Officials from the Rocky Mountain Association of Realtors say that when it comes to growing and sustaining a workforce in Butte and Anaconda, access to affordable housing is paramount.
This will be the topic of discussion during a housing summit next week, during which economists, government leaders from Butte and Anaconda, and officials from the real estate and related industries will speak on the topic.
The seminar, dubbed the Butte and Anaconda Housing Summit, begins 11 a.m. Tuesday at the Clarion Inn Copper King Hotel & Convention Center and is being organized by Jennifer Shea of Century 21 Shea Realty, Tina West of Berkshire Hathaway HomeServices and Judy Kivela, present of the RMAR and owner of Kivela Real Estate. Shea and West are co-chairing the event. Attendance is free.
According to Shea, housing stock numbers in Butte and Anaconda are low, and the two communities are anything but alone. In fact, Shea said Wednesday, low housing stock is a nationwide trend.
Economists and media professionals alike have speculated what could be driving the sluggish pace of new housing development. Explanations range from skittishness among developers from the 2008 housing crisis to high development costs due to government regulations.
Patrick Barkey, director of the Bureau of Business and Economic Research at the University of Montana, is the keynote speaker for Tuesday’s summit.
In 2019, BBER’s annual Economic Outlook Seminar took up affordable housing in Montana as a theme.
For the seminar Barkey composed an article, in which he stated that “the resumption of price growth since 2012 has again outpaced income growth … Despite this deterioration, prices relative to income are lower today than they were just before the housing bust 11 years ago.”
“To some people’s way of thinking, there may not be a problem with house prices at all,” he continues, noting the solution to housing affordably depends on one’s view of the problem.
“Certainly in many Montana housing markets the level of prices relative to income falls short of what would be considered unaffordable. But even in the faster-growing areas where prices are much higher, the regulations impacting new construction represent a sort of tax on development, which forces developers to pay the costs incurred for the congestion and inconvenience of construction and density.”
Incidentally, during the Butte portion of the seminar, Barkey took a poll among attendees, asking them what they thought was the leading reason for increased housing prices.
Sixty-two percent of attendees said they felt high housing prices were due to supply and demand. Ten percent said local regulations were driving up prices. Twenty-nine percent said they felt housing prices weren’t high in Butte and Southwest Montana.
Access to affordable housing may be especially problematic for renters living below the poverty line.
According to data released last year by the Montana Budget and Policy Center, a Helena-based nonprofit that specializes in research and analysis on issues affecting low- and moderate-income Montanans, there is not a single county in the state where a minimum-wage worker can afford a rental home at fair market rent.
Montanans making minimum wage need to work 73 hours to afford a two-bedroom unit in their local markets. In Silver Bow and Deer Lodge counties, those workers need to work 67 hours and 64 hours to afford the same units.
The organization’s data also shows that 84 percent of low-income renting families in Silver Bow County are “cost burdened,” spending more than 30 percent of their income on housing. In Deer Lodge County, that number is 71.1 percent.
The market for low-income renters is even worse in Missoula and Gallatin counties, where the percentage of those who are cost burdened is 92 and 88 percent.
In short, while Butte and Anaconda’s homes and rents are much more affordable than in bigger markets in the state, for a portion of renters living below the poverty line, affordable housing is out of reach.
Shea, Kivela, and West said Wednesday that homes under $200,000 are by far the most in-demand properties in the Butte and Anaconda markets, but there is a lack of houses in that range.
As soon as home in this range goes on the market, the three said, it’s quickly snatched up.
Investors taking advantage of Butte and Anaconda prices may also be having an impact.
Kivela said she could remember a time when there was a portion of low-end homes in the Butte and Anaconda market that were around $30,000 to $70,000. Today, those same homes are around $70,000 to $120,000, she said. Meanwhile, some of her clients can only afford homes under $80,000.
“Here we used to have lower-end houses, but people are buying them and redoing them for either investment or rental properties,” said Kivela, noting that the supply of low-end homes has decreased in recent years.
Homes in that range often require costly repairs, she added, which presents a problem for low-income families.
Investors, meanwhile, can afford to make the repairs and flip such homes and put them on the market for twice as much.
When asked what needs to be done to make affordable housing more accessible to working people in Butte and Anaconda, the three real-estate professionals said the answer is simple: Build more houses.
But to get that done, Shea said, more infrastructure in the form of water, electric and sewer lines is needed to create subdivision-type lots that are suitable for modest homes that working people can afford.
“We do need more affordable family homes,” she said.
The three said Wednesday that next week’s summit will also be a good opportunity for home buyers and sellers alike to get educated about buying and selling a home and ask professionals in the industry questions. It will also be an opportunity, they said, for residents to express their opinions in front of local leaders.
“There’s a lot to explain to a home buyer that they don’t really get if they’re new. But if they come to this summit they can see everybody in one place and find out everything they wanted to know about buying or selling a house in one spot for three to four hours,” said Kivela.
MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.