By Jacob Kuntz, Executive Director of Helena Area Habitat for Humanity
Imagine our community’s housing challenges as a cruel game of musical chairs. As housing becomes more expensive, the most vulnerable are the first to lose their seat. In 2019 the average sales price of a home in the Helena area was $280,000. Today that number is over $470,000. That is a 68% increase in four years.
In that same time the cost of rentals in our community has skyrocketed. Lewis and Clark County ranked in the top five counties in the nation for rent increases. Today, it is hard to find a two-bedroom apartment for less than $1,500 a month. But the costs of affording a two-bedroom apartment dwarf the cost of a mortgage on an average home in Helena. That number currently stands at over $3,000 a month, assuming a downpayment of close to $50,000 and interest on a 30-year note of 7.25%. A family would need a household income in excess of $120,000 to afford the basic home.
If it was just the cost of housing, coupled with current interest rates, we would have enough on our hands. But add to all this the increase in property taxes estimated at an average of 49% statewide, the increases in insurance to accompany rising home valuations and labor, and a 28% increase in Northwestern’s residential energy rates since 2022 and we are right in the middle of a perfect storm in housing affordability.
Back to that game of musical chairs. As households with lower incomes (<80% area median income which make up 80% of Montana’s population) are unseated from homeownership, they add increased pressure to the rental market, with the most vulnerable among renters unseated from housing for good. We are seeing only the initial signs of individuals and families experiencing homelessness in our community. The cruel game continues and is increasing in pace and intensity.
I have spent the last year and a half as a member of the Governor’s Housing Task Force and was introduced to the term “attainable housing”. Over the years the terminology to describe affordable housing has shifted regularly. It’s curiously challenging to describe the work we do without conjuring images of blighted neighborhoods or Soviet tenement blocks. The term “attainable” refers to unsubsidized market rate housing and is often directed to households making between 80-120% of the median income, but those incomes don’t represent most of Montana’s population. The median income for a family of four in Lewis and Clark County currently stands at $104,149, up from $76,000 in 2018. I have a hard time imagining the 37% increase is driven by pay increases alone. What we know now is that local small businesses (and even large businesses) can’t afford to pay their employees enough to afford the average home in the Helena area. Businesses would need to pay more than $25/hour for a worker to afford the basic 2-bedroom apartment. The cruel game won’t end with the unseating of vulnerable individuals and families but will extend to vulnerable businesses who are unable to find workers to fill key positions. After all, employees need a home.
So, when will the cruel game end? A few years ago, our organization realized we needed to consider the full cost of a home when building. These costs include direct construction expenses to build the home with interest. We also factor in the costs of insurance, property taxes, utility costs, and long-term maintenance. To control building costs, we engage future homeowners and volunteers to keep labor costs down. To address utility costs, we build very energy efficient homes and even partnered with Bonneville Power in Washington to perform energy modeling on our home designs. To control long-term maintenance costs, we build very durable homes with quality materials. Rising land costs have been our greatest challenge. To address this, we are now going into the land development business in East Helena. Helena Area Habitat for Humanity is currently in the process of designing a world-class neighborhood there to serve a wide range of incomes.
We could build thousands of affordable (and attainable) homes in the Helena area only to have these homes undermined by forces beyond our control, namely rising insurance, property tax and utility rates. In a time when the cost of a home is higher than ever before, these forces require thoughtful consideration of how they impact our community’s workforce.