Group launches idea to create more affordable housing in Billings | Local News

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Billings officials worry the tight housing market could short-circuit the area’s ability to attract and retain workers and drive first-time home buyers out of the market altogether.

Local real estate broker Bob Leach has told any group that gives him a hearing that if Billings and Yellowstone County don’t act quickly, it could take a generation for the area to recover.

“When you don’t have housing for your workers, we all suffer,” Leach said.

Leach and others in the county believe a public land trust that developers are building on could be the smartest way to create affordable workforce housing as the global housing market rages.

Billings consistently ranked among the nation’s top emerging housing markets last year. The Wall Street Journal and Realtor.com ranked Billings as the top emerging real estate market last summer.

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Last year alone, the median home price in Billings rose 6% to $347,000. To afford a house at this price, a person or a couple would need to earn about $75,000 per year. But Yellowstone County’s median household income is $61,000, meaning homeownership is increasingly out of reach for working-class city and county residents.

“Even with two-income households, it gets overkill,” said Steve Simonson, senior project manager at Big Sky Economic Development and one of Leach’s housing market experts.

In the Billings area, the percentage of individuals or families owning a home has increased from 63% to 58% over the past three years, Leach said. He then pointed to other hot real estate markets across the country where hedge funds now own 30% of some housing markets, further excluding single-detached home buyers.

Areas around Bozeman and Kalispell have struggled over the past decade to preserve or create affordable housing for workers as house prices have soared. The COVID-19 pandemic has exacerbated the problem and now Billings is starting to see similar housing shortages and rapidly rising housing prices.

To illustrate the heat coming from Montana’s housing market, Leach pointed out that last year, 24% of all real estate transactions here were paid for in cash. Most buyers come from out of state, as people leave high-priced city markets and buy relatively cheap in Montana.

In 2021, for every Montanan who left the state, four foreigners moved in, he said. Montana has seen 70,000 transplants in California alone, he added.

Leach, Simonson and others see the formation of a land trust as a way to create affordable, quality housing for workers.

“With a land trust, we can take land out of the equation somewhat,” Leach said.

A land trust works by having a city, county, or state place land it owns into a public trust which it then leases out for a small fee to homebuilders for development. Developers then build houses that do not bear the cost of the land on which they are built; 200 to 300 properties are needed to make it self-sufficient.

The houses are then sold to a specific demographic group. It’s like buying a condo, Leach said. Other communities in the state have had success doing this, such as Red Lodge and Missoula.

The land trust system also allows the city or county to impose restrictions on ownership and maintain its appreciation at 1.5% per year. This means the new owner can build up equity in the home and sell for a profit, but the price doesn’t skyrocket in a booming market.

In total, about six in 10 people who own a home on one of these specialized land trusts move into the mainstream housing market at some point, Simonson said.

“It’s a stepping stone to (regular) homeownership,” he said.

Leach’s group presented their idea to Billings City Council and Yellowstone County Commissioners. They plan to meet with the state land board later this spring, where they will discuss the possibility of using Department of Natural Resources and Conservation lands for land trusts.

When Leach and Simonson met with council and commissioners, the groups talked about the 250 acres of DNRC land on Governors Boulevard in Billings Heights. The state has tried for years to sell the land for development with little success. Leach’s group sees this as a viable option.

Meanwhile, the region is experiencing a significant shortage of construction workers and a backlog of building materials. Leach and Simonson are both working with School District 2 to expand the district’s Career Center home-building classes to other high schools.

The region needs to start producing skilled builders and construction workers on a much larger scale, Leach said.

Likewise, builders should start looking for non-traditional building materials, and the region should work to attract manufacturers and businesses to the area that produce non-traditional building materials to speed up construction, Simonson said.

Unless that happens, “I don’t think we can get away with it,” he said.

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