Increasing Residential Density Across Montana

Background

Montana has a rapidly growing population, due in large part to an increase in migration from places with higher costs of living, especially the West Coast. Although Montana has long been a destination for wealthy retirees and vacation home buyers, migration to the state surged during the pandemic, driven by the increased ability to relocate and work remotely. The state has seen skyrocketing housing prices as a result.

Between 2010 and 2020, Montana’s population increased by nearly 10%, and despite an increase in homebuilding, housing supply struggled to keep up, only increasing by 7%. During the pandemic, from 2020 to 2023, the state’s population is estimated to have increased by another 4.5%, or about 50,000 people. Yet only 19,000 new homes were built in that time. According to Zillow, the median home value in Montana jumped by over 60% over the course of four years, starting at $274,000 in 2019 and reaching $446,000 by 2023.

Reforms Implemented

In 2022, Montana Gov. Greg Gianforte issued an executive order establishing a housing task force of diverse stakeholders to develop recommendations for addressing the housing affordability problems facing the state. The task force included Republicans and Democrats from the state legislature, as well as representatives from state agencies, businesses and industry groups, nonprofits, academia, and local communities.

The task force put out two reports in 2022 and, in 2023, the state passed a series of laws based on many of the task force’s recommendations. Those laws focused on allowing for increased density in existing towns and cities to prevent sprawl and preserve Montana’s natural beauty.

Bill	Description	Date Implemented
House Bill 211	Streamlines the subdivision review and approval process, which divides land so that it can be developed for housing.	Applies to subdivision applications approved on or after October 1, 2023
Senate Bill 245	Allows multifamily residential and mixed-use buildings to be built in areas zoned for commercial use.	Passed May 17, 2023; effective upon passage
House Bill 246	Allows cities and towns to create zones that allow tiny homes.	Passed April 19, 2023; effective upon passage
Senate Bill 323	Allows duplexes to be built wherever single-family homes can be built (only applies for municipalities with more than 5,000 residents).	Intended to be effective January 1, 2024, but temporarily on hold
Senate Bill 382	Requires municipalities that meet population minimums to create land use plans that detail how they will meet long-term housing needs. Requires cities to implement at least five regulatory changes that would increase housing supply from a list of 14 suggested changes. Accelerates the opportunity for public comment on planning decisions so that it occurs earlier in the process.	Passed May 17, 2023; effective upon passage
Senate Bill 407	Eliminates design review by external boards.	Passed May 17, 2023; effective upon passage
Senate Bill 528	Requires that ADUs be allowed without regulatory requirements such as parking minimums or restrictions on who can live in them.	Intended to be effective January 1, 2024, but temporarily on hold

Early Evidence

Many of these new laws have only been in effect for a few months, and two of them have not yet gone into effect, making it challenging to assess their impact thus far. Although the laws garnered bipartisan support and backing from a wide array of organizations and officials across the state, some communities have been resistant to the changes. A recent lawsuit from a group of Montana residents contests four of the laws—Senate Bills 245, 323, 382, and 528. The lawsuit argues that the new laws violate equal protection and citizen participation rights, and that authority for making zoning and land use decisions is reserved for local governments, not the state. Earlier this month, a judge ruled that Senate Bills 323 and 528 could not be implemented as planned in January—they will not go into effect until a final decision on the lawsuit is reached. However, Senate Bills 382 and 245 were allowed to stay in effect pending a final decision.

Despite these legal challenges, the adoption of the task force model has been a clear success. The task force generated 36 recommendations, many of which were passed into law within a year and with bipartisan support. The task force, originally slated to end in 2023, has been extended through 2025 to develop additional recommendations, indicating there may be additional developments from Montana in the near future.

Read more zoning and land use case studies here.