There are two main reasons housing in Bozeman is expensive: cutthroat competition and a mismatch between our housing needs and our housing options.

There is cutthroat competition for homes in Bozeman because nearly 19,000 people moved to Bozeman since 2010 but only 5,000 homes have been built in that time. With nearly four new people for every one new home, there is a vicious game of musical chairs for housing, where rich people can bid up prices and lower-income people get pushed out.

There is a mismatch for housing because most of Bozeman treats housing as a one-size-fits-all, meaning that the available home options do not meet the needs of many households. Over half of homes in Bozeman have 3 bedrooms or more but 69% of Bozeman households have 2 or fewer people. That means Bozeman has too many big homes (which are more expensive) & too few smaller homes (which are naturally more affordable).

Both of these problems exist because the status quo UDC effectively bans smaller homes across Bozeman and incentivizes developers to build McMansions instead of workforce housing.

“UDC” stands for “Unified Development Code,” the set of rules and regulations that govern what can be built in Bozeman. Bozeman’s first zoning code was adopted in 1935 and has been adopted or readopted in entirety with changes 14 times since then. The most recent UDC was adopted six years ago in 2018. Since then, Bozeman has grown dramatically and the cost of living in our community has skyrocketed. According to Zillow, the average house in Bozeman cost $414,750 in 2018; today it is more than $700,000. The City of Bozeman began a process to rewrite the UDC in December 2021, and released a draft proposal in August 2023. Responding to community feedback, the city will begin a process to engage community members this September, and going through Fall 2024.

“Zoning” is the umbrella term for municipal regulations over what can be built where. In Bozeman, our zoning is done through the UDC. Cities like Bozeman have had zoning for about half of their history. Before zoning, property owners built what they wanted where they wanted, and most of “Old Bozeman” was built before the strict modern zoning code adopted in the mid 20th century.

Under the status quo zoning code, the cost of housing in Bozeman has risen dramatically, older homes are being “flipped” into McMansions, working families are being priced out of the city, and the number of our neighbors experiencing homelessness has exploded.

These things happened before the City considered changing the Unified Development Code; in fact it was precisely those problems that led the City to reconsider the current UDC. The root of the problem with the UDC is that it restricts homebuilding in most of the city to the #1 most expensive type of housing – the single-detached house on a large lot. These houses are pricier because the two biggest drivers of home price are the size of the residence and the size of the lot; single-detached houses take up more of both, and their costs cannot be shared across multiple households.

The most affordable types of homes in Bozeman – the small multiplexes with four, five, or six homes on a lot – have been banned in new construction in most of the city since the 1950s. This reduces the number of housing options and creates more competition for existing housing. That adds up to a city growing more expensive every day.

An update to the UDC is an opportunity to revisit the restrictions that block new workforce housing and put Bozeman back on a path to affordability.

First, it’s important to note that the city cannot mandate affordability in new developments since so-called “mandatory inclusionary housing” programs were banned by the Montana Legislature in 2021. What it can do is rewrite the zoning code to incentivize builders to construct more affordable housing types and give regulatory advantages to subsidized affordable housing

Second, Bozeman needs more homes of all shapes and sizes for people of all income levels. That means more market-rate housing, more subsidized affordable housing, more transitional housing – all of it.

Middle class families in Bozeman should not need subsidized housing and, based on the experience from other cities, would generally be able to afford a market-rate home in middle housing like a fourplex, if we re-legalize them.

Lower-income families will often need subsidized housing, and our coalition supports including big bonuses and other incentives for that housing in a UDC update to give affordable housing providers a leg up over other developers.

America is a free country and we can’t stop people from moving where they want to move. Bozeman is a wonderful place and we understand why people want to build lives here.

There is no version of the UDC, or any policy or law, that will keep people from moving here. Zoning for too-few homes certainly won't do that; it will just mean only rich people can move here or stay here. For the last decade, we’ve seen what happens when there are too few homes for the number of people moving here – bidding wars for existing housing drive prices through the roof. Since 2010, 19,000 people moved here, we only built 5,000 homes and home prices went from $275,000 to $700,000 - $800,000.

We cannot stop Bozeman from growing. We can only choose how we grow. Do we want to be a sprawling city reserved for people who can afford McMansions, where workers have to commute from Belgrade or beyond? Or do we want to be a city of walkable, bikeable neighborhoods where essential workers can afford to rent or own a modest home of their own within their budget?

That’s the choice before us.

Any new building has an environmental impact, but some homes are much more harmful than others. A sprawling McMansion with a huge lawn at the outskirts of town has a much worse environmental impact than a smaller home in a walkable, bikeable neighborhood. Put another way, “middle housing” is much better for the environment than what is currently incentivized under the status quo.

City-level data from around the United States shows that single-family homes use twice as much water per dwelling compared to multifamily residences, in large part because most single-family homes are often surrounded by big lawns.

When it comes to energy use, large homes are inherently less sustainable because they require more energy to heat and cool. The Pew Charitable Trust found that increases in home size have more than canceled out all of the energy efficiency improvements in recent decades.

