How Montana performed a housing miracle
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In 2015, a physical therapist named Nathan Dugan moved to Whitefish, Montana, and fell in love with the place. How could you not? The glaciers, the pine air, the small-town feel. Whitefish was always expensive: When he first got there, Dugan camped on and off for a month before he found an affordable home. But it got far more expensive during the pandemic, when wealthy retirees and digital nomads flooded the tiny town’s tiny housing market. Out-of-staters were making cash offers on homes, sight unseen. Airbnbs started going for Bay Area prices. Rentals dried up. This has become a familiar story across America, where the housing crisis has gotten so severe that even rural communities in northern Montana are feeling the pinch.
Here’s another familiar story: Seeking to capitalize on the real-estate gold rush, a developer proposed building a handsome 318-unit community just north of downtown, on Whitefish Lake. The property would include a series of low-slung apartment buildings and townhomes, including units reserved for low-income families. Whitefish’s residents freaked. Hundreds submitted letters to the town’s planning committee. Local philanthropists, some billionaires, reportedly threatened to pull their support from local nonprofits if city officials did not nix the proposal. Nearly 200 people showed up at a marathon public meeting, one of several, to argue about, and mostly against, the project: It would look too tall, pollute the lake, pollute the night sky with light, change the neighborhood’s character, stress the community’s schools and medical services, destroy wildlife habitats, and increase traffic, which would interrupt snow plows and endanger families fleeing from forest fires. The town rejected the proposal.
Dugan was at that meeting and left incensed. “There’s a gut reaction in places like this: All development is bad, and we need to stop any development to maintain what we have,” he told me. “But the people who showed up to that meeting were all older and generally very wealthy.” They made it sound like the new development would ruin their lives, he said. But those people were doing fine. They already had a home in Whitefish.
Here’s where things get different. NIMBYs have throttled the supply of homes across the country. In Montana, the state government was not just paying attention but primed to do something about it. At the same time that Dugan was steaming over his neighbors in Whitefish, analysts in Helena were worrying about the displacement of middle-class families, and politicians in Bozeman were hearing complaints about long commutes. “I can’t do a town hall in any community in Montana and not have the affordability of housing come up,” Governor Greg Gianforte told me. “Housing prices have just been out of control.”
Last July, Gianforte created a housing task force, bringing together homebuilders, politicians, experts, and advocates, including Dugan, who had gone on to found a housing nonprofit called Shelter WF. In October, the group delivered a series of proposals to state officials; in December, to local officials. Montana’s legislature debated a set of bills based on those recommendations. Then it passed them this spring. The state transformed its land-use policies. It set itself up for dense development. It did this on a bipartisan basis and at warp speed.
Montana’s just one state. But it did something—and maybe enough—to fix its housing crisis.
Over the past decade and change, the country’s housing shortage has spread from coastal cities to suburbs and satellite cities to rural communities and small towns in the Mountain West, the Plains, the interior South. Fannie Mae estimates that the country needs 4.4 million more homes. The National Association of Realtors puts the number at 5.5 million. But the country is not building enough homes to close the gap, or even keep up with population growth.
Millions of families are stuck in apartments they do not want to live in, paying prices they cannot afford. Eventually, many decamp for low-cost, low-wage regions of the country. “Even before the pandemic, there was an increasing trend of people leaving expensive coastal areas like San Francisco, Los Angeles, and New York for more affordable places,” Daryl Fairweather, the chief economist at Redfin, told me. “Then the pandemic hit, and the trend accelerated.”
In recent years, that migration has buoyed or battered Montana, depending on how you look at it. The state’s population surged 1.6 percent from mid-2020 to mid-2021, faster than that of 47 other states. Montana added nearly 20,000 residents while it permitted just 3,000 new single-unit homes. Home prices climbed by nearly 50 percent in a matter of months.
When the pandemic hit, Montana already had a housing shortage; in fact, it had a few of them. First, a dilapidation problem. Building new housing in Montana’s rural reaches is expensive, which leaves many residents occupying decaying and at times dangerous units. (This is a particular problem on Montana’s American Indian reservations.) “If you look at population numbers and counts of housing units in these rural places, it doesn’t look that bad,” Andrew Aurand of the National Low Income Housing Coalition told me. “But when you look at the quality of the housing, the safety of the housing, and the extent to which families are doubling up, the housing crisis is severe.”
