation, and inflation on laws that President Joe Biden supports and that Tester voted for.
“Our biggest challenge in growing our company has been convincing people to come to Montana and pay these insane housing costs,” Sheehy said during the debate. “They are a direct result of the Biden administration's policies.”
On September 4, 2024, a new home is for sale in Missoula, Montana, where real estate prices have skyrocketed in recent years.
CNBC
Inflation and housing costs are a major problem nationwide, but few places are as troublesome when it comes to affordability as Montana. The National Association of Realtors has ranked Montana as the least affordable state for homebuyers. According to the U.S. Federal Housing Industry Price Index, home prices in the state have increased 66% over the past four years – faster than the 50% increase nationwide.
Smith said some Montana residents can no longer afford the communities they grew up in because those moving to the state have sold their homes in more expensive parts of the country and are able to buy with cash.
According to the U.S. Census Bureau, the median household income in Montana is $67,631. That means the median home price in Missoula, which is $568,377 according to the Missoula Organization of Realtors, is high for the average Montana resident but enticing for those looking to leave more expensive states to live in Montana's mountains, national parks and plenty of space.
“People in Colorado and California would sell their homes for over a million dollars and have a lot of equity to buy a home here in Montana,” Smith said. “That led to a record 30% of our homes being paid for with cash last year.”
Missoula contractor Andrew Weigand, owner of Butler Creek Development, said prices are also being affected by the state's labor shortage. Subcontractors such as plumbers and electricians are in short supply and costs are higher as a result, he said.
“If you can rely on a pool of three or four subcontractors rather than 30 or 40, the market will not be as competitive as in other parts of the country,” he said.
Read more about CNBC's political coverage
Weigand expressed concern that the problem will become more severe as many subcontractors get older and there are fewer people to replace them.
“Many of our professions are aging. They have been doing this for 20 [or] 30 years, and then they're close to retirement,” he said. “There aren't many … young professionals or young people interested in doing those jobs to fill that need.”
Tester has several proposals aimed at helping Montana residents who can barely afford a home, including housing upgrade grants and home repair assistance. He has also proposed a tax credit to encourage mobile home park owners to sell their property to coalitions of Montana residents rather than to developers who could use the land to build more expensive homes.
While Sheehy blamed inflation for high housing prices, during the June 9 debate he called for an expansion of trade programs in the state to address the shortage of builders needed for housing construction.