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2022 Whitefish Area Community Housing Needs Assessment Update Prepared by: Wendy Sullivan, WSW Consulting, [EMAIL REDACTED] Agnew::Beck Consulting, Inc. Draft, August 5, 2022 ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 1 Contents 1. Report Organization 4 2. Definitions 5 3. Executive Summary 6 Purpose of this Assessment 6 Area of Study 7 Community Housing Needs in the Whitefish Area 7 Why Is There a Community Housing Problem? 8 Moving Forward 11 4. Resident Income Distribution and Attainable Prices 12 What Home Prices are Attainable for Whitefish Area Households? 12 Whitefish Area Spectrum of Housing Needs 13 5. Housing Inventory 16 Housing Units – Total Inventory and Occupancy 16 Housing Built Since 2016 17 Subsidized Community Housing Inventory 19 Housing Tenure 22 Short-Term Rental Inventory 22 Proposed and Pending Development 24 6. Jobs and Seasonality 27 Jobs Estimates and Projections 27 Seasonality of Jobs 28 Average Wage 29 Unemployment Rate 30 Commuting Trends 31 7. Housing Market and Availability 33 For-Sale Market 33 For-Rent Market 37 8. Community Housing Needs Estimate 40 Catch-Up Needs (2021) 40 Keep Up Needs (2021 to 2030) 42 Total Needs (2021 to 2030) 43 ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 2 List of Figures Figure 1. Whitefish Zip Code 59937 ("Whitefish Area") 7 Figure 2. Whitefish Area Housing Needs Bridge, 2022 8 Figure 3. Whitefish area growth rate over time 9 Figure 4. Housing needs and total housing built between 2016-2021 10 Figure 5. Whitefish Area Housing Needs Bridge, 2022 15 Figure 6. New Construction by Housing Type 2004-2021 (Whitefish Area 59937) 18 Figure 7. Estimated owners by place of residence – Whitefish Area 2021 21 Figure 8. Ownership of Homes by Type of Unit: 2021 22 Figure 9. Jobs Estimates: 2016 to 2021 27 Figure 10. Flathead County Employment by Month 2016 and 2021 29 Figure 11. Average Annual Wage: Flathead County 2005 to 2021 30 Figure 12. Average Yearly Unemployment Rate: Flathead County, 2005-2021 31 Figure 13. Median Residential Sales Price Comparison: 2015/2016 and June 2022 34 Figure 14. Percentage of Sold Homes by price: 2015/2016 and 2021/2022 35 Figure 15. Residential For-Sale Listings: July 2016 and June 2022 36 List of Tables Table 1. Median Residential Sale Prices by Community, 2015/2016 to June 2022 9 Table 2. Flathead County AMI by Household Size: 2022 12 Table 3. Maximum Affordable Housing Costs 13 Table 4. Whitefish Area Households by AMI Percentage: Owners and Renters 2022 14 Table 5. Housing units – total inventory and occupied units 16 Table 6. Occupied Housing Unit Trend: 2010 to 2020 (est) 16 Table 7. Housing Units Constructed/Permitted: 2016-2021 (Whitefish Area 59937) 17 Table 8. Whitefish Area Community Housing Inventory – Ownership 19 Table 9. Whitefish Area Community Housing Inventory – Rentals 19 Table 10. Expired Community Rental Units 20 Table 11. Owner- and renter-occupied housing 22 Table 12. Active Short-Term Rentals in the Whitefish area 2019-2022 23 Table 13. Under Construction and Pending Approvals (Residential) – Whitefish 2022 24 Table 14. Under Construction and Pending Approvals (Commercial) – Whitefish 2022 26 Table 15. Rezone Applications – Whitefish 2022 2022 26 ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 3 Table 16. Jobs Estimates and Projections: 2016 to 2030 28 Table 17. Average Annual Wages, All Industries – Flathead County and the Whitefish Area 29 Table 18. Where Whitefish Area Workers Live 2016 and 2019 31 Table 19. Whitefish Area In-Commute Mileage and Expenses 32 Table 20. Median Home Sale Price – Whitefish Area, 2015/16 to 2022 (Jan-May) 33 Table 21. Change in Median Home Sale Prices by Community, 2015/2016 to June 2022 34 Table 22. Whitefish Area (59937) For Sale Listings by Type and Price, June 2022 36 Table 23. Homeowner Income Distribution Compared to For-Sale Availability 37 Table 24. Market Rents of Managed Long-Term Rentals by Unit Size, June 2016 vs. June 2022 38 Table 25. Market Rents of Vacant Units by Bedroom Size: Whitefish Area (59937), June 2022 . 38 Table 26. Market Rents of Vacant Units by AMI: Whitefish Area, June 2022 39 Table 27. Renter Income Distribution Compared to For-Rent Availability 39 Table 28. Update of Housing Needs: Whitefish Area, 2016 to 2021 41 Table 29. Estimated Remaining Community Housing Needs: 2016-2021 42 Table 30. Keep up needs: 2021-2030 43 Table 31. Total Needs: Catch-Up Plus Keep-Up: 2021 – 2030 43 Table 32. Total Needs by Tenure and Price: 2021 - 44 ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 4 1. Report Organization This report updates the 2016 Whitefish Area Workforce Housing Needs Assessment. The information presents trends and progress over the past six years, along with updated community housing needs estimates through 2030. The report is divided into five sections, as follows: Resident Income Distribution and Attainable Prices ² which illustrates the income profile of households that call the Whitefish Area home and the purchase prices and rents that households making their living in the area can afford. Understanding the primary price points needed by the community, but that are not being supplied by the housing market, is necessary to focus community housing resources and efforts. Housing Inventory ² which identifies several trends related to the available inventory of homes in the Whitefish Area since 2016. This includes new housing development, both market rate and community housing units; changes in local resident occupancy and ownership of homes; increased short-term rental inventory; known loss of units to redevelopment and expiring community housing restrictions; and planned/pending residential development in the pipeline. Jobs and Seasonality ² which presents job growth since 2016, projected job growth through 2030, seasonality of employment, change in wages, unemployment trends, and employee commuting patterns, all of which affect and are affected by the availability of housing in the area. Housing Market and Availability ² which details the conditions around homeownership and the rental housing market in the Whitefish Area. This section identifies changes in home sale prices, rents, and currently available inventory for both. This is used to understand at which price points homes are being undersupplied by the for-sale and for-rent market. Community Housing Needs Estimate ² which calculates current and future community housing needs in the Whitefish Area through 2030. This section uses information from each of the above sections, plus data and assumptions presented in the 2016 Housing Needs Assessment. Results are presented for both ownership and rental housing and by income level, as done in the 2016 study. ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 5 2. Definitions The following terms are used in this report help readers better understand the content. Attainable or Affordable Housing ² When rent or homeowner payments equal no more than 30% of gross household income regardless of the income level of occupants. Attainable housing is often synonymous with affordable housing. Community Housing ² Housing that is affordable for community members that live and work in the Whitefish Area that is not being provided by the housing market. Refers to a range of household income levels for which market priced housing is unattainable, including both the traditionally low- income housing, as well as middle income, and, in Whitefish, upper middle income. Deed Restricted Housing ² Residential units that have occupancy limits, and often income and price caps. Limits are imposed through deeds, especially for ownership, but may also be placed on properties through financing agreements and other types of covenants. Market Rate Housing ² Housing that is not protected by any covenant for community housing needs and rents or sales prices are based on market conditions. Strategies ² Tools become strategies when unique community issues, opportunities and constraints are considered, and a plan of action is created for implementation. Tools ² Approaches used by communities to provide housing. They vary widely from incentives to funding. Workforce Housing ² Units deed restricted for occupancy by households that include at least one local employee. Homes in which employees reside but are not deed restricted are part of the free market. ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 6 3. Executive Summary Purpose of this Assessment The purpose of the 2022 Community Housing Needs Assessment is to present an understanding of the community housing problem ² how much housing is needed by local residents and employees, at what price points, and by whom ² and illustrate its importance in retaining a diverse and vibrant community and thriving economy. This Assessment is part one of a two-part Community Housing Refresh process being conducted in the Whitefish Area, funded by the city of Whitefish. The second part of the Housing Refresh process includes a six-month, collaborative process to update and evolve the 2017 Whitefish Strategic Housing Plan. Data from the Assessment will be used to ground the update in an understanding of what is needed in order to plan an effective path forward. The outcome will be an updated community housing strategy road map based on a partnership framework and rooted in data, research, and community input. 