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Bozeman's Future- What Lies Ahead

by Hart Real Estate Solutions

Earlier this year, we learned that Bozeman had hired the city’s first affordable housing director in an effort to generate solutions to help reduce the gap between the cost of housing and affordability. In a recent city report, 22% of homeowners were found to be spending more than 35% of their income on their mortgage payment, while 44% of the city’s renters are spending more than 35% of their income on a monthly rent payment.

With current affordability statistics this high, Bozeman’s median single-family home price having reached $398,000 last year, and the current population estimated to be above 47,000 (and growing), it’s more important than ever for this new director to begin mandating affordable housing across all types of homes.

Another New Position

Another top priority for the city, in addition to working on the creation of more affordable housing options, is the construction of a new public safety complex. Whether the city will go alone to build the new center or partner with Gallatin County is to be determined, but either way, the plan will come with a big bill that will need plenty of support before citizens vote on it.

When it comes to large city plans that have an impact on Bozeman’s future (such as affordable housing options or the new safety complex), there’s a bit of a disconnect with city hall’s goals reaching residents. In effort to better communicate the city’s plans to citizens, Bozeman will be hiring its first communications coordinator.

This new role will serve as City Hall’s voice in order to manage which information goes to the public, and how. Largely intended to be an outreach position, the person who fills the job will keep citizens informed via social media and traditional press releases and will likely step outside of the traditional 8-to-5 schedule. Although the search to fill the position is national, the job could be filled as early as April if the city finds the right applicant.

Looking Forward

When Bozeman reaches 50,000 people (and so far, it’s on track to do so very soon), a Metropolitan Planning Organization (MPO) must be established, per the federal law. This organization will help with transportation planning and give citizens more control over what happens to the area. At this time, Bozeman will also receive federal money for future expansion projects. If the city and the county can work harmoniously together, some officials believe that an MPO would be beneficial as Bozeman continues to grow, while others are skeptical because of uncertainties with a limited pot of money and strained relationships between Bozeman and Gallatin County.

As the future unfolds and new city positions are created to help determine the direction in which Bozeman will develop, it will be interesting to see how some of the city’s current issues are solved in terms of both population growth and more affordable housing options.

More Affordable Housing Coming to Bozeman

by Hart Real Estate Solutions

Bozeman is growing exponentially— this is no surprise. What might be surprising though is how quickly it is predicted to grow by 2045. Between 2000 and 2016, Gallatin County added roughly 2,200 new residents each year. From 2017 to 2045, Gallatin County is expected to gain nearly 55,000 new residents, with 50% of these residents expected to live in the City of Bozeman.

It’s been a seller’s market in Bozeman for some time now, with both available inventory and housing affordability increasingly becoming more of an issue in our market. The greater Bozeman area has experienced an average 8.3% increase in median sales price over the last 5 years. Currently, the median home price in Bozeman is $398,000— meaning that a household needs to earn at least $68,400 per year, or $32/hour for one earner, in order for this home to be considered affordable at the 30% of income affordability standard. While the median household income in our area is $68,000 (indicating that home prices are in line with incomes), this statistic doesn’t account for the quality of the housing that is available at this price.

However, with the city’s prices on track to surpass wages, and so many people moving to the area over the next few decades, the need for more affordable housing options is critical. The latest affordable housing project is being led by HRDC, and will be constructed on a parcel of land that partially wraps around Baxter Square Park (just under 3 acres), a quarter mile northwest of the North 27th Ave and Baxter Lane intersection. The 24 townhomes will be available to families who earn between $30,000 and $40,000/year, and those who are interested must financially qualify and complete HRDC education and home buying courses.

The Location Dilemma

Years ago, previous developers created a human-made pond adjacent to the future location of the new affordable townhomes. Their project was stalled in 2008 after the recession and was never fully completed. Over the past decade Cattail Creek merged with the pond, creating an expanse of wetlands in the area, resulting in a difficult location to build on.

Originally, HRDC had plans for a few single homes— they’ve since asked city commissioners to approve constructing the new affordable units closer to the pond, in addition to reducing both the size of the lots and the amount of space between homes and the streets. HRDC also proposed the creation of dog stations, individual lot fencing, and enhanced building signs for each of the units. City commissioners approved the project on February 26th, as it falls in line with their preference for constructing more homes on less space as Bozeman continually adds several thousand new residents every year. 

Future Location for Affordable Townhomes (Approximate)

 

Next Steps

If Bozeman continues to grow as quickly as it is predicted to (an additional 27,500 residents by 2045), then projection estimates will demand 12,700 new housing units over the 2017 through 2045 time period. In order to construct all of these units, developers need between 1,800 and 3,100 acres— the current supply in city limits for residential development is 1,300 acres.

