A Need for More Housing in Bozeman
The city of Bozeman, Montana is beautiful, busy and growing. Ever since 2012, after recovering from issues related to the recession, Bozeman has been improving economically. According to a housing report from the One Valley Community Foundation, jobs were growing at nearly 4 percent per year and the population was growing nearly 3 percent per year prior to the onset of COVID-19. Currently, the job growth rate is about 3.9 percent per year, while the housing growth rate is at about 2 percent a year. So, while both jobs and new housing options are increasing, the housing market (affordable housing and otherwise) isn’t keeping up with the pace of job growth.
New home construction has also increased over the years, but affordability is an issue there, as the cost to buy a home in Bozeman has been increasing faster than the national average. In fact, the local newspaper, the Bozeman Daily Chronicle, reported that the median sales price of a single-family home rose by nearly 50 percent between November 2019 and November 2020, making home ownership an unrealistic goal for many in the area.
It should come as no surprise then, that existing rental housing is largely leased. Rental vacancy rates that had been averaging around 30 percent during the recession were as low as 1 percent in some locations in 2019. And residential development activity increased, as well. While around 250 units per year were developed during the recession, in 2019, the average was back up to about 800 new units per year.
Part of the need for more rental housing in Bozeman has to do with it being home to Montana State University, which has around 16,000 students enrolled and has experienced increased enrollment numbers each year since 2007. The student population has led to an increase in student housing options in the area, but housing for non-students has not grown at the same pace, despite the fact that the university’s employee count—along with the local workforce—has steadily grown in recent years.
Census data showed the city of Bozeman as having gained around 12,500 people in the nine years following the 2010 count, an increase of more than 33 percent. Still, many people employed in Bozeman are forced to live elsewhere due to a lack of housing. A survey from 2018 found that 53 percent of Bozeman employers who participated in the survey thought affordable housing was one of the most serious problems in the city. Another 22 percent found it was the most critical problem.
Bozeman has fully recuperated from temporarily-high unemployment due to COVID-19, with Gallatin County having an unemployment rate around 3 percent as of the summer 2021. Today, in Gallatin County as a whole, about 50 percent of renters and 24 percent of home owners are cost-burdened by their housing payment, according to One Valley. This can sometimes mean people are left with not enough money to cover other necessities like food, transportation and healthcare. This is evident in the fact that organizations that serve homeless populations say they have seen an increase in employed, low-wage working residents utilizing their services.
Project Collaborators Unite to Offer a Solution
The Annex Group®, a leading workforce, affordable and student housing developer, researched the Bozeman market and came to the conclusion that in order to meet the needs of Bozeman residents, more housing was crucial. Based on the population and employment statistics, company leaders decided that a workforce housing development would be most impactful in Bozeman. To make it happen, the company partnered with Argosy Real Estate Partners for equity, Avenue5 Residential for property management, First Merchants Bank and Citywide Banks, a subsidiary of Heartland Financial USA, Inc., for debt, and BC Contracting for construction.
Enter: The Annex of Bozeman
Construction on The Annex of Bozeman began in April 2021. The $31 million community will feature 134 units including studios, one, two and three-bedroom units available to working families and young professionals.
“The need for workforce housing in Bozeman is evident,” said Kyle Bach, CEO of The Annex Group. “Some local business leaders say they’ve had trouble recruiting employees because of the lack of housing. And because of the proximity to Montana State University, many students are competing for rentals with workers. We’re really pleased to be able to offer professionals another housing option that is both high-quality and affordable.”
The Annex of Bozeman will feature abundant amenities, including: an on-site integrated public park with pavilion, sky deck with views of surrounding mountains, lounge, fitness center, ample indoor bike and ski storage, covered parking and volleyball courts.
“KTGY is pleased to deliver another exciting community for The Annex Group,” said Craig Pryde, Principal of KTGY. “This new development will provide much needed residential living for the people of Bozeman.”
The Annex of Bozeman is expected to open in late summer 2022.
Affordable Housing by The Annex Group
Affordable housing matters because having a place to call home can improve the quality of life for any person—whether they are renting, utilizing affordable housing, or owning a home.