The U.S. Census Bureau found that the median household income for a household in Gallatin County is around $61,500 per year in 2018 dollars. In Bozeman specifically, the median household income is just under $52,000. For those making less than that median, staying here while housing prices are increasing quickly and consistently is getting harder and harder, said city commissioner Terry Cunningham.

“We are approaching a crisis point in Bozeman,” said Cunningham, who is the commission liaison to the City Affordable Housing Advisory Board.

Bozeman and the Gallatin Valley’s struggle with affordable housing stems from a lot of places. A major cause is the lack of supply and high demand.

Vacancy rates in Bozeman generally hover around zero, Cunningham said, while what’s generally considered a healthy vacancy rate is around 5%. That means that the ever-growing population of the valley are all competing for the same few houses, condos and apartments, which rent or go under contract for sales quickly — sometimes on the same day they are listed.

“To a large extent, we’re in a supply-and-demand crunch,” Cunningham said. “You have increased competition for fewer and fewer affordable units.”

Mark Dobrenski, a sales associate with Berkshire Hathaway and a member of the Gallatin Association of Realtors, said that such a dearth of inventory can make it especially tough for first-time buyers, like young families.

“That is the buyer group I have the most sympathy for,” Dobrenski said.

It’s not uncommon for a house listed to have six or seven offers by the end of the first day on the market, he said. If a buyer wants a home, they have to be ready to put an offer in right away, and there’s a good chance they’ll competing with a cash buyer. In the 16 years Dobrenski has been in real estate in the valley, people buying homes in cash has remained around one-third of buyers.

“We have a huge amount of buyers, we really do, and not a fraction of the homes we need to be able to satisfy that need,” Dobrenski said. “I feel so bad for those first-time home buyers, because they’re so excited and yet they want to think about it and, unfortunately, they don’t have a lot of time to think about it.”

And the lack of available homes to sell doesn’t just hurt first-time buyers — it impacts the entire real estate market. Those who want to sell and stay in the area need a place to live after their home sells, but with the pressure in the market now, an exit strategy could be tougher to put together.

“That makes it a catch-22,” he said. “You need more homes, but people are reluctant to list because they know the doggone thing will go under contract so quick … and if you don’t have them, you can’t sell them.”

Dobrenski pulled numbers for median listing prices the week of Sept. 25, 2020. Few homes of any kind in the valley were listed for sale under August’s median sales prices, he said, which likely means that September’s median prices will again be an increase over August’s.

Bigger pieces of the pie

When households that buy or rent have to spend bigger pieces of their paycheck to keep a roof over their heads, they have to make difficult choices.

Rising prices also mean that those who lost a home for any reason are likely to have a much harder time getting a place to live again.

“We are actually seeing families staying in our shelter program longer because, with the driving forces of housing costs here in Bozeman, that’s also affecting the rentals,” said Christel Chvilicek, the executive director of Family Promise of Gallatin Valley.

Family Promise runs a family emergency housing shelter and has a variety of programs to keep families in homes or to help them find a place to live after losing a home. But that’s been harder and harder to do as prices and competition continue to increase for the rentals that are available, Chvilicek said.

“We have families that have good credit, they have good-paying jobs,” she said. “You can’t even find them a place to live so that they can move on and continue on their plan for success.”

Chvilicek said a lot of the people Family Promise is helping right now don’t have the traditional barriers that can make housing difficult, like a past eviction or a criminal record. But for the people who have made mistakes in the past, it can make finding a place to live even harder.

“Everybody makes mistakes. You think of how you’ve grown up, and you learn from your mistakes,” she said. “With our housing crisis here in Bozeman, you make a mistake and you can’t even grow from that mistake because you really don’t have the opportunity to prove to a new (landlord) that you’ve changed.”

Chvilicek said she’s had multiple families apply to rent units less than 24 hours after the unit was posted for rent, but they were already too late.

“To know that they basically have to act as soon as they see something … it makes life pretty complicated, to know that you don’t even have a 24-hour window,” she said.

There are a variety of large-scale housing projects in the works that might help relieve some of the pressure on the Gallatin Valley housing market, at least as far as supply goes.

For instance, a 600-unit development by Bates Homes is under way in the Prescott Ranch subdivision in Belgrade, where housing prices are still high but remain lower than in Bozeman and Big Sky. According to Bates Homes spokesperson Tedra Bates-Flowers, those homes start at $350,000. August’s median sales price for a single-family home in Belgrade was $355,225, according to the Big Sky Country Multiple Listing Service.