2016 Housing Needs Assessment Conducted 2017 Housing Strategic Plan Created + Strategic Housing Plan Committee Appointed 2017²2022 Strategic Housing Plan Committee Stewards + Tracks Progress of Strategic Plan Implementation TODAY Update 2016 Housing Needs data + Update/Refresh 2017 Strategic Housing Plan ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 7 Area of Study This assessment covers the 59937 zip code area, which includes the city of Whitefish and QeighbRUiQg XQiQcRUSRUaWed aUea. WhiV UeSRUW, Whe WeUm ´WhiWefiVh AUeaµ iV XVed WR indicate the zip code area. This area is highlighted in yellow in the below map. Figure 1. Whitefish Zip Code 59937 ("Whitefish Area") Source: Google Maps Community Housing Needs in the Whitefish Area The housing bridge below illustrates what the housing opportunities for residents and workforce in the Whitefish area should look like. The bridge portrays a spectrum of housing that is affordable and most likely to be sought by households in different income groups. It indicates the percentage of households earning incomes in each income range and the type of housing likely to be needed at the different income levels. The bridge represents what may be ideal for most communities ² the availability of housing that is affordable to households at all income levels and provides options for changing life circumstances. It is from this perspective that the housing needs assessment was conducted. The housing bridge illustrates the mix of housing needed by residents making their living in the Whitefish Area and at which income level. It shows where the market is providing housing and where it is not; and how much additional housing is needed to address current shortfalls and keep up with future job growth. More specifically: ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 8 x The housing rental market for residents and local employees searching for homes is expensive and scarce. A three-person household earning about $75,000 per year coming to Whitefish may find housing that would be defined as affordable in the market. x Households making their living locally are mostly priced out of market rate ownership housing ² it has simply gotten too expensive. This includes condominiums, townhomes, and single-family homes, alike. Homes priced under $500,000 are scarce not only in the Whitefish Area, but in neighboring communities as well. x To address the current housing shortfall and keep up with future job growth, at least 75% of the 1,310 homes needed to support local residents and employees by 2030 in the Whitefish Area will need to be priced below market. Addressing housing needs will require local policies, subsidies, and creative partnerships, building upon the existing achievements of the city, local organizations, employers, developers, and community in this regard. Figure 2. Whitefish Area Housing Needs Bridge, 2022 Source: Ribbon Demographics, LLC, US Department of Housing and Urban Development (HUD), Consultant team Why Is There a Community Housing Problem? Housing market dynamics are complicated; if they were simple, then there would not be a community housing problem. There are a few key trends, however, that illustrate the underlying challenge of housing affordability and availability for local residents and employees in the Whitefish Area. ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 9 1. Wages are not keeping up with rising home prices and rents. 2. Regional home prices are rising, affecting the ability to commute. 3. Job growth and housing development are not aligned. 4. Community housing is being lost. The following subsection describes these key trends in more detail. 1: Wages are not keeping up with rising home prices and rents. The balance between household income and what housing costs is a struggle in the Whitefish Area. The increase in home sale prices and rents has been far outpacing the rise in wages, meaning that homes are becoming more unaffordable for people earning their living locally. This is not new; this same trend was apparent in 2016. At this point, average wages need to more than double to bring current housing prices within the affordable range for households making their living in the area. The problem cannot be solved by increasing wages alone. (See Housing Market and Availability and Jobs and Seasonality – Average Wage sections of the report.) 2: Rising regional home prices impacts commuting as an option. The supply of homes priced under $500,000 in Whitefish and under $400,000 in neighboring communities has drastically declined. As the ability for employees to find homes they can afford in neighboring communities diminish, commuting becomes less of an option. This should be of particular concern given that the majority of jobs (63%) are filled by workers that commute into the Whitefish Area for work. When commuting no longer offers employees an affordable option, it becomes even more important to provide housing opportunities locally. (See Housing Market and Availability and Jobs and Seasonality – Commuting Trends sections of the report.) Table 1. Median Residential Sale Prices by Community, 2015/2016 to June 2022 Median Residential Sale Price (June 2022) Percent Increase since 2015/2016 Whitefish (city) $950,000 197% Kalispell (city) $650,000 243% Columbia Falls $575,000 174% Bigfork $850,000 206% County Total $697,000 188% Source: Montana Regional MLS 2015/2016, 2021/2022 Figure 3. Whitefish area growth ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 10 3: Job growth and housing development are not aligned. Since 2016, there were more housing units built in the Whitefish Area than needed to keep up with job growth and address estimated community housing deficiencies. Between 2016 and 2021, an estimated 980 housing units were needed and 1,067 housing units were built. Despite this, home prices and rents rose at historically high rates, availability dropped, and local residents and employees struggle more than ever to afford and find homes. Addressing community housing needs is more than just adding supply ² it is adding supply at the right price to support the resident and employee community. Of the 980 housing units needed, over 60% needed to be priced below market to meet the growing needs of local residents and employees; instead 93% were built at market rate. In a community where 40% of residences are owned by out-of- area homeowners and investors and 30% of homes are used as second homes and vacation use, the traditional supply-demand approach needs help. A dedicated supply of community housing for local households that live and work in the area allows local workers to compete against the strong outside demand for housing, helping to sustain local businesses, ensure quality resident and visitor services, and retain a diverse and economically vibrant community. (See Housing Inventory – Housing Built Since 2016, Housing Market and Availability, and Community Housing Needs Estimate sections). Figure 4. Housing needs and total housing built between 2016-2021 Source: 2016 Whitefish Area Workforce Housing Needs Assessment, Flathead County Assessor data, city of Whitefish 4: Community housing is being lost. In scarce housing markets, protecting the supply of homes that exist needs to be part of the equation. Multiple factors have contributed to the loss of housing for the local community in recent years, not the least of which includes: ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 11 x The growing prevalence of short-term vacation rentals and consequent rise in investment buyers (160% growth in short-term rentals in the Whitefish Area since 2016) (see Housing Inventory – Short Term Rental Inventory section), x Redevelopment (loss of 20 apartments downtown due to a pending hotel development) (see Housing Inventory – Pending Development section), and x The conversion of community housing units to market rate (loss of 37 community housing apartments). (See Housing Inventory – Community Housing Inventory section.) x Denial of 137 proposed hRXViQg XQiWV ViQce 2016. While WechQicall\ QRW a ´lRVV Rf XQiWV,µ eYeU\ SURjecW WhaW iV deQied iV a meVVage WR deYelRSeUV WR QRW ´UiVkµ XViQg incentives, discourages public support, and hurts the ability to raise financing for housing. These factors are not unique to Whitefish, but tracking their impact and implementing creative programs to reduce, if not prevent, the loss of units needs to be part of any effective community housing program. (See Housing Inventory – Community Housing Inventory.) Moving Forward While there are many challenges to addressing community housing in the Whitefish Area, it is important to note that there are also several positive trends: x The rate of community housing development increased since 2016, and proposed residential development is primed to continue this trend. (See Housing Inventory – Housing Built Since 2016 section) x Multi-family development has increased substantially in recent years, providing more diversity of housing options for renters and homeowners alike. (See Housing Inventory – Housing Built Since 2016 section) x The community has been more active in addressing community housing issues in recent years. This is reflected in new city policies, increased staffing, rising community housing development, new and more active organizations involved in housing, employer activity and partnerships, and widespread public, private, philanthropic, and non-profit community involvement in the issue.1 The second phase of this work - the evolution of the Whitefish Area Community Housing Roadmap ² will use the community housing needs and challenges presented in this Assessment to inform a successful path forward. By building upon existing momentum and exploring new partnerships and opportunities, the Roadmap will define a partnership framework, with roles, responsibilities, and strategies, to address community housing needs and take important strides in retaining a diverse and vibrant Whitefish Area community and thriving economy. 