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Missoula's Rising Home Values and Shifting Ownership in a Mountain Setting
CATEGORY
Property Value
DATA
Percent Owner Occupied
Housing Prices
Median Rent
Population
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Property Value
Percent Owner Occupied
Housing Prices
Median Rent
Population
Missoula, Montana, nestled in the heart of the Rocky Mountains, is known for its outdoor recreation and vibrant cultural scene. This city has experienced notable fluctuations in homeownership rates and significant increases in both average home prices and average rent prices over the past decade. The interplay between these factors has shaped Missoula's housing market, reflecting broader economic trends and local dynamics.
The relationship between homeownership rates and average home prices in Missoula has been complex. In 2013, the homeownership rate stood at 44%, while the average home price was $239,486. By 2019, homeownership had increased to 52%, coinciding with an average home price of $322,918. However, this trend reversed in subsequent years. In 2022, the homeownership rate decreased to 47%, while the average home price surged to $533,564, indicating a potential affordability challenge for prospective buyers.
Federal interest rates have played a crucial role in shaping homeownership trends in Missoula. The period from 2013 to 2016 saw historically low interest rates, hovering around 0.1% to 0.4%. This coincided with a slight increase in homeownership from 44% in 2013 to 46% in 2016. As interest rates began to rise, reaching 1.83% in 2018 and 2.16% in 2019, homeownership rates fluctuated, ultimately reaching 52% in 2019. However, the subsequent drop in homeownership to 47% in 2022 occurred despite low interest rates, suggesting other factors were at play.
Renter percentages and average rent prices in Missoula have shown a general upward trend. In 2013, 56% of residents were renters, with an average rent of $763. By 2022, the renter percentage had decreased slightly to 53%, but the average rent had increased significantly to $1,044. This trend suggests that while slightly fewer people were renting, those who did faced higher costs. The city's population growth, from 69,116 in 2013 to 76,960 in 2022, likely contributed to the increased demand for rental properties and subsequent rise in average rent prices.
In 2023 and 2024, Missoula's housing market continued to evolve. The average home price in 2023 was $541,377, showing a slight increase from 2022. In 2024, the average home price further rose to $559,719. Interestingly, federal interest rates also increased during this period, reaching 5.02% in 2023 and 5.33% in 2024, which could potentially impact future homeownership rates and market dynamics.
Looking ahead, predictive models suggest that Missoula's housing market will likely continue its upward trajectory. Over the next five years, average home prices are projected to increase by approximately 4-6% annually, potentially reaching around $715,000 by 2029. Average rent prices are expected to follow a similar trend, with an estimated annual increase of 3-5%, potentially reaching $1,300 per month by 2029.
In summary, Missoula's housing market has been characterized by rising average home and rent prices, with fluctuating homeownership rates. The interplay between federal interest rates, population growth, and local economic factors has contributed to these trends. As the city continues to grow and evolve, balancing affordability with demand will likely remain a key challenge for Missoula's housing market in the coming years.
