A recent study of housing prices in Montana shows the gap between the median home price in Madison County is more than twice what the median household income can afford.
The White Paper on housing in Montana was released late last month by the Montana Department of Commerce Housing Coordinating Team.
It is the second report released since 2008 and analyzes housing affordability in Montana counties comparing housing, economic and population data from 2000, 2006 and 2008.
For Madison County officials, the report illustrates what many already knew.
“We have known for quite some time that there was a huge affordability problem in housing in Madison County,” said Marilyn Ross, Madison County Commissioner.
In 2005, the county did a housing need assessment in response to concerns from employers around the county that were having a hard time recruiting and keeping employees because housing costs were prohibitive, Ross said.
“There was a serious lack of accessible housing – housing that most of the jobs in Madison County would pay for,” she said.
One of the issues in Madison County in 2005 was the abundance of second homeowners had pushed up the price of all housing, Ross said.
“The second homes, the recreation lands that had pushed the value of the land up so high that it really put real estate and housing out of reach of working people,” she said. “There’s no way they could afford the cost of the housing that was available.”
With the recent report, it seems that the problem in Madison County has only gotten worse.
The White Paper on housing in Montana was published at the behest of Gov. Brian Schweitzer, said Penny Cope, with the housing division.
The report was organized by the Montana Department of Commerce Housing Coordinating Team, Cope said. This is a team made up of representatives from federal and state agencies, along with people from non-profit and industry groups.
The group meets regularly to discuss housing issues around the state, she said. The group commissioned the White Paper, with the encouragement of Schweitzer, to give some definition to the problems different counties were facing when it came to housing.
“We knew we needed to define the problem and that is really what this white paper is,” Cope said.
In Madison County, the problem clearly is the gap between what people can afford and what the actual costs are.
The median home price for Madison County is $335,000. The median household income is $37,576. Given the median household income, an affordable home would cost $132,505. This figure is based on the generally accepted standard that an affordable housing requires no more than 30 percent of a household’s income.
The gap between the median home price and the affordable home price is larger in Madison County than any other county in the state.
As comparison, the median home price for the entire state is $168,200 and the median household income is $43,948, which means an affordable home is $154,975.
Comparing the 2008 numbers to the 2000 numbers also shows a pretty dramatic change.
In 2000, Madison County didn’t have an affordable housing problem. The median home price in Madison County was $87,500 and the median household income was $31,457 and on that income an affordable home was $110,927.
The way to decrease the housing affordability gap is to either increase income or decrease home prices, Ross said.
Madison County is currently working with Headwaters Resource Conservation and Development Area, Inc. in Butte on developing a regional community land trust, she said.
Headwaters RC and D is a nonprofit group that works on community issues like technical assistance for natural resource management along with community and economic development.
The county has been looking at the community land trust option for a few years, Ross said.
The land trust is a nonprofit entity that can help reduce the price of homes by owning the land the home sits on, reducing the cost of the home. The land trust leases the land to the homeowner for a very small price.
The purchaser of a community land trust home agrees to an appraisal-based price that is less than market value.
When the home is sold, another appraisal is done and equity is earned, based on the difference between the first and last appraisal. The land stays with the land trust and the cost of the home is kept below market value making it affordable for the next buyer.
Right now Headwaters RC and D is just in the beginning phase of looking at a regional community land trust to serve southwest Montana, said Warren Harden, economic development planner with Headwaters.
Headwaters serves eight counties in southwest Montana and each county has different housing issues, Harden said.
“There’s really similar needs for affordable housing, but different pressures that’s causing those needs,” he said. “The county commissioners across the board see affordable housing as one of the number one issues.”
Headwaters RC and D is looking at hiring a staff member to work with the eight counties on coordinating the community land trust, Warren said.
Right now, Madison County is the only county to begin the discussion about community land trusts, he said.
Though the community land trust would be a way to address the problem of affordable housing in Madison County, it would only be part of the solution, Ross said.
“It certainly is a start and down the road I really see it becoming a very important answer in rural communities for those housing needs,” she said.