Housing study paints picture between haves and have nots; Separately, Ruis closes on CFAC property, which could change the housing landscape

A draft housing study commissioned by the City of Columbia Falls found that the price of houses here has far outpaced an increase in wages for most residents and without some sort of subsidy, home ownership is simply out of reach for many in the working class.

The City Council and the city Planning Commission went over key points in the study during a work session last week with consultant Wendy Sullivan of WSW Consulting, the lead firm in the study.

“In the Columbia Falls area ... affordability is a problem for a broad range of income levels, not just low income,” the study found.

The median sale price of homes in the Columbia Falls area was $575,000, which is 85% higher than in 2019, when it was $310,000. Homes below $300,000 made up 48% of sales just five years ago. Last year, just 7%.

One thing noticeably absent from the draft study is Mick Ruis’s plans for the Columbia Falls Aluminum Co. property, where the developer bought about 2,000 acres west of the old plant for housing.

He has said in the past that his vision is for $500,000 homes, with 10% down and a 6% owner financed mortgage.

Ruis confirmed last week that he had closed on the deal to purchase the property, which does not include the landfills and hazardous waste sites, which amount to about 200 acres of the 2,400 acre parcel.

The average annual wage in the Columbia Falls area is just over $52,000 a year. About 45% of families make $75,000 to $125,000 or more. But the other 55% make less and 16% make just $20,000 to $39,999 a year.

It requires a (family) income of about $180,000 at a 6.5% interest rate to afford a $600,000 home.

The home price escalation since 2020 — when house prices surged during the pandemic and kept up a 17% annual increase for several years — has wiped out the market for first-time homebuyers. Homes under $300,000 are almost gone and homes priced up to $500,000 often need significant repairs. Residents able to buy attached units in this price range are often competing with investment buyers and units may not be designed with local families in mind, the study found.

An attached unit would be something like a townhome or condominium.

On the investment end, Sullivan also noted a surge in vacation rentals in the past five years. According to the study, vacation rentals increased from 12 to 83 inside the city limits in five years and 223 licensed vacation rentals in the Columbia Falls area (59912 Zip code). That includes 24 in the downtown area.

Still, the market has cooled considerably since interest rates went up.

“Real estate agents note that investor buyer interest in purchasing home to short-term rent increased in Columbia Falls post-Covid, but settled when interest rates rose over 7%,” the study found, adding, “It is worth monitoring this trend and evaluating the priorities of the city as related to short-term rentals. Existing homes converting to short-term rentals may remove valuable housing stock from the local resident pool. New residences being built for short-term rental purposes decrease development opportunities for resident and workforce housing. Land is already scarce and expensive in the city,” the study found.

To that end, council and the planning commission have both restricted short-term rentals in new developments as they come before their respective boards. Most recently, a townhome project on Meadow Lake Boulevard was restricted to short-term rental. Another tactic the city could use in the future is to restrict them through zoning, Sullivan suggested.

But there are plenty of positives as well, the study noted. For one, more recent housing developments have included a blend of projects and price points, such as townhomes and a plan by Habitat for Humanity to build seven affordable homes in the city, one of which is already under construction.

But some developments haven’t come to fruition yet. Ruis also has a subdivision approved off Meadow Lake Boulevard that could bring 100 more units on board, but it has yet to break ground.

It’s estimated that in the next five years the Columbia Falls area will need about 360 units to keep up with job growth by 2029 and 250 more from 2029 to 2034, assuming the economy continues to grow. That’s about 32 homes a year.

Add in projected population growth and we’ll need 32 more homes a year on average, assuming growth is 1% a year. If it rises to 1.5% the average increases to 39 a year.

The job market continues to be robust, despite housing concerns. About 21% of residents work in manufacturing jobs, which pay about $70,000 a year on average, which is well over the county average wage, the study found.

Having said that, jobs in education and health care comprise about 20% of jobs in the area and pay close to $44,000 a year on average, which is well below the average in the county, which is $54,907.

Still, the job market is expected to grow, though wages haven’t kept up with housing costs. Between 2019 and 2023, the average wage in Columbia Falls rose 5.8% a year, while the county rose even faster, at 6.5% a year, it’s just that housing costs rose much faster, about 17% a year up until recently, when prices leveled off.

One thing that could help affordability quickly is an interest rate drop. For every 1% rise in interest rates, the purchasing power of a homebuyer drops by 10%.

The final document is due out later this month.

This story has been updated to clarify the Ruis-CFAC land purchase.