While some of these new 12,700 units will be single-family homes, others will be multi-family buildings, townhomes and duplexes. Some will be affordable housing opportunities, and others won’t be.  At any rate, Bozeman IS growing, and quickly. Whether growth means that we expand up, or expand out, expansion of some sort and the addition of more affordable housing options will be necessary over the next few decades as our city prepares for massive growth.

A New Solution: Bozeman’s First Affordable Housing Director

by Hart Real Estate Solutions

Bozeman’s Affordable Housing Action Plan pinpointed several major strategies to implement over a 5-year timespan (2012-2016). Its purpose was to work on providing more affordable housing units and down payment assistance for both renters and homeowners alike. While this plan outlined several goals that were partially met by the end of 2016, affordable housing in Bozeman is still a significant issue that needs continued attention and work in the future.

In 2010, 28% of homeowners and 49% of renters in Bozeman were living in unaffordable housing, when using the widely accepted benchmark amount of <33% of total income for homeowners and <30% of total income for renters. It’s important to note, however, that there is no universal home price or rent benchmark that defines “affordable”— this varies by income level and should be based on ability to pay.

 By 2015, at least 4,000 of the city’s 8,400 renters were paying rents at or above the 30% threshold, while a third of homeowners were paying at least that much, if not more.

Is Something Being Done to Help?

With these statistics not having improved much in recent years, the City of Bozeman has decided to hire its first affordable housing director. The person who will fill this new position (expected to begin by the end of January) will be responsible for generating solutions to help reduce the gap between the cost of housing and how much many Bozeman residents can afford to pay.

Six months ago, Bozeman planning adopted a new rule that mandated that builders and developers would have to either sell 3 in 10 homes in new developments at $260,000 or less, OR 1 in 10 homes at $215,000 or less, subject to change based number of bedrooms per unit. The city has been trying to keep up with this rule, which is where the need for an affordable housing director stems from.

Additionally, the new director will help to track housing projects from the time a building permit is issued to the time that someone closes on their home, in order to ensure that this 6-month-old rule is followed from start to end.

As 2018 unfolds, it will be interesting to see how this new position begins to change the affordable housing market and what impacts it will have on many of Bozeman’s renters and homeowners who are currently above the income threshold for housing. 

Bozeman Commission Passes Inclusionary Zoning Plan

by Hart Real Estate Solutions

After nearly a year of discussion and research from residents, consultants and builders alike, and after a voted delay in September, the Bozeman City Commission decided to move forward with a two-stage plan to help lower home values in Bozeman.  The plan, ideally, will help Bozemanites with modest means better afford to buy homes within the city limits.

Although the areas surrounding Bozeman have more reasonable home and rent values and although Bozeman’s cost of living is not outrageously above national averages, the city made it clear, by their decision, that they want Bozeman itself to remain a diverse and affordable place to live. Opponents to the plan did not want to hamper down a recently recovered housing market. Builders, who require on average 22 subcontractors to build a home, also felt the plan put too much financial risk on their shoulders.

The proposal has two phases to try to get builders and developers to start building affordable homes—one voluntary and one mandatory. The mandatory phase would only come into use should the voluntary phase not produce 54 affordable homes within the next two years.  Only the mandatory phase includes plans for inclusionary zoning – the most controversial aspect of the new ordinance.

The voluntary phase, as mentioned, requires that at least 54 affordable homes be built in 2 years within Bozeman city limits. During the voluntary phase, the city would try to entice builders to add affordable homes into their existing plans by including incentives like reduced lot size requirements, relaxed parking standards, expedited plan review and impact fee subsidies, incentives the city already may have added anyways. The voluntary phase also requires that at least 14 affordable homes are built by September 2016, otherwise, it would revert to the mandatory phase after only one year.

If the voluntary phase fails, then the city would move to a mandatory inclusionary zoning ordinance. In this phase, subdivisions would be required to either make 1 out of ever 10 units affordable to Bozeman residents making 80% of Bozeman’s median income or to make 3 out of every 10 affordable to residents making the median income.

Please read Eric Dietrich’s great follow up article going into the nitty gritty details of the new zoning ordinance here.

The new plan should help lower home values in Bozeman, helping free up more buyers in Bozeman’s housing market. How it will affect sellers and builders is yet to be determined. Rental values might also be impacted. High rents have been keeping investment properties in Bozeman at very high values. With additional homes on the market, both rental values and investment property values may decrease, helping keep renters in home while also helping them jump into homeownership.

 

Source: http://www.nbcmontana.com/news/Bozeman-City-Commission-passes-inclusionary-housing-ordinance/36512554

http://www.bozemandailychronicle.com/blogs/city/questions-and-some-answers-about-bozeman-s-new-housing-plan/article_be2e9b16-b1e8-5ce7-8f34-982e270cd21e.html

http://www.bozemandailychronicle.com/news/city/split-city-commission-passes-housing-plan/article_7080761a-5287-59dc-a4fd-7f73a12e3f7e.html

 

 

Displaying blog entries 1-4 of 4

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