1 See city of Whitefish housing webpage for more detail ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 12 4. Resident Income Distribution and Attainable Prices What Home Prices are Attainable for Whitefish Area Households? This Assessment centers on building an understanding of what households can afford for housing in the Whitefish Area, and explores where needs are being met, and where there are gaps. The term ´affRUdableµ ma\ RfWeQ be aVVRciaWed ZiWh lRZ-income housing. In the Whitefish Area, however, affordability is a problem for a broad range of income levels; not just low-income. The term we are using to describe housing needs across the full spectrum of income levels for which market rate housing is unattainable is community housing. FRU SXUSRVeV Rf WhiV UeSRUW, UeQWal hRXViQg iV ´affRUdableµ ZheQ Whe UeQW dReV QRW e[ceed 30% Rf a hRXVehRld·V gURVV iQcRme. OZQeUVhiS hRXViQg iV ´affRUdableµ ZheQ Whe housing payment (mRUWgage, iQVXUaQce, HOA, Wa[eV) dReV QRW e[ceed 30% Rf a hRXVehRld·V gURVV iQcRme. The 30% standard is commonly applied by federal and state housing programs, local housing initiatives, mortgage lenders and rental leasing agents. Federal and state housing programs that help create or subsidize community housing categorize hRXViQg ´affRUdableµ fRU YaUiRXV iQcRme leYelV aV a SeUceQWage Rf Whe AUea MediaQ IQcRme (AMI). AMI is published annually by the U.S. Department of Housing and Urban Development (HUD) for each county and varies by household size. Many of the income- and deed-restricted housing units in the Whitefish Area use AMI to qualify households for occupancy and establish affordable prices. The AMI for Flathead County in 2022 is $80,300, or about 33% higher than in 2016 ($60,400). The 2022 AMI levels for Flathead County for various household sizes is shown below. Table 2. Flathead County AMI by Household Size: 2022 AMI Level 1-person 2-person 3-person 4-person 30% $16,700 $19,050 $23,030 $27,750 60% $33,360 $38,160 $42,900 $47,640 80% $44,450 $50,800 $57,150 $63,500 100% $55,600 $63,600 $71,500 $79,400 120% $66,720 $76,320 $85,800 $95,280 150% $83,400 $95,400 $107,250 $119,100 200% $111,200 $127,200 $143,000 $158,800 250% $139,000 $159,000 $178,750 $198,500 Source: Montana Board of Housing; US Dept. of Housing and Urban Development (HUD) ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 13 The average household size in the Whitefish Area is about 2.5-persons. The below table shows the affordable rents and home purchase prices at various household incomes and the respective AMI level for an average-sized 2.5-person household. Table 3. Maximum Affordable Housing Costs AMI Equivalent* Household Income Max Rent Max Purchase Price** 30% $21,040 $525 $64,900 60% $40,530 $1,015 $125,000 80% $53,975 $1,350 $166,500 100% $67,550 $1,690 $208,400 120% $81,060 $2,025 $250,100 150% $101,325 $2,535 $312,600 200% $135,100 $3,380 $416,800 250% $168,875 $4,220 $521,000 Source: Consultant team *AMI for the average sized 2.5-person household earning the respective income. **Assumes 30-year mortgage at 7.0% with 5% down and 20% of the payment covering taxes, insurance and HOA fees. Interest rates affect the borrowing power of buyers, impacting the price of home they can afford. Affordable purchase prices in the above table assume an average mortgage interest rate of 7.0%, which is above the current rate. For every 1% rise in interest rate, the purchasing power of a household decreases by about 10%. The rising interest rate environment needs to be considered when evaluating the affordability of housing and establishing prices for community housing. Whitefish Area Spectrum of Housing Needs The distribution of households in the Whitefish Area by the 2022 AMI for Flathead County is important because it illustrates the percentage of households that can benefit from community housing opportunities targeted at various prices points. Ideally, community housing should be priced proportionate to household income distributions. Based on existing distributions, this means that: x About 55% of rentals should be priced affordable for households earning under 100% AMI. x About 55% of ownership housing should have sales prices that are affordable for households earning between 80% and 250% AMI. Interest rates significantly affect the purchasing power of buyers. ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 14 Table 4. Whitefish Area Households by AMI Percentage: Owners and Renters 2022 Whitefish Area (59937) Households by AMI Owners Renters Total <30% 5% 10% 7% 30.1-60% 10% 22% 14% 60.1-80% 11% 11% 11% 80.1-100% 11% 12% 11% 100.1-120% 9% 10% 9% 120.1-150% 12% 8% 10% 150.1-200% 13% 7% 11% 200.1-250% 10% 11% 10% >250% 20% 11% 17% TOTAL % 100% 100% 100% Total Households 4,634 2,020 6,654 Source: HUD 2022 Housing for Whitefish Area residents and workforce should accommodate a wide range of incomes. This includes households on fixed incomes, entry-level service employees making $18 or less per hour, up to business managers making $100,000 or more per year. It must also provide options for households at various life stages to buy or rent ² from new school graduates, to young families, to empty-nesters. Providing a range of ownership and rental housing allows households to grow and change within a community, thus supporting a diverse and vibrant community and economy. The Housing Bridge, illustrated below, portrays the spectrum of housing that is affordable and most likely to be sought out by households in different income groups. It indicates the number and percentage of households earning different area median incomes and the type of housing likely to be needed at the different income levels. The Housing Bridge depicts what may be ideal for most communities ² the availability of housing that is affordable to households at all income levels and provides options for changing life circumstances. ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 15 Figure 5. Whitefish Area Housing Needs Bridge, 2022 Source: Ribbon Demographics, LLC, US Department of Housing and Urban Development (HUD), Consultant team ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 16 5. Housing Inventory Housing Units – Total Inventory and Occupancy The Whitefish Area (59937) has an estimated 9,529 housing units, which equates to just over 17% of the total housing units in Flathead County as a whole. Since 2016, the number of housing units grew by 14.1% in the County and a lower 12.6% in the Whitefish area. Table 5. Housing units ² total inventory and occupied units Flathead County Whitefish Area Housing Units Occupied Units Housing Units Occupied Units 2010 46,963 37,504 7,873 5,605 2016 (est) 47,808 37,940 8,460 5,655 2022 (est) 54,536 44,305 9,529 6,654 % Change 2016-2022 14.1% 16.8% 12.6% 17.7% Source: 2010 Census, American Community Survey Estimates 2016-2021 Flathead County Assessor data, Consultant Team, 2010 SF1 file According to 5-year ACS estimates, the percentage of homes in the Whitefish Area (59937) occupied by local residents relative to vacant/second homes had been declining since 2010, until recently. Occupancy of homes dropped below 70% in 2013, dipped to 66% in 2019, but are again about 70% in 2020. Reported changes are largely within the margin of error for the dataset, meaning that time will tell if the recent rise is a positive shift in the trend. Table 6. Occupied Housing Unit Trend: 2010 to 2020 (est) Source: 2010 US Census, 5-year ACS (2011 to 2020) 71% 72% 72% 68% 69% 67% 67% 67% 67% 66% 70% 81% 80% 79% 79% 79% 78% 79% 79% 79% 79% 81% 50% 55% 60% 65% 70% 75% 80% 85% 90% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Whitefish Area (59937) Flathead County ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 17 Housing Built Since 2016 About 1,070 new housing units were constructed in the Whitefish Area between 2016 and 2021. Recent development shows a notable upward trend in the percentage of homes built specifically for local residents. About 2.9% of homes in total in the Whitefish Area are dedicated community housing units, meaning that they are deed-restricted ownership or restricted rental units (income/residency/employment) for residents making their living in the area. In comparison, a much higher 7.1% of homes built since 2016 are community housing units. Figure 6. Housing Units Constructed/Permitted: 2016-2021 (Whitefish Area 59937) Sources: Flathead County Assessor data, city of Whitefish, Whitefish Housing Authority The pace of new development has increased significantly over the past five years, but is still below the peak levels seen between 2004 to 2006. x New construction in 2021 represented a 58% increase since 2016. x Multi-family construction has also picked up in recent years, increasing the diversity of housing options in the community. About 37% of new units constructed in 2020 and 2021 were multi-family, compared to 28% between 2016 and 2019, and only 12% between 2010 to 2015. ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 18 Figure 7. New Construction by Housing Type 2004-2021 (Whitefish Area 59937) Sources: Flathead County Assessor data, city of Whitefish Despite these positive development trends, 137 community housing units were proposed, but not approved, since 2016. Every project that is denied is a meVVage WR deYelRSeUV WR QRW ´UiVkµ XViQg incentives, discourages public support, and hurts the ability to raise financing for housing. It is important to remedy this trend if the goal is to increase community housing production in the community. 0 50 100 150 200 250 300 350 [PHONE REDACTED] 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Single Family Manufactured Multi-Family, Condo, and Townhome ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 19 Subsidized Community Housing Inventory The full inventory of community housing units is shown in the below tables. Community housing units represent approximately 2.9% of the total housing unit inventory in the Whitefish Area. This includes 39 permanently attainable homes for ownership and 276 rentals. Table 7. Whitefish Area Community Housing Inventory ² Ownership Project Total Units 1-b 2-b 3-b Income Level Year Built Expiration date Housing Authority Scattered homes 10 4 townhomes 6 single-family 0 Yes Yes <80%AMI Various 90 years, renewable Trailview 29 to-date 80-120% AMI 2019/2020 None Source: Interviews, Whitefish Housing Authority, Consultant Team Table 8. Whitefish Area Community Housing Inventory ² Rentals Project Total Units 1-b 2-b 3-b Income Level Year Built Expiration date Housing Authority BNSF Units 2 2 0 0 <80% AMI Various Never; while WHA owns Mountain View Manor 50 48 2 0 <40% AMI; Senior 1969/1997 Never; contract w/ HUD Colorado Village Apts 36 4 28 4 <60% AMI 1986 No info Whitefish Manor 30 30 0 0 <40% AMI; Senior 1988 No info Stonecreek Apts 41 40 0 1 <60% AMI; Senior 1992 No info Mountain Apartments 30 6 18 6 50%, 60% AMI 2001/02 Permanently per Mgr Mountain Senior Apts 30 10 20 0 50%, 60% AMI; Senior 2003 Permanently per Mgr Hailey Apartments 10 2 6 2 50%, 60% AMI 2004 Permanently per Mgr Whitefish Crossing (IZ) 6 2 4 <70% AMI 2017 Never Riverview Trails (IZ) 5 3 (incl. 60% AMI studio) 2 <70% AMI 2021 Never Alpenglow Apts 36 Y Y Y (3 are 3-b TH style with garages) <60 AMI (LIHTC) 2021 Never TOTAL Rentals 276 147 80 13 All under 80% AMI - Source: Interviews, Whitefish Housing Authority, HUD Database, Consultant Team All of the community housing rental units in the Whitefish Area are restricted for households earning 80% or less of the area median income and just under half of the units are restricted to ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 20 seniors or individuals with disabilities. These projects were constructed with a combination of funding mechanisms, including Low Income Housing Tax Credits (LIHTC), Rural Development funding, Section 515 and Section 202 and other HUD housing supports). Expired Community Rental Units Since 2016, one previously affordable housing rental property is known to have converted to market rate, resulting in a loss of 37 community housing rentals. Table 9. Expired Community Rental Units Project Total Units 1-b 2-b 3-b Income Level Year Built Expirati on date Big Mountain Apts 37 0 37 0 Was <60% AMI (expired) 1977 Market rate Source: city of Whitefish Apartments constructed with the tax-credit (LIHTC) program, including Stonecreek, Mountain, Mountain Senior, and Hailey Apartments must remain affordable for 30 years, after which property owners can rent units at prices the market will bear. The LIHTC program was created in 1986 and made permanent in 1993, meaning that many of the first LIHTC units are beginning to see the 30- year affordability restrictions expire. In Whitefish, Stonecreek Apartments is the only tax-credit -funded housing that may be approaching expiration, meaning that efforts to preserve the community housing status may be needed in the near term. Colorado Village Apartments and Whitefish Manor have unknown expiration dates (if any). Ownership by Residency Status The percentage of homes that are owned by persons or entities with out-of-area addresses illustrates the extent to which outside investment interests demand and compete for homes in the Whitefish Area. In high-amenity mountain communities, out-of-area demand for housing reduces the inventory of homes available for local residents and increases the price of home entry due to competition with higher wage households and investors, complicating the standard supply-demand relationship. A dedicated supply of community housing for local households that live and work in the area allows local workers to compete against the strong outside demand for housing, helping to sustain local businesses, ensure quality resident and visitor services, and retain a diverse and economically vibrant community. In the Whitefish Area: x About 61% of housing units are owned by persons or entities with a local address based on County Assessor ownership records; meaning that near 40% of housing units are owned by persons or entities that are located outside of the Whitefish Area. Ratios were similar in 2016. ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 21 x Of the homes that are owned by individuals outside of the Whitefish Area, most are owned by persons residing outside of Montana. The vast majority of out-of-country owners reside in Canada. Figure 8. Estimated owners by place of residence ² Whitefish Area 2021 Source: Flathead County GIS Department, Flathead County Assessor The ownership pattern varies by type of unit. x About 71% of single-family homes are owned by local residents. x Out-of-area ownership is higher for multifamily units (townhomes and duplexes). Since 2016, there has been a slight rise in the percentage of townhome/duplex units owned by local owners (up to 48% from 42%). Whitefish Area, 61% Other Montana, 8% Out of State, 26% Out of Country, 5% ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 22 Figure 9. Ownership of Homes by Type of Unit: 2021 Source: Flathead County GIS Department, Flathead County Assessor Housing Tenure The proportion of renter occupied housing units has been relatively stable since 2016 (about 30%), after showing a slight decline since 2010 (about 35%). Increased development of multi-family rentals that are prohibited from being rented short-term less than 30-days) will help boost rental inventory and availability for residents. Table 10. Owner- and renter-occupied housing Whitefish Area (59937) 2010 2016(est) 2020 (est) Owner-Occupied 65% 69% 70% Renter-Occupied 35% 31% 30% Source: 2010 U.S. Census, American Community Survey 5-Year Estimates. Short-Term Rental Inventory In the second quarter of 2022, there were 1,422 active short-term rentals in the Whitefish Area (59937) listed on Airbnb and VRBO. This represents a 160% growth in short-term rentals in the Whitefish Area since 2016, when there were 529 active listings. The purchase of homes for short- term rental purposes by investment buyers or second home owners increases home prices and reduces the potential availability of homes for long-term rentals and/or for purchase by local residents. 71% 48% 30% 29% 52% 70% 0% 20% 40% 60% 80% 100% 120% Single Family Townhomes/duplex Condominiums/Multifamily Local owner Out-of-area owner ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 23 Table 11. Active Short-Term Rentals in the Whitefish Area (59937) 2019-2022 Listing Date 2019 Q2 2020 Q2 2021 Q2 2022 Q2 Number of active listings 740 949 1,248 1,422 Source: AirDNA, Quarterly Averages of available rentals 2019-2022 Short-term rentals in the Whitefish Area can demand higher prices in the summer months when tourism is at its peak. This has culminated in a trend noted by property managers and lenders of some properties being rented to Whitefish employees in the winter months, but then converting to short-term vacation rentals or substantially raising rent 50% or more) in the summer months, requiring the local occupant to find another home. A handful of properties that were advertised for rent in June 2022 exhibited this trend. Of the listed units on AirDNA, about 97% are listed as entire home rentals and 3% are listed as private room. Licensed short-term rentals: City of Whitefish The city of Whitefish began requiring permits for short-term rental units in 2013. Proprietors must acquire a business license, pay a fee, and units must pass inspections from the fire and health departments. Listings also require a State of Montana Public Accommodation license to operate. The city of Whitefish currently restricts short-term rentals to specific zones within the city. The number of registered short-term rentals in the city has grown over 10-fold in the past six years, from 21 in 2016 to 325 in 2022. The city actively tracks units for compliance and, as of July 2022, only 5 known properties were illegally operating as short-term rentals in the city. Licensed tourist homes: Flathead County The Flathead County Department of Environmental Health reported 1,060 licensed tourist homes in Flathead County in July 2022. Licenses are either procured by the owner or collected when the department receives a publicly submitted complaint. The department is not as active as the city in searching for non-complying rentals. ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 24 Proposed and Pending Development Residential Development As of July 2022, there are 17 new residential developments that are currently proposed or under construction in the city of Whitefish. x Proposed projects represent up to 313 new housing units, with at least 60% proposed to be multi-family housing, continuing the trend of increased unit diversity in the city. x Just over 10% (about 40 units) are proposed to be permanently deed restricted for ownership by households earning 120% AMI or less, continuing the rising trend in community housing production. x About 47% of potential new units are located within the zone that permits short-term rentals, meaning that a portion of these units could end up serving the short-term rental market as opposed to rentals for residents or owner-occupied units. Table 12. Under Construction and Pending Approvals (Residential) ² Whitefish 2022 Project Type of Units # of units Price Point In STR Zone? Quarry III ² 900 Wisconsin Ave Multi-family – condo 36-unit Market Rate Yes 406 Standard ² 1515 Hwy 93 S Multi-Family – condo 52-units Market Rate Yes 736 Wisconsin Avenue ² preliminary plat 4-8 units (lots size for either SF or 2-unit bldg.) 4-lot subdivision Market Rate No 406 Standard, Part II ² 1625 Highway 93 S Detached condo 6 Market Rate No 4 & 8 Miles Ave Multi-family – condo 10-units Market Rate No Little Bear SFR, T/H, Multi-family – condo Up to 53 units Market Rate Yes Davis-Hartline SFR or 2-unit Up to 2 Market Rate No 444 Central Ave Multi-family – condo 4-units Market Rate No Vanee ² Bay Pt & Dakota Townhomes 4-units Market Rate Yes Fulkerson ² O·BULeQ & Sawtooth SFR & Townhomes Up to 5- units Market Rate No 235 O·BULeQ Mixed Use 3-units Market Rate Yes Bear Paw ² State Park Rd. SFR 4-units Market Rate No 95 Karrow Mixed-use project (including a hotel) with Multi-family – condo 74-units Market Rate No 93 LLC Single Family and Multi- Family – condo 52-units (22 SFR, 30 condo) Market Rate No Rice subdivision SFR or 2-unit 2-4 units Market Rate No Snow Lot (not yet submitted) Townhouses 22 Community Housing <120% AMI No Trailview Homes SFR 29 total, est. 19 will be deed restricted Community Housing <120% AMI & market rate No Source: city of Whitefish Abbreviations: SFR = single family residential; AMI = area median income ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 25 More detail on the two pending community housing projects, as well as additional community housing projects that are in preliminary planning stages, are summarized below: Snow Lot: The Whitefish Housing Authority (WHA) was given the 1.64-acre Snow Lot property by the city of Whitefish in June of 2020. Twenty-two (22) townhomes permanently deed restricted for households earning from 80% to 120% AMI are anticipated on the property. Donated land, city tax increment financing, American Rescue Plan Act funding, and payment in lieu monies from the now voluntary Legacy Homes program are all anticipated to help finance the development. Planning is underway. Trailview Homes: The Trailview development is privately funded and was designed to provide single family homes for the people who live and work in the Whitefish Area. One-half of the homes were originally proposed to be deed restricted for households earning less than 120% AMI and one- half reserved for local workers. The development broke ground in 2019. Twenty-nine (29) of the homes have been constructed. Prices currently range from $290,000 for a 1-bedroom home to $360,000 for a 3-bedroom home. Another 29 units remain to be constructed. To account for increased construction materials and labor cost, supply chain delays, and material shortages, council recently approved the developer’s request to sell ten (10) homes at market rate, which will occur if the developer cannot find financing to fill the price gap. Construction of the remaining homes is expected to be completed within two years. Monegan Road: Discussions regarding development of the city owned land on Monegan Road with potentially 100 community housing units are occurring. Some funding has been secured through the Whitefish Community Foundation to explore project feasibility. No date for project initiation has been set. Alpenglow II: In 2021, the 36-unit Alpenglow Low Income Housing Tax Credit apartment complex was completed and fully leased. The WHA partnered with Homeword to win a Low- Income Housing Tax Fund grant through the state of Montana. There were only 4 of 22 applications awarded for that year. The WHA has land for a second phase to this project, although product and pricing planning has yet to occur. ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 26 Commercial development The city also has three commercial hotel projects that are under construction or pending approval. Commercial development impacts community housing needs; employees filling jobs need housing. In addition, the Larch House Hotel includes redevelopment of an existing site in the Railway District downtown, which will result in the loss of 20 existing apartment units. Table 13. Under Construction and Pending Approvals (Commercial) ² Whitefish 2022 Project Commercial type Larch House Hotel Hotel – 32 rooms Restaurant Downtowner North Hotel Hotel – 21 suites Restaurant Retail space 38 Central Hotel Hotel – 40 rooms Dining and retail space Source: city of Whitefish Rezone Requests Several rezone applications have been approved or are pending, with the intent to facilitate housing at each location. Rezones, if approved, would allow for additional market rate and community housing to be developed. Table 14. Rezone Applications ² Whitefish 2022 2022 Project Size Rezone request Pheasant Run 7-acres, recently annexed Two-family residential and secondary business Upper Cut and Eagle properties 31-acres, recently annexed WCR (County residential, single family, 2.5-ac lot min) 90 Edgewood PUD 3 annexed parcels; 3.4-acres for rezone Two-family residential as part of PUD to permit development of 30 apartments, including 6 deed restricted community housing rentals Source: city of Whitefish ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 27 6. Jobs and Seasonality Jobs Estimates and Projections In 2021, there were about 53,205 jobs in Flathead County, of which about 14% (7,360 jobs) were located in the Whitefish Area. Changes in jobs since 2016 show that: x Jobs grew at about one-half the rate in the Whitefish Area than in Flathead County since 2016, precipitated by job losses experienced in 2020 due to the COVID-pandemic. x Jobs fell about 2% in the county between 2019 and 2020, compared to a much higher 10% decline in the Whitefish Area. The pandemic hit accommodations, food service, retail, and personal services the hardest, which comprise a larger percentage of jobs in the Whitefish Area. x Jobs in the county recovered to pre-pandemic levels in 2021 and jobs in the Whitefish Area are expected to fully recover in 2022. Figure 9. Jobs Estimates: 2016 to 2021 Source: QCEW County and Zip Code files, Montana Dept. of Labor and Industry Job growth estimates are used to project how many housing units will be needed to house workers filling new jobs. In the 2016 Housing Needs Assessment it was estimated that about 395 new jobs would be created in the Whitefish Area by 2020. Instead, job losses due to the COVID pandemic slowed anticipated growth, resulting in 310 jobs being added through 2021. Looking ahead, job projections reported by the Montana Dept. of Labor and Industry for the northwest region, which includes Flathead County, project modest job growth at an average of 1.2% per year through 2030. More specifically: 6,000 6,500 7,000 7,500 8,000 8,500 40,000 42,000 44,000 46,000 48,000 50,000 52,000 54,000 2016 2017 2018 2019 2020 2021 Whitefish Area Jobs Flathed County Jobs Flathead County Whitefish Area ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 28 x Projections anticipate higher than normal growth through 2022 due to recovery of employment losses in the base year of 2020 and stimulus spending from the American Recovery Act. x Growth is expected to slow after 2022 due to a constrained worker supply. Applying the same state estimates and assumptions to the Whitefish Area means that growth is anticipated to occur at a faster rate in the Whitefish Area (1.8% per year) than the county (1.2% per year) through 2030, in large part because jobs in the Whitefish Area are still recovering from pre-pandemic levels. An estimated 1,280 jobs will be added in 2022 through 2030. Table 15. Jobs Estimates and Projections: 2016 to 2030 2016 2020 2021 2030 Projection Yearly % change (2016-2021) Est. yearly % change (2021-2030) Flathead County 48,450 49,760 53,205 59,355 1.6% 1.2% Whitefish Area 7,050 6,645 7,360 8,640 0.7% 1.8% Source: QCEW County and Zip Code files, Montana Dept. of Labor and Industry Seasonality of Jobs Employment in Flathead County and the Whitefish Area are highest in the summer months when tourism and seasonal economic activity are most prominent. In 2021, the labor force in Flathead County grew by about 4,600 workers between the seasonal low in January and the peak summer employment in June, returning back to pre-COVID employment patterns. The Whitefish Area also has a winter seasonal job peak (November through April), albeit lower than in the summer (June through September). This has several advantages from a seasonal housing standpoint over communities with distinct summer- or winter-only peaks. x Similar summer and winter peaks mean that employees may be able to live in the area year- round by holding summer and winter seasonal jobs. This reduces the need for local businesses to recruit and train new employees each season, helping the employer and improving the quality of service to the visitor. Year-round housing opportunities need to be available, however. x Similar summer and winter peaks also provides opportunities for shared seasonal housing partnerships among employers. A significant barrier to providing solely summer or winter seasonal housing is that it sits vacant for one-half of the year. With similar summer and winter seasonal peaks, opportunities are available to ensure many beds are filled most of the year. ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 29 Figure 10. Flathead County Employment by Month 2016 and 2021 Source: Quarterly Census of Employment and Wages (QCEW) Average Wage The average annual wage in Flathead County was just over $49,000 in 2021. Wages in the Whitefish Area average about 10% lower than the county overall, in large part due to the significant service economy. Wages increased an average of 4.7% per year since 2015, including 3.3% per year prior to 2019 and over 7% per year in 2020 and 2021. Despite the recent faster rise, wage increases were still far below changes in housing prices (see Housing Market and Availability section). Preliminary 2022 wage data indicates growth will continue. Table 16. Average Annual Wages, All Industries ² Flathead County and the Whitefish Area Average Annual Wage 2015 2021 Flathead County $37,340 $49,088 Whitefish Area $33,933 $45,226 Source: QCEW 2015 and 2021 Industry and Wage data, Montana Dept. of Labor and Industry 30,000 32,000 34,000 36,000 38,000 40,000 42,000 44,000 46,000 48,000 50,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 2019 2020 2021 ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 30 Figure 11. Average Annual Wage: Flathead County 2005 to 2021 Source: QCEW Industry and Wage data, Montana Dept. of Labor and Industry Unemployment Rate In 2016, the unemployment rate in Flathead County averaged 5.8% for the year. Unemployment has generally been falling since that time, with the exception of the spike in unemployment during the COVID pandemic in 2020. This spike correlates with record high unemployment numbers nationwide caused by COVID-19 restrictions and temporary business closures. With rapid job recovery post-COVID, unemployment is now at its lowest point since before the 2008 recession. Unemployment in June 2022 is 3.1%. When unemployment is this low, businesses encounter several problems: x The remaining labor pool often does not have the requisite skills needed for many jobs; x Employers compete with each other for the same skilled labor force. This results in wage wars and simply moves vacant positions around; and x Businesses must attract employees from outside the area to fill jobs and most will need to find housing. With an expensive and tight housing market, the ability to attract employees is extremely difficult. Housing availability is a competitive advantage in tight labor markets. $10,000.00 $20,000.00 $30,000.00 $40,000.00 $50,000.00 $60,000.00 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 31 Figure 12. Average Yearly Unemployment Rate: Flathead County, 2005-2021 Source: Montana Department of Labor and Industry Commuting Trends The majority of employees in the Whitefish Area commute in for work from homes in neighboring communities. About 43% of jobs are filled by employees living within the zip code area. The remaining 57% (about 3,500 employees) commute into the Whitefish Area for work, predominately from Kalispell, Columbia Falls, Hungry Horse, and West Glacier. Commute patterns show little change since 2016. The recent rapid rise in housing prices has affected not only Whitefish, but also neighboring communities from which many workers commute (see Housing Market and Availability section). As the ability for employees to find homes they can afford in neighboring communities diminish, commuting becomes less of an option. This should be of particular concern in communities, such as Whitefish, in which the majority of jobs are filled by in-commuters. As commuting becomes less of an option, it becomes even more important to provide housing opportunities locally. Table 17. Where Whitefish Area Workers Live 2016 and 2019 % of workers living locally - in the 59937 ZIP code % of workers living outside of the 59937 ZIP code Total workers filling jobs 2016 41.2% 58.8% 5,840 2019 43.3% 56.7% 6,200 TOTAL % 100% 100% - Source: U.S. Census Bureau, Center for Economic Studies, LEHD. 0% 2% 4% 6% 8% 10% 12% 14% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Unemployment Rate Flathead County State of Montana ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 32 Commuting results in significant costs and vehicle miles traveled for in-commuters. Over the course of a year, in-commuters will travel an average of 8,933 miles to commute to work, which translates to an annual commute cost of $5,583 or $465 Table 18. Whitefish Area In-Commute Mileage and Expenses Kalispell Columbia Falls West Glacier Average in- commuter Mean miles commuted one way (Distance from Whitefish) 15.6 10.1 27.9 17.8 Days per Week commuters drive 5 5 5 5 Round trip miles per week 156 101 279 178 Miles per year (assuming 50 weeks of commuting) 7,800 5,050 13,950 8,933 Cost per mile (Federal IRS rate) $0.63 $0.63 $0.63 $0.63 Cost per year $4,875 $3,156 $8,719 $5,583 Cost per month $406 $263 $727 $465 Source: Consultant Team, IRS.gov ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 33 7. Housing Market and Availability For-Sale Market This section evaluates how much home sale prices have changed since 2016 to understand the extent to which homes may have become more or less affordable to local residents and employees. It also summarizes units currently advertised for sale compared to units available in 2016 to illustrate changes in the availability of homes. Home Sales Residential sale prices for the Whitefish Area have more than doubled over the past six years. This equates to an average yearly increase of about 17% per year. The median residential sale price was $825,000 for homes sold between January and May 2022. Table 19. Median Home Sale Price ² Whitefish Area, 2015/16 to 2022 (Jan-May) July 2015 - June 2016 2022 (Jan ² May) % Change All Residential Median sold price $326,250 $825,000 153% Median sold price per sq. ft. $186 $478 157% Single Family Median sold price $379,750 $1,025,000 170% Median sold price per sq. ft. $180 $510 183% Attached (condo/townhome) Median sold price $255,000 $565,000 122% Median sold price per sq. ft. $203 $452 123% Source: Montana Regional MLS 2015/2016, 2021/2022 Home sale prices have shown a drastic increase not only in the Whitefish Area, but also throughout neighboring communities. Whitefish Area residents and employees used to find homes priced below $400,000 in neighboring communities, including Kalispel, Columbia Falls, and Bigfork; however, this option is disappearing. x All communities in the region have experienced an increase in median home values, with Kalispell showing the greatest percent increase at 243% since 2015. x As of June 2022, the median sale price of residences exceed 200% AMI in all markets, meaning that households earning in excess of $150,000 have trouble finding homes they can buy. x The median sale price of residences in Flathead County was near $700,000 in June 2022, up from $242,000 in just six years. As housing options for Whitefish Area residents and employees throughout the region diminish, it becomes even more important to provide opportunities locally. ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 34 Figure 13. Median Residential Sales Price Comparison: 2015/2016 and June 2022 Source: Kelly Appraisal (2015), Montana Regional MLS 2021/2022 Table 20. Change in Median Home Sale Prices by Community, 2015/2016 to June 2022 Percent Increase Whitefish (city) 197% Kalispell (city) 243% Columbia Falls 174% Bigfork 206% County Total 188% Source: Kelly Appraisal (2015), Montana Regional MLS 2021/2022 The substantial rise in home sale prices since 2015/16 is apparent in the inventory of homes sold by price bracket. x Between July 2015 and June 2016, 30% of homes sold for under $300,000, compared to only 2% of homes sold between May 2021 and May 2022. x Conversely, only 9% of homes sold in 2015/16 were priced over $1 million, compared to 30% of homes in 2021/22. This shift in market price reveals that there are very few attainable homes for sale on the market. The majority of Whitefish Area residents and employees need homes priced below $500,000. Only one-in-four sales between May 2021 and May 2022 met this price point. $189,500.00 $320,000.00 $210,000.00 $278,000.00 $242,000.00 $650,000.00 $950,000.00 $575,000.00 $849,878.00 $697,000.00 $100,000.00 $200,000.00 $300,000.00 $400,000.00 $500,000.00 $600,000.00 $700,000.00 $800,000.00 $900,000.00 $1,000,000.00 Kalispell Whitefish City Columbia Falls Big Fork County Total July 2015 - June 2016 Jun-22 ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 35 Figure 14. Percentage of Sold Homes by price: 2015/2016 and 2021/2022 Source: Land Title Group 2015 and Montana Regional MLS 2021/2022 Current Availability There is a much lower inventory of homes for sale in the current market than in 2016 and homes listed for sale are much more expensive. x The number of listings on June 6, 2022 (125) is 70% lower than in July 2016 (413); x About 22% of listings in 2016 were priced over $1 million compared to 72% in 2022; x About 50% of listings in 2016 were priced under $500,000 (212 units) compared to only 3% in 2022 (4 units); and x Based on sales between May 2021 through May 2022, there is a less than one-month supply of homes for sale below $500,000. Conversely, there is a 6-month supply of homes priced over $1 million. 