As for climate change, the environmentalist Rocky Mountain Institute found that zoning for more abundant housing in walkable, bikeable, and transit-connected neighborhoods is one of the single most impactful things cities can do to reduce carbon emissions.

As environmentalist Bill McKibben recently wrote,

“But we don’t just live in a community; we also live on a planet where carbon crosses jurisdictional boundaries shortly after we spew it into the air. And so protecting one’s backyard from any change has to be balanced against the cost it will impose on the larger whole. Imagine a community considering a new wind turbine or solar farm, or thinking about denser housing along transit corridors. These are the cheapest ways to cut carbon, and if we don’t build lots and lots and lots of projects like this, then we won’t be able to keep the temperature from climbing dramatically.”

Tear-downs and house-flips are currently happening under the status quo – in fact, the current UDC encourages this to happen by banning new workforce housing and encouraging new large single-detached houses. Developers currently see the biggest profit opportunity in flipping old houses into McMansions, so that’s what happens today. The status quo is the worst of both worlds – a ton of flips & tear-downs, and less affordability.

Re-legalizing middle housing in Bozeman can have a positive impact on tear-downs AND reduce the cost of homes that do get built.

First, allowing four, five, six, or more homes on a lot reduces the number of lots needed to meet our community’s housing needs, meaning more lots will keep their old homes intact.

Second, when four, five, six or more homes are on a lot, the families in those homes can split the cost of land, and each home will be much smaller (and thus much more affordable) than the McMansions that are currently being built in historic neighborhoods.

It’s important to remember that anything that you’ve seen built in Bozeman in recent years was built under the status quo UDC, which restricts almost all of Bozeman land to the most expensive type of home there is, the single-detached house on a large lot.

The new homes that our coalition is advocating for will make housing more affordable for two reasons: 1) by reducing competition for homes and 2) by allowing more naturally affordable housing to be built.

1) Reducing competition. Right now, homes are expensive because, with four new residents for every new home, there are brutal bidding wars for every opening, driving up costs. By allowing several modest homes on every lot, home-seekers will have more options and therefore greater bargaining power to negotiate prices down.

2) Legalizing more naturally affordable homes. The homes our coalition is advocating for would be naturally much more affordable than single-detached houses because they will be more modest sized, and allow multiple families to share the cost of expensive land. Because price is closely-tied to square footage, a new 1,200 square foot home in a fourplex will be dramatically more affordable than a new 2,500 square foot McMansion.

“Luxury housing” is a marketing term generally used to describe new housing; many of today’s more affordable apartments in Bozeman were “luxury” properties when they were built 10-15 years ago. New housing will always be more expensive than older housing for the same reason that a new car is more expensive than a used car. But reducing bidding wars for homes (new and old alike) will tamp down housing costs in general and legalizing workforce housing types will put new, more affordable homes on the market.

But even under the status quo, the most “luxury” form of housing is the single-detached house, which costs over $250,000 more than the average condo.

New housing options will almost always include ample parking because most people won’t pay for a home without the parking they need. That said, when the average home price in Bozeman is over $700,000, we need to be considering our priorities in the context of limited land – do we want to use the land we have to give homes to people, or do we want to use it to warehouse cars?

According to many studies (including a recent study from the University of Utah), property values are rarely harmed by nearby new developments – more often than not, they increase.

But even if that weren’t the case, the median home value in Bozeman has risen from $170,000 in 2003 to $700,000 - $800,000 today. Longtime homeowners in the community have little to worry about when it comes to a return on their investment.

The current draft of the UDC is striving for “gentle infill” through the re-legalization of housing types that have historically always existed in our neighborhoods – townhomes, multifamily buildings, duplexes etc. – and by setting size and height standards so that new developments are in line with what’s around them.

But the question of “character” ought to be about more than aesthetics – it’s about values. We believe that the character of Bozeman neighborhoods is one that is fundamentally inclusive and welcoming to new neighbors who want the same things that we do – to be able to build lives for themselves and their families in this community.

The lawsuit brought by a group of affluent property owners is targeting laws passed by the 2023 Legislature, not anything that the city is doing specifically. The city began its UDC update process before these laws were even on the books, so the process is not directly affected by the litigation in any way.

Housing prices are sky-high in Bozeman because there isn’t enough housing to go around. Building new homes—at any price point—helps. When new housing at the high end of the market is created and someone moves up from a mid-tier home to a high-end home, that creates a vacancy in the middle tier (which, in turn, can create a vacancy in the lower-end market). Economists call this process “filtering” and countless studies have shown that even increasing supply of high-end units can improve affordability for all. These same studies also show, however, that building housing that is more affordable in the first place, such as modestly sized condos or five- or six-plexes, provides greater and more immediate affordability benefits.

Bozeman’s status quo zoning regulates construction based on the number of kitchens inside a building. In most neighborhoods you can legally build a structure that’s large enough for five or more families, but the code limits occupancy to one family. A form-based code regulates design based on height and how a building appears from the street. Another way of saying this is that form-based codes regulate the things that define the “feel” of a block—not the number of neighbors.