Bates-Flowers said that, originally, the homes were scheduled to be completed over the course of about a decade. But Bates Homes saw such high demand for them that it’s building the houses quicker and plans to have all built and sold in under seven years.

“It is very difficult, in this day and age, to afford a home and to provide a lot of livability in that house,” she said. “We are trying to hit that price point for people, but also offer those granite countertops, the large vaulted ceilings, the open floor plans.”

There’s also a few housing projects in the valley geared specifically toward lower-income families and residents. Seattle-based company GMD Development is working with the Human Resources Development Council (HRDC) to build a 232-unit affordable rental development, and HRDC is working to save a number of subsidized housing units so the city doesn’t lose that inventory.

But just increasing the inventory won’t be enough, commissioner Cunningham said, especially when big portions of new construction are luxury homes and apartments.

“We are seeing more apartments, multi-family units (being built), but many of them are priced in the luxury rental market,” he said.

Cunningham said the city and organizations like HRDC will need to make a continued and concerted effort to create new housing that will be affordable for those making less than the area’s median income.

Trickle-down to renters

Carly Urban, MSU associate professor of economics, said that she’s less worried about the price of rentals and is more worried about income and unemployment in the valley, especially as the economic recession caused by COVID-19 continues to make its mark on Montanans.

“Some people are doing completely fine or even really well, and other people are really struggling,” Urban said.

This kind of recession recovery is called a K-shape recession, and it’s different from the 2007 and 2008 recession because of its impact on childcare and elder care and, by extension, women. Urban said women are more likely to be caring for children or elderly family members, which could mean more women temporarily or permanently exiting the workforce.

“People who have a lot of money in the stock market, who are homeowners, who can work from home … they’re doing really well,” she said. “Then there’s this group that couldn’t work from home or that are being hit really hard by child care obligations that are doing a lot worse.”

Those who already own a home likely have a little more flexibility with their lenders right now, Urban said, and could also be able to refinance and maybe even see a lower monthly cost.

Rising housing prices don’t always have an immediate impact on rental prices, Urban said, in part because rental contracts are generally somewhat long.

“It doesn’t mean that our rental market is accessible or designed to really be pro-renter, but I don’t think it’s worse (than before),” Urban said.

”Increasingly more challenging”

Organizations like Family Promise and HRDC are trying to tackle the challenges that middle- and low-income Bozeman residents face in their search for a roof over their heads. But HRDC CEO Heather Grenier said it’s becoming “increasingly more challenging” to make housing attainable, especially for young professionals.

“The only area where we’re seeing out-migration of our population is that young professionals group, because they want to be able to buy a home and start a family and that starter-home level doesn’t exist in our community,” Grenier said. “The people that want to live and work here can’t afford to stay here.”

A common misconception about HRDC, Grenier said, is that the majority of its work is with people who are seeking emergency shelter. And while that’s an incredibly important piece of the puzzle, people who are already homeless are only about 3% of the people HRDC works with.

“Our goal is always to prevent (homelessness) from happening in the first place,” she said.

That work comes in lots of different forms: eviction prevention, rent and down payment assistance, and programs to offset other big costs of living, like transportation.

“If you have to pay 50% of your income towards your rent, which is extremely cost burdened, or your mortgage … then you don’t have the resources you need to pay for medications, to buy your groceries, to pay your heat bill,” Grenier said. “We’re always going to be behind the curve, so we have to still mitigate and make it possible for people to stay here.”

Interest in HRDC’s homebuyer education program has been growing consistently, Grenier said. Between 300 and 500 people each year take the class, and some lenders require a homebuyer education class of some sort before financing.

HRDC also administers down payment assistance programming. That money comes from a few different federal, state and local pots, one being the city’s Community Housing Fund. But there’s a maximum purchase price for homes that buyers can use that down payment assistance on, and there are “very few homes” that are priced below that in the county, Grenier said.

The organization’s affordable housing developments are also becoming less feasible as the cost of development continues to rise, Grenier said.

“When we look at a potential development and we’re willing to take zero profit and keep it affordable for 15 or 30 years and we can’t make it work, then anybody in the for-profit industry certainly can’t make it work,” she said. “It’s becoming really practically infeasible.”