Housing affordability is on the front page of the Paper of Record this morning, as the New York Times Editorial Board calls for a growing housing supply across the country to address national affordability challenges.  

The numbers are stark in Bozeman, where the median home costs more than 8x the median income. That puts us on par with New York, Boston, and Los Angeles, and less affordable than Seattle. 

NYT argues that cities need to build more housing to get prices back under control.  

But in places like Bozeman, a steady supply of new housing might only be one part of the solution. According to NYT, while Bozeman has been building at the same rate as Austin, Austin’s housing market is half as expensive as Bozeman’s. 

What’s going on? 

For one thing, we think that the Ed Board might be conflating rental housing construction with for-sale housing construction/affordability – we’ve seen rents drop significantly in response to the thousands of new units that have come online in last few years. We haven’t seen that same dynamic in the for-sale market. 

Bozeman is an amenity community, an attractive place for newcomers with bigger budgets than local earners. Our mountains and rivers will always attract folks to the Gallatin Valley. In fact, the Ed Board acknowledges that Amenity Communities might have tougher challenges on their hands, but doesn’t engage with the problem much. 

“This corner contains places where prices are high despite high levels of construction. It contains fewer metro areas than the other corners. Some of the places here are resort towns where wealthy buyers have driven up prices.”  

Maintaining a healthy supply of housing in line with population growth is critical for preventing exorbitant increases in housing costs, but it will generally not take us back to pre-2020 housing prices. 

Without more significant investment in new below-market housing, home prices will likely remain out of step with local incomes in the short-to-medium term. 

So what’s the solution?

First, Bozeman needs to maintain a healthy supply of housing. During the pandemic, rapid short-term population growth caused housing prices to nearly double in 2 years. But that dynamic had already been unfolding in slow motion in the decade prior as population growth consistently exceeded housing supply growth, leading to a critically low vacancy rate. Pandemic-era population growth pushed Bozeman’s housing market to the brink. In order to keep prices in check into the future, new housing construction needs to stay consistent with population growth. 

More importantly, Bozeman needs to go further and invest in housing that is permanently affordable to households that earn local incomes. Communities that can’t provide real economic opportunity and mobility to their workforce can never thrive in the long run. As the NYT puts it:  

“High prices prevent families from buying homes, feeling fully invested in their communities and building wealth. They increase generational inequality and breed cynicism among people in their 20s and 30s. They can prevent couples from having as many children as they want.”

 

“Some young renters who would like to remain in these areas leave for cheaper housing elsewhere. People from other regions sometimes cannot move in to accept new jobs, preventing them from taking a step on a path of upward mobility.” 

Headwaters is powering community vibrance and economic opportunity in the Gallatin Valley by creating and stewarding permanently affordable homes. Through the Community Land Trust Model, we can preserve a local supply of homes that will be affordable to generations of local households. The main barrier to our work remains the cost of construction in the Gallatin Valley. If a home costs $500,000 to build, and we want to sell it to a middle-income household for $400,000, we need to raise $100,000 to sell the home below-market and preserve it as permanently affordable.  

Headwaters is working to bridge these gaps and grow our community’s supply of permanently affordable homes. But if Bozeman wants to truly rise to the challenge, conversations about further public investment in permanently affordable housing need to remain at the forefront of the community conversation.