High Lot Prices Make Housing More Expensive

With the demand for more affordable housing in Bozeman, builders are faced with higher lot prices, which push the overall cost of building new homes.

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In a nutshell: Because construction is expensive, and lower-income Americans generally can't afford rents high enough to make new development projects pencil out.

The Urban Institute, a left-leaning think tank, has published a study (and accompanying interactive web app) trying to get at why, based on data sourced from the Denver metro area. The gist of their findings:

It turns out building affordable housing is not particularly affordable. In fact, there is a huge gap between what these buildings cost to construct and maintain and the rents most people can pay. Without the help of too-scarce government subsidies for creating, preserving, and operating affordable apartments, building these homes is often impossible.

Note that this is focused specifically on lower-income housing, federal government speak for what's affordable to households making 30 percent of median income (about $22,000 a year for a four-person family in Bozeman). Federal guidelines also typically count housing costs as affordable if they total no more than 30 percent of income (in Bozeman: $550 a month).

In the same vein as the study, most of Bozeman's recent affordable housing projects, like HRDC's Stoneridge Apartments and Homeword's Larkspur Commons project, do seem to have relied on federal tax credits for a portion of their financing.

The city of Bozeman's current affordable housing program, aimed at modest-income families and the for-sale market, also makes heavy use of incentives on the basis that they're necessary to keep lower-priced homes within reach for private, for-profit development efforts.

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Eric Dietrich can be reached at 406-582-2628 or edietrich@dailychronicle.com. He is on Twitter at @eidietrich.

Eric Dietrich covers city government and health for the Chronicle.

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