Missoula Apartment Market Update
Missoula’s apartment vacancy rate has dropped to a low of .95% in a survey of multifamily housing. The survey was conducted by Sterling Commercial Real Estate Advisors (Sterling CRE).
The survey captured a snapshot of the market in December 2020. Looking at 2020 survey data, apartment vacancy sat at 3.63% in Q1. In Q2, the market experienced a slight uptick to 4.19%. But, Q3 saw a dramatic decrease to 1.2% vacancy across Missoula. Subsequently, that downward trend continued into late 2020, with vacancy rates dropping to .95% in Q4. In short, the vacancy rate has dropped to unhealthy levels.
“Our concerns for the 2021 multifamily market are twofold,” said Nick Chausee with Sterling CRE. “If the eviction moratorium expires in January and results in broad evictions, that could upend the rental market, leading to more instability. Secondly, the cost of construction is rising quickly. That complicates the process of planning new multifamily development.”
Working with tenants is likely the best path forward for landlords considering eviction. Low unemployment in Missoula indicates that renters may be able to get back on their feet.
Data collected for 2021 apartment deliveries shows some positive trends. With 414 units to be constructed, apartment vacancy could rise to 3% if absorption is steady.
Likewise, for-sale housing increases may also relieve some pressure in the apartment market. The fourth quarter of 2020 saw a 3% increase in the number of homes permitted. That’s up from Q4 2019.
More information on the multifamily housing market will be available at Missoula MarketWatch on March 10, 2020. The event will be fully online and will begin at 10:00 am MST.