Second, the tight market in resort, gateway, and second-home communities. Coastal-city billionaires and rich retirees keep buying up ranches and lodges in Montana. Their shmancy consumer spending creates jobs. But the people working those jobs end up living in campers close by or in homes far, far away, because there is just not enough housing.
Third, a shortage of affordable homes in Montana’s population centers, such as Billings and Missoula. “The math does not work” for homebuilders to create low-income housing anywhere in the country absent government subsidies, Jeffrey Lubell, the director of housing and community initiatives for Abt Associates, told me. The math especially does not work in Montana, where frozen ground shortens the construction season, and where a lack of skilled tradespeople drives up costs.
These problems collided with the state’s pandemic-era population surge. “I started looking around and thinking, Holy cow, prices are going up,” Christopher Dorrington, the director of the Montana Department of Environmental Quality and the chair of Gianforte’s housing task force, told me. The state suddenly had a noticeable homeless population; town squares and vacant lots filled with tents in the summertime. All but the very wealthiest families started feeling strained. “You couldn’t move, because supply was so short,” Adam Hertz, a real-estate developer and former member of Montana’s house, told me.
Gianforte said that the answer was obvious to him: Montana had a supply crisis. It needed a supply solution. His task force soon figured out how to get Montana more housing: Make it possible for folks to build housing units by right, rather than having every development go through a miserable, expensive process of negotiation. Encourage dense development in already dense areas. Cut red tape. Indeed, Montana already had pretty loose building regulations, and legislators loosened them even further—functionally banning single-family zoning and preventing towns and cities from adding onerous zoning policies, among many other changes and investments.
“We obviously did not anticipate being able to get the big wins we did,” Kendall Cotton, the founder of the local think tank the Frontier Institute and a driving force behind the housing bills, told me. “We thought maybe there might be one bill that passed. We ended up getting almost everything that we were asking for.”
Montana’s policies aren’t perfect. There still isn’t enough incentive for developers to create low-income housing units, experts told me. Housing costs won’t decline immediately, because building takes time (and because high interest rates have frozen the development pipeline). Montana has weak tenant protections and too few resources for struggling renters, antipoverty advocates said.
Still, housing experts around the country are cheering. Montana now arguably has the most pro-development, pro-housing set of policies of any state. How did this policy phenomenon happen, and so fast?
The explanation has something to do with the nature of Montana’s housing crisis, and something to do with the nature of Montana itself. The fact that so many people in such a small state found themselves affected at once pushed legislators to act. “We were victims of our own success,” Hertz, the developer and former state representative, told me. “We’ve been having all of these discussions about how to get people to move to Montana and start a business here: How do we get more tourism in Montana? How do we get tech businesses here? We got the demand, and wow, we got caught totally flat-footed on the supply side.”
Politics, for once, helped too. Montana had lower housing prices and fewer roadblocks to development than other states to begin with. Republicans with a strong libertarian streak, like Gianforte himself, are a powerful bloc, and happen to be the kind of folks thrilled to slash red tape. Joining them were anti-sprawl environmentalists, student activists, urban-density advocates, real-estate developers, and antipoverty liberals, creating a coalition spanning from the far left to the far right. The fact that Gianforte pushed so hard on the issue and that Montana’s legislature meets only once every two years put more pressure on those elected officials to get something big done.
Yet perhaps the biggest motivating factor—one mentioned by nearly every Montanan I spoke with—was California. Montana did not want sprawl ruining its wildlands, as happened in the Central Valley and along the Pacific Coast. Montana did not want San Francisco’s sky-high inequality and huge homeless population. Montana did not want middle-class families squeezed out, as they were in Oakland and San Diego. Montana did not want to throttle its own economy, as the Bay Area did.
“If you have single-family zoning and bury your head, you will eventually face San Francisco’s problems. It’s not just the high cost of housing. It’s a high cost of living, wealth inequality, homelessness, and crime,” Fairweather of Redfin said. “All cities should look at San Francisco as an example of what happens when you do nothing.” Montana did, benefiting from California’s missteps and learning from its YIMBY advocates.
Many other communities are doing the same. Washington and Maine are banning single-family zoning, as Oregon did in 2019. A number of cities are allowing single-room-occupancy buildings, getting rid of parking minimums, and letting homeowners build second properties on their lots. YIMBY groups are blanketing the country, pushing for denser development. Dugan’s is one of them. He’s hopeful that the state’s new policies will increase the housing supply in Whitefish, where he and his partner just—finally—bought a home.
How Montana performed a housing miracle