The Urban Land Institute has released a report highlighting the urgent need for increased housing supply to combat escalating unaffordability. The crisis, influenced by factors such as climate change, immigration policies, the pandemic, and local land-use regulations, was discussed at a presentation in Kalispell on January 17. Attendees included bankers, real estate agents, residents, developers, and nonprofit representatives. Presenters from the institute examined regional post-pandemic housing challenges and forecasted trends for the 2025 real estate market. They emphasized that while household numbers are rising, housing units are not keeping pace, leading to significant pressures on both rental and purchase markets.
Housing shortages have become a pressing issue across the United States, with various factors contributing to the current crisis. Rosie Hepner, Vice President of the Urban Land Institute’s Terwilliger Center for Housing, explained during a recent presentation in Kalispell that multiple elements are converging to create this challenging scenario. Climate change, shifts in immigration policy, the lingering effects of the COVID-19 pandemic, and stringent local land-use regulations all play crucial roles. Hepner noted that for a healthy housing market, there should be one new unit added per new household. However, most areas are failing to meet this benchmark, leading to increased pressure on both rental and purchase markets.
In response to these challenges, policy solutions include implementing zoning reforms, making small regulatory adjustments, and utilizing vacant or underutilized land. According to the Home Attainability Index for 2024, these measures aim to alleviate some of the strain on housing markets. Notably, Kalispell ranked third nationally for the largest increase in new home costs between 2020 and 2023, with median monthly mortgages rising from approximately $1,538 to $2,368—a 54% increase. This trend is mirrored in other tourist destinations like Bozeman, Boise City, Coeur d'Alene, and Idaho Falls.
Erica Wirtala, Public Affairs Director for the Northwest Montana Association of Realtors, pointed out that Flathead County faces unique challenges due to limited developable space—only 30% of the county can be developed—and the influx of second homes driven by its status as a tourist destination. Kim Morisaki, Executive Director of the Northwest Montana Community Land Trust, added that the shortage of starter homes complicates efforts to retain employees who cannot afford to live in the area. With a median home price around $530,000 and only 36 homes available between $300,000 and $400,000, the situation is particularly dire.
The pandemic exacerbated these issues, especially in resort communities where higher earners relocated, driving up prices. Affordable housing initiatives, such as modular homes, offer potential solutions. Molly McCabe, CEO of HaydenTanner, presented findings from the Emerging Trends in Real Estate 2025 report, which surveyed over 2,000 industry experts. McCabe highlighted that climate change's impact on real estate has been more significant than anticipated, influencing migration patterns northward. Additionally, she warned that restricting immigration could lead to labor shortages, impacting housing and commercial spaces.
To address these multifaceted challenges, innovative approaches like engineered wood in modular home designs, proposed by Ben Kaiser of LSW Architects, present promising solutions. These materials are structurally robust, environmentally friendly, and well-insulated, offering a viable path forward. Ultimately, solving the housing crisis requires a comprehensive strategy that considers economic, environmental, and social factors, ensuring sustainable growth and affordability for all.