To Rent or To Buy in Missoula: A Discussion

By Brenna Moore, 8-08-06

Rent or buy? As in any growing town, this is a complicated question in Missoula.

As part of our series looking into housing issues with the Live Missoula radio program on KGVO 1290, several of Missoula's housing leaders today talk about changes in the Missoula market and what the rent or buy questions boils down to in the Garden City.

Historically, Missoula has had a large renter market -- at least 50 percent of households, said Robert Doore, Public Affairs Director for the Missoula Organization of Realtors. Real estate professionals generally attribute the large rental base to the large student population, but the numbers indicate that even if you leave the students aside there is still a substantial renter population.

So, the questions remain: do renters stay renters because they don't want a long-term commitment or the responsibilities and costs of home ownership? Or is it because the price of owning a house in Missoula has increased so much that many people don't have a choice? Or do people lack the information they need to go about buying a house?

When it comes to the student population, the main target for many rental property owners, the answers are not complicated. Pam Lundt, Co-Owner and Broker for Professional Property Management, Inc., notes that students are rarely looking to settle down for long periods of time in the same space, and even if they wanted to buy a home, they would rarely be eligible for a loan. "They are just not going to buy," she said.

But for the non-student population the issues are more subtle. Betsy Hands, Program Manager for homeWORD in Missoula, thinks that one of the reasons so many residents tend to lean toward renting is because they are unsure of how to go about purchasing a home. She thinks that if citizens were educated about the steps to becoming a home owner, and the benefits that come with it, people would be more eager to become buyers instead of renters. HomeWORD offers an 11-hour class that provides attendees with the information needed to buy a home.

Hands also acknowledges the difficulties some face in breaking into home ownership. There is so much continuous growth in Missoula, and there is not enough housing being produced to accommodate that growth, Hands said. "It's hard to find an affordable house, it's hard to find an affordable rental," she said.

On average, a family shouldn't pay more than thirty percent of their income toward housing, Hands said. Twenty-five percent of home owners are paying more than that, and renters are stretched even more than home owners, she said.

Still, Corina Chamberlain, Property Manager for Guardian Management, said that although the Creekside Apartments on east Broadway are usually almost full, about half of the renting population leaves because they are buying a house.

"In the long-run, it's obviously cheaper to own... you get more for your money," Chamberlain said. "I think anyone who could buy a house, should... I'm saying that and I'm a rental property manager," she said.

Judy Wahlberg, Board President for the Missoula Organization of Realtors and owner of Remax Realty Consultants, also believes the gap between owning and renting is an education issue.

"People are not educated to the advantage of owning... a potential renter could be a buyer with lending being as flexible as it is... people don't have to pay a twenty to twenty-five percent down payment these days," Wahlberg said. She added that some people are still not even aware that mortage interest is tax deductible, which dramatically improves the economics of home ownership for most people.

There are times, however, when renting a property is the better option. If a resident is relocated to Missoula and unsure of a new job, he or she might not want to commit to a house, Wahlberg said.

"I've known people in their forties who've rented all their lives... people have a phobia of commitment," Wahlberg said.

Lundt adds: "You don't have to mow your own lawn, do your own maintenence... sometimes it's even appealing to me, you just have to call somebody."

And phobias or an aversion to lawn-mowing aside, because Missoula is a growth market where real estate is considered a good long-term investment, the price of rental housing is relatively lower (and the price of buying higher) than in markets that are considered more mature and have less appreciation potential. That can making renting more economical in the short run.

Yet the urge to own property is very strong, notes Wahlberg. "People take pride in their homes... they have the chance to improve it, improve its value by remodeling, landscaping, which brings a nice return on investment... plus you get to enjoy it as well. If you're a renter you can't do that."

New West, in collaboration with the Missoula Organization of REALTORS and the news radio station 1290 KGVO, sponsors a weekly radio show that delves into Missoula's housing market. Each week, local leaders chat with host Pete Deneault about issues relating to housing, growth and development, public policy and homeownership. Interviews with the Live Missoula guests on New West like this one serve as a preview of issues for the show. This week's show, scheduled for Sunday at 10:30 a.m., focuses on renting versus buying. We encourage you to comment here on this issue and help shape this weekend's radio discussion.

For more information, visit MOR's Web site, as well as the Live Missoula info page.
[End of article]