Home to stunning national parks and a tranquil atmosphere, Montana is certainly appealing to property buyers. But while many of the local counties offer relaxed small-town lifestyles, the cost of living in Montana seems more similar to what you’d expect in a big city. Keep reading to find out why Montana is so expensive.
The Inflation of the Housing Market
The high cost of living in Montana comes down to the booming local property market. According to Patrick Barkey, the Director of the Montana Bureau of Business and Economic Research, housing prices have more than doubled since the year 2000 across five Montana counties.
The inflation of the market began in the 1990s and became worse in the 2000s. Though the 2008 Global Financial Crisis slowed things down, the price of houses in Montana has risen by 4.1 percent every year since the end of the recession.
What’s Driving the Housing Boom?
The booming property market in Montana may come down to a variety of factors affecting supply and demand. First and foremost, buyer interest is naturally strong in the state because it’s a desirable place to live. With national parks and majestic views abounding, how could it not be?
In addition to the natural beauty of the local landscape, high demand may be exacerbated by people moving to Montana following the COVID-19 pandemic. When speaking to NBC Montana, local real estate broker Paulette McMannis explained that people with ties to the state, such as those who grew up there or with family there, are moving back due to concerns over the pandemic.
With workplaces offering remote work opportunities, an increasing number of people are choosing to live in remote locations where they may have family ties.
From the supply side of the scale, the Missoula Current reports that strict local building regulations, such as impact fees or density restrictions, are causing building prices to rise, consequently reducing supply. Also, 29% of the state is covered by wetlands, agricultural land, and federal lands which can’t be sold, thus putting tighter constraints on the supply of new housing.
The combination of less supply and more demand naturally drives up the average price point.
How Does the Housing Boom Affect the Rest of the Local Economy?
It’s not just housing prices that are inflated in Montana. Bloomberg reports that in the town of Bozeman, where housing prices have really skyrocketed due to increased demand from out-of-staters, the cost of living is now 20% higher than the national average.
Barkey explained that the higher housing costs in Montana are causing a ripple effect through the rest of the local economy, where costs for general goods and services are rising in response to the inflated housing prices. For example, according to Love Money, Montana is now more expensive when compared with other states in the country when it comes to groceries; food shopping costs 4.6% more than the national average.
Due to increased demand and reduced supply, the housing market in Montana is experiencing a significant boom. These high prices trickle down into the rest of the economy, resulting in a higher cost of living than the national average. While Montana is naturally a desirable place to live, the consequences of COVID-19 have paved the way for an influx of new residents into the state, which is accelerating the rise in prices.
Have you been affected by price inflation in Montana? Do you have any questions about the high cost of living? Let us know in the comments below.