Short-Term Rentals Rise in Western Montana | Local News

On a quiet residential street just two blocks from the University of Montana, a two-story white house with a finished basement has been divided into several apartments. The upper level two bedroom apartment would be a great place for a UM student or employee. But instead, the apartment was converted into an Airbnb rental for $295 a night, not including fees.

It’s happened with increasing frequency in every neighborhood in Missoula: a house or apartment that was once a place to live for a local has been converted into a short-term rental for visitors. Homeowners are betting that the financial returns are greater if they use their home more like a hotel. This means long-term renters must find another place to live in a city that faces a severe shortage of affordable housing.

Missoula saw an increase of nearly 100 additional short-term rental units from the first quarter of 2019 to the first quarter of 2022 for a total of 583, according to data from, a website that tracks tourist residences. There are others who can operate under the radar. This means that almost 600 houses do not house people who live and work here permanently.

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Over the same period, average rents in Missoula have risen about 30%, according to data from the Missoula Organization of Realtors and Sterling Commercial Real Estate Advisors. The median home sale price has increased nearly 43% over this period and now stands at over $535,000.

Other towns in Montana that have also seen soaring housing prices have seen an even larger influx of short-term rental housing. Whitefish’s inventory of Airbnb-style rental homes grew from 675 to 1,305 during that time, and Bozeman’s grew from 556 to 853.

As housing prices soar and rent hikes continue to frustrate low- and middle-wage workers in Montana, some officials and citizens are demanding answers on exactly how converting neighborhood homes to rentals for visitors affects the housing market.

Business leaders and University officials said they could not hire enough staff due to the high cost of housing. Complaints about short-term rentals prompted Missoula officials to investigate the matter.

Eran Pehan, Missoula’s director of community planning, development and innovation, said his staff conducted data analysis to see how prevalent short-term rentals were in the city. They will present their findings to the City Council’s Housing and Redevelopment Committee later this summer.

In 2019, Norma Nickerson of the University of Montana’s Tourism and Recreation Research Institute teamed up with Whitefish Inn owner Rhonda Fitzgerald to write a report on the impact of tourist residences in Montana.

“Originally, short-term rentals were seen as part of the sharing economy, offering travelers a low-cost option to expensive hotels or resorts,” they wrote. “But a growing trend has emerged with commercial operators running hospitality schemes, which tend to fracture communities, raise security concerns and raise the price of rent for residents while exhausting housing options. affordable.”

In Whitefish, the city council has banned tourist homes in most parts of town, except for resort areas and the downtown business district.

According to Whitefish Pilot LogWhitefish Sustainable Tourism Management Plan Committee Chair Lauren Oscilowski said the city needs to make sure longtime residents of the city have a place to live in traditional residential neighborhoods.

“There is a limited pool of housing for the workforce and that is designed to try to stop the bleeding,” she told city officials in late 2021, according to the newspaper. “What we ask of you is to protect our neighborhoods.”

According to data from AirDNA, the average daily rate for a vacation home in Missoula is $157 and the median occupancy rate is 77%. The number of active rentals fell sharply during the pandemic and is now back to the pre-pandemic peak. Missoula tourist home prices are highest in August and lowest in January. Only tourist residences that are not owner-occupied must register with the city for security reasons.

In Whitefish, the average daily rate is $353 and the median occupancy rate is 58%. You’ll pay up to €403 on average per night for a December rental in Whitefish, but prices drop to an average of €290 in October.

Kalispell saw an increase from 231 tourist residences at the start of 2019 to 527 at the end of 2021, but more than 100 became inactive in 2022 in this city.

Brint Wahlberg, a Missoula real estate agent, told the Missoulian last month that he’s noticed some vacation home operators have decided it’s not worth competing with so many others.

“I’ve noticed a handful of vacation rentals are starting to come back on the market for sale,” Wahlberg said. “These are Airbnbs that have taken away properties that Missouis can live in for the long term. And maybe the market has become a bit oversaturated with vacation rentals, so people are starting to throw them away because people aren’t getting the returns they thought they were getting.”

Several academic studies have indicated that short-term rentals lead to higher rents and house prices in communities. A 2017 National Bureau of Economic Research and UCLA study found that a 1% increase in Airbnb listings leads to an average monthly increase in rents of $9 and an increase in home prices of $1,800.

A similar East Bay Housing Organization study recommended that short-term rentals move workforce housing options closer to transportation infrastructure and employment centers, requiring longer commutes for residents. A study by the Center for Economic Policy Research in London reveals that places that attract tourists are more likely to have higher rent and home prices due to short-term rentals.

There’s no doubt that many Montana property owners derive much-needed income from short-term rentals.

But Norma Nickerson (who has since retired from her position at the Tourism and Recreation Research Institute) wrote in her 2019 report that many people in heavily touristed communities see collateral damage from homes. of tourism.

“Residents were telling us how short-term rentals were taking up all the units,” she said. “People living there now, it makes their property more valuable. But if you’re a businessman trying to hire people for the season, there’s no room for people because all the manpower housing is going from long-term rental for short term rental.

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