11% 19% 17% 13% 10% 8% 6% 4% 3% 9% 1% 1% 11% 14% 13% 10% 7% 7% 6% 30% 0% 5% 10% 15% 20% 25% 30% 35% July 2015- June 2016 May 2021 - May 2022 ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 36 Figure 15. Residential For-Sale Listings: July 2016 and June 2022 Source: Land Title Group 2015 and Montana Regional MLS June 6, 2022 All homes listed for sale, regardless of type of product, are predominately priced over $1 million. Table 21. Whitefish Area (59937) For Sale Listings by Type and Price, June 2022 Single Family Residential Condominiums Townhomes Total Less than $200,000 0 0 0 0 $200,001 - $300,000 0 0 0 0 $300,001-$400,000 1 1 0 2 $400,001 - $500,000 1 1 0 2 $500,001 - $600,000 2 2 0 4 $600,001 - $700,000 3 7 0 10 $700,001 - $800,000 1 1 2 4 $800,001 - $900,000 5 1 1 7 $900,001-$1 million 3 3 0 6 Over $1 million 53 27 10 90 Total 69 43 13 125 Median list Price $1,950,000 $1,414,500 $1,850,000 $1,695,000 Average list Price $3,217,929 $1,666,886 $1,848,428 $2,543,394 Source: Montana Regional MLS June 2022 In 2016, there was a shortage of homes available priced for households earning under $75,000 (150% AMI). In 2022, there is currently a deficit of homes priced under about $500,000, which are affordable for households earning about $160,000 per year (about 250% AMI). Homes affordable for households earning under $40,000 per year are also undersupplied; however, producing homes at this price will not occur without substantial subsidies or programs such as 7% 15% 16% 13% 7% 8% 6% 3% 3% 22% 0% 0% 2% 2% 3% 8% 2% 6% 5% 72% 0% 10% 20% 30% 40% 50% 60% 70% 80% Jul-16 Jun-22 ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 37 Habitat for Humanity. These households also often have trouble qualifying for loans and meeting down payment purchase requirements. Table 22. Homeowner Income Distribution Compared to For-Sale Availability AMI Level Income (2.5- person household Maximum Affordable Purchase Price* Owner income distribution For sale listings (June 2022) <60% $40,530 $125,000 15% 0% 60.1-80% $53,975 $166,500 11% 0% 80.1-120% $67,550 $250,100 20% 0% 120.1-150% $81,060 $312,600 12% 0% 150.1-200% $135,100 $416,800 13% 2% 200.1-250% $168,875 $521,000 10% 2% >250% >$168,875 >$521,000 20% 97% TOTAL - - 100% 125 NOTE: Shading indicates where there is a shortage of housing supply for the workforce. *Assumes 30-year mortgage at 7.0% with 5% down and 20% of the payment covering taxes, insurance and HOA fees. For-Rent Market This section provides information about the existing rental market in the Whitefish Area and changes seen since the 2016 Housing Needs Assessment. This data provides insight into the current affordability and availability of rental units for local residents and employees in the Whitefish Area. Availability and Market Rents At the time of the 2016 Housing Needs Assessment, it was found that the rental market rebounded strongly after the Great Recession. Vacancies dropped sharply and rents increased significantly beginning in 2014. More specifically: x Availability was extremely low ² vacancy rates were below x Market rents had risen exceed pre-recession levels, showing 10% gains per year; and x The average rent in the Whitefish Area ($1,240) was affordable to a household earning over $50,000 per year (about 100% AMI). Of units available for rent, the asking rent averaged over $1,500. x Turnover was very low; meaning that renters new to the area had difficulty finding homes and renters in unsuitable housing had so few choices that they were unable to move. Current conditions show that trends observed in 2016 have continued: x Vacancies are still very low. The 50 units advertised for long-term rent in June 2022 equates to a 2% vacancy rate. Only 16 of these properties, however, were priced under $2,000 per ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 38 month, which is the primary price point needed for local residents and workers. This would be affordable for households earning $80,000 per year, or about 120% AMI for an average sized 2.5-person household. x Property managers of year round rentals for residents reported that unit turnover has declined in recent years. One manager used to have 6 to 10 properties vacate each year, which declined to only 3 or 4 vacated in the past couple of years. x Owners selling rentals has reduced inventory for local residents. One manager lost 42 units since 2016 due to rentals being sold. Due to the shortage of units, rents have continued to increase: x In recent years, landlords raising rents in excess of $500/month was not uncommon. To retain good tenants, some property managers recommended increases of no more than $200. Property managers report that rents increased just over 7% per year since 2016. Table 23. Market Rents of Managed Long-Term Rentals by Bedroom Size, June 2016 vs. June 2022 Average Rent Average Yearly % change 2016 (est) 2022 (est) 1 Bedroom $775 $1,170 7.1% 2 Bedroom $1,275 $1,845 6.4% 3+ Bedroom $1,680 $2,815 9.0% Overall Average $1,240 $1,890 7.3% Source: Property Manager focus group (2016), interviews x Since 2016, advertised rents have increased an average of 12% per year. It is common for advertised rents to be higher than rents reported by property managers. This is largely because most managed rentals are filled by word of mouth and are never advertised. The units listed, therefore, tend to be higher priced homes that local employees cannot afford. These are the units that new employees coming to the area will find, however. x The median rent for advertised rentals was $3,000 per month. This is affordable for a household earning about $140,000 (180% AMI). By bedroom size, advertised rents are affordable for households earning between about 75% to 200% AMI. Table 24. Market Rents of Vacant Units by Bedroom Size: Whitefish Area (59937), June 2022 Units Median Rent AMI Affordability Studio/1BR 9 $1,175 75%-85% AMI 2 BR 15 $2,700 150% - 170% AMI 3+ BR 26 $3,500 180% - 200% AMI Total Listings 50 $3,000 180% AMI Source: June 2022 Active Listings on Zillow, Five Star Rentals, Craigslist, homes.com, Crown Property Management, Whitefishapartmenthomes.com *AMI ranges assume 1- or 2-person households in 0/1-bedroom units, 2- or 3-persons in 2-bedrooms; and 3-or-more persons in larger units. The current rental market is underserving households with incomes at or below 120% AMI ($80,000 per year for an average 2.5-person household), which includes the core local resident and employee ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 39 rental market in Whitefish. The majority of available listings (66%) were priced for households earning above 120% AMI. Table 25. Market Rents of Vacant Units by AMI: Whitefish Area, June 2022 Studio/1-bdrm 2-bdrm 3+-bdrm Total listings % listings <60% 4 0 0 4 8% 60.1-80% 4 1 1 6 12% 80.1-100% 0 3 0 3 6% 100.1-120% 2 1 1 4 8% >120% 2 10 21 33 66% Total 12 15 23 50 100% Sources: June 2022 Active Listings on Zillow, Five Star Rentals, Craigslist, homes.com, Crown Property Management, Whitefishapartmenthomes.com In 2016, there was a shortage of rentals available priced for households earning under $40,000 (80% AMI). In 2022, there is a significant deficit of rentals that households earning up to $70,000 can afford (100% AMI). More 2- and 3-bedroom rentals priced around $2,000 per month are also needed. Table 26. Renter Income Distribution Compared to For-Rent Availability AMI Level Maximum Income (2.5-person household) Maximum Affordable Rent Renter Income Distribution % listings <60% $40,530 $1,015 32% 8% 60.1-80% $53,975 $1,350 11% 12% 80.1-100% $67,550 $1,690 12% 6% 100.1-120% $81,060 $2,025 10% 8% >120% >$81,060 >$2,025 35% 66% Total - - 100% 50 *Available rentals include rentals available in the Whitefish Area in June 2022. NOTE: Shading indicates where there is a shortage of housing supply for employees. Community housing units provided in the lighter shaded price points should be 2- and 3-bedroom units. ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 40 8. Community Housing Needs Estimate This section updates the current and future community housing needs in the Whitefish Area through 2030. The goal of this section is to estimate the amount, price, and type of housing needed by residents and employees that call the Whitefish Area home to support the community, businesses, and the economy. As such, estimates do not represent total demand, but rather focus on housing needed by employees to fill current and future jobs and increase housing opportunities for local residents and area workers. The estimate includes housing that may be provided by the market, and gaps where the market is unlikely to provide housing needed to support the local workforce. This section: x Updates the 2016 Housing Needs Assessment projections of total needs for 2016 through 2021; x Identifies how many community housing units are known to have been lost during this time; x Identifies how many community housing units have been constructed or approved during this time; x Calculates how many units are still needed to address the housing deficit identified in 2016 total needs minus the number of community housing units provided or to be built by 2021); and x Projects how many units will be needed to keep up with job growth and retiring employees, utilizing the same assumptions from the 2016 study, where applicable. Estimates do not include additional components of demand, such as homes desired by out-of-area buyers, second homeowners, and investors, given that the market is providing homes for these sectors. Meeting the housing needs of local residents and employees estimated in this section, however, is necessary to retain the vibrant community and quality services that make the Whitefish Area so attractive to residents, visitors, and investors alike. Results are presented for both ownership and rental housing and by AMI level, as done in the 2016 study. The prior study should be referenced for more detail on utilized assumptions. Catch-Up Needs (2021) Catch up in 2021 refers to the number of units needed to catch up to meet current community housing needs that are in short supply. For the purposes of this update, catch-up is calculated by: x Updating the total housing needs calculated in the 2016 Housing Needs Assessment for the time period between 2016 and 2021. ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 41 x Subtracting the number of community housing units constructed or approved since the 2016 study from total needs. Updated 2016 Study Estimates The 2016 study projected housing needs through 2020. This included two estimates: x Housing units needed to catch-up with current deficits by providing housing units for employees needed to fill unfilled jobs and in-commuting employees who want to live in the Whitefish Area. x Housing units needed to keep-up with future demand for housing based on projected employment and jobs vacated by retiring employees. Updated estimates are based on: x A five-year, rather than 4-year, need. Estimates presented in the 2016 study covered from 2016 to 2020. Revised estimates show needs from 2016 through 2021; x Updated actual and estimated job growth between 2016 and 2021 from the Montana Department of Labor and Industry, showing that a total of 310 jobs have been added. This is lower than the anticipated addition of 395 jobs between 2016 and 2020; and x Known estimates of community housing units lost. Big Mountain apartments (37-units) converted from income-restricted community housing rentals to market rate since 2016. These estimates do not include resident housing lost due to conversion to short-term or mid-term rentals, a topic of concern in the Whitefish Area, and should, therefore, be considered conservative. Insufficient data is available to be able to provide these estimates. Table 27. Update of Housing Needs: Whitefish Area, 2016 to 2021 2016 Study 2016 to 2020 (est) Updated 2016 to 2021 (est) Time Period: 2016 ² 2020 2016 ² 2021 In-commuters that want to move (34%) 555 555 Unfilled jobs (3.8% in 2016) 115 115 Retiring employees (next 5 years) 180 180 New jobs (job growth) 130 100 Lost Community Housing units* - 37 TOTAL 980 987 Community Housing (below-market) 605 609 Market Rate 375 378 *Big Mountain Rentals converted from income-/rent-restricted to market-rate rentals. See Housing Inventory section for more information. ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 42 Community Housing Produced Since 2016 Revised estimates of need for 2016 to 2021 show that about 987 housing units were needed for local residents and employees to address deficiencies in 2016 and keep up with job growth, retiring employees, and replenish lost community housing units. Most of these units needed to be priced below market (609 units). As shown below: x Market rate development exceeded estimated local resident and employee housing needs; x Community housing, while comprising 7% of units built and 13% of planned development, fell short of needs. About 490 units are still needed to address the back-log of community housing needs.2 Table 28. Estimated Remaining Community Housing Needs: 2016-2021 Total need Built 2016 - 2021 Pending (by 2025) Remaining need Below Market (total) 609 76 41 492 Ownership (below 150% AMI) 248 29 41 178 Rental (below 80% AMI) 361 47 0 314 Market Rate* 378 993 272 - Ownership 155 891 92 - Rental 223 102 180 - NOTE: Differences are due to rounding Keep Up Needs (2021 to 2030) It is estimated that about 820 community housing units are needed to keep up with changes through 2030. As done in the 2016 study, the need for community housing units through 2030 is based on: x Projected job growth. The Montana Dept. of Labor and Industry estimates about 1,280 jobs will be added through 2030; and x The need to fill jobs vacated by retirees. In 2016, employers reported that employees will retire from about 1.3% of jobs each year, equating to about 90 jobs per year through 2030. Assumptions regarding the mix of units by ownership and rental are the same as those used in the 2016 Housing Needs Assessment, which can be referenced for more detail. This includes: x About 40% of new units should be for ownership and 60% for rent. This takes into account that most in-commuters that would move are renters, as are the majority of new workers to the area initially (an estimated 70%). It is also in line with the rental shortage experienced in the Whitefish Area (under 2% vacancy rate). The SUeciVe UaWiR, hRZeYeU, iV VRmeZhaW deSeQdeQW XSRQ Whe AUea·V deViUed diUecWiRQ aQd housing policy. While the rental market is very tight and rentals are needed to help fill jobs and allow employees to enter the community, ownership is needed long term to reduce 2 See Housing Inventory section for more detail on built and pending projects. ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 43 housing stress and build stability, security, and satisfaction among residents making their living in the region. Table 29. Keep up needs: 2021-2030 Keep Up Needs: 2021 to 2030 Retiring employees 410 New jobs 410 Total Keep Up Needs 820 Ownership 335 Rentals 485 Total Needs (2021 to 2030) About 1,310 catch-up and keep-units are needed in the Whitefish Area through 2030 to provide housing opportunities for local residents and employees. About 75% of needed homes should be community housing units that are priced below-market. This means below 250% AMI for ownership and below 100% AMI for rentals. This will allow the Whitefish Area to address both current housing needs and keep up with annual average job growth and retiring employees through 2030. Table 30. Total Needs: Catch-Up Plus Keep-Up: 2021 ² 2030 Total Ownership Rental Catch-up (2021) 492 178 314 Keep-Up (2021 – 2030) 820 335 485 TOTAL Housing Units 1,310 515 800 Community Housing (below-market) 975 400 580 Market rate 335 115 220 NOTE: differences are due to rounding Workforce housing units are needed for owners earning under 250% AMI and renters earning under 100% AMI due to continued rising housing costs and scarce supply since the 2016 Housing Needs Assessment. x Home purchase prices for locals should range as low as about $170,000 up to about $520,000. This would provide ownership opportunities for households earning between $55,000 through $165,000 per year (between about 80% and 250% AMI). The for-sale market is not providing a sufficient supply of homes in this price range. x Homes affordable for households earning under $50,000 per year to purchase are also undersupplied; however, producing homes at this price will not occur without substantial subsidies or programs such as Habitat for Humanity. These households also often have trouble qualifying for loans and meeting down payment purchase requirements. ---PAGE BREAK--- Whitefish Area Community Housing Needs Assessment Update, August 5, 2022 DRAFT 44 x New rentals should be mostly priced for households earning under $65,000 (or about 100% AMI). There is also a shortage of rentals priced up to about $2,000 for two- and three- bedroom units in the Whitefish Area. Table 31. Total Needs by Tenure and Price: 2021 - 2030 AMI Range Max Household Income (2.5-person household) Max Affordable Home Price or Rent # of Units % of Units OWNERSHIP <=60% $40,530 $125,000 75 15% 60.1-80% $53,975 $166,500 55 11% 80.1 - 120% $81,060 $250,091 105 20% 120.1 - 150% $101,325 $312,600 60 12% 150.1 - 200% $135,100 $416,800 65 13% 200.1 - 250% $168,875 $521,000 50 10% >250% (market rate) >$168,875 >$521,000 105 20% TOTAL - - 515 100% RENTALS <=60% $40,530 $1,015 255 32% 60.1-80% $53,975 $1,350 90 11% 80.1-100% $67,550 $1,690 95 12% 100.1 - 120% $81,060 $2,025 80 10% >120% (market rate) >$81,060 >$2,025 280 35% TOTAL - - 800 100% NOTE 1: Shading indicates where there is a shortage of housing supply for employees. Rentals provided in the lighter shaded price points should be 2- and 3-bedroom units. NOTE 2: differences are due to rounding