According to the Missoula Organization of Realtors' most recent annual housing report, the median sales price of a home in Missoula hit a record high this year. At $238,700, the typical house now sells for 87 percent more than it did in 2000, when the median price was $127,900.
That's great news for people who own homes, particularly if they plan to sell them and leave town. Given rising property taxes, it's less great for people who own homes and want to live in them. What they ought to do is rent them out.
According to the housing report, the rental vacancy rate in Missoula was a mere 4.1 percent in 2015. Just over half of Missoula residents rent, and those are the ones we can count. When you consider informal leases, undocumented bonus roommates and people who don't respond to surveys, the portion of Missoulians who rent their homes is probably higher.
And boy, are they willing to pay! According to MOR, nearly half of Missoula's renters spent more than 30 percent of their incomes on housing in 2015. That's exciting, considering their median household income was only $27,606. Even though they only make a little more than half what homeowners make, renters in this town give their landlords more money than they spend on taxes or food. And they're not going to become homeowners themselves anytime soon.
At current interest rates, a 20-year mortgage on a median-priced home costs $1,436 a month—or 62 percent of the median renter's income. If you thought 30 percent was bad—and most real estate agents and the federal government agree it is—then I've got great news for you. Combined with low wages, home prices in Missoula guarantee a permanent underclass of residents who will never stop paying rent.
That's why I've coined a new slogan for our fair city: Missoulaa great place to charge other people to live! The exclamation point is for extra excitement. With any luck, this dynamic new slogan will attract even more of the people who make Missoula's housing market great by steadily increasing the population as wages stagnate.
College students, for example. Because many of them get their incomes from loans or parents, students are a great way to keep Missoula's housing market disconnected from its job market. Granted, the University of Montana enrolls 20 percent fewer students than it did five years ago. But President Engstrom's plan to increase enrollment while cutting budgets promises a renewed supply of renters with no increase in economic activity. That's good news for landlords—especially lazy ones, since students are willing to live in conditions few families would tolerate.
Students have long supported Missoula's robust community of slumlords, bartenders and free-clinic employees. But what about tourism? For that, you need people from other places with lots of money. I've got more good news: the median family income in the state of California was $71,015 last year. That's more than double the median income in Missoula.
This is probably just a coincidence, but the median mortgage payment here is about 24 percent of a Californian family's income—around the level financial planners consider wise. The typical house may be out of reach for the typical Missoula family, but for Californians looking to buy an investment property, it's just right.
There's never been a better time to own a home in Missoula and stop living in it. Granted, there's never been a worse time to buy a home—not even right before the massive housing crash that destroyed the U.S. economy in 2008. But if you bought here two decades agoor if you grew up here and are waiting for your parents to die so you can inherit their house—now is a great time to sell out and move away.
We did it! Missoula made us all rich. By "us all," I mean the 48 percent of us who own our homes. But those people made out like bandits—again, provided they're willing to sell or rent their houses and live somewhere else.
That's how a successful town works. Step one: Develop a national reputation as a great place to live, based on beautiful scenery, low cost of living and a flagship university. Step two: Watch the population go up even as major employers shut down and the university crumbles. Step three: Sell out and move to Butte.
I missed out on step one, which happened while I was in high school, so this plan didn't quite work for me. Still, I'm proud to be a part of it. At least I got to join the permanent underclass in a beautiful place, among families who have lived here for generations and now hate everyone else. At least I got to watch Missoula turn into Aspen. Someday, when I'm 50 years old and still renting in a different town, I'll be proud to say I lived here once.
Dan Brooks writes about politics, culture and what else was happening when he was in high school at combatblog.net.