Montana's housing crisis is a warning for older homeowners across the country

Older and retired Montanans are particularly hard hit by the state's severe housing crisis, as their fixed incomes are squeezed by rising costs.

• Montana homeowners face rising costs and housing insecurity amid soaring property taxes and insurance.
• Older Montanans, particularly those with health issues, are especially vulnerable.
• State housing reforms aim to boost supply, but one housing counselor worries about short-term aid.

Owning a home doesn't guarantee financial security in retirement — even when home values have skyrocketed, as they have in communities across the country over the last few years.

This is particularly apparent in the state of Montana, which has seen home values surge as out-of-staters move in and its home shortage deepens. But in Big Sky Country, as in much of the nation, costs associated with homeownership, including home insurance premiums, property taxes, and home repairs, have also risen quickly.

Older homeowners who live on fixed incomes are having a particularly hard time managing these rising costs. With mortgage interest rates sky-high and home inventory low, they have few options to downsize.

Beverly Dashnaw has worked as a HUD-certified housing counselor for about two decades in Montana, and she says she's never seen so many retired and elderly homeowners struggling to make ends meet. She blames rising property taxes and insurance costs but notes that inflation, in general, has also squeezed those on fixed incomes.

"Elderly and disabled people are struggling really, really hard," she said. "The cost of living, inflation is going up for everything, and their income doesn't go up."

Montana's crisis is particularly acute as it has one of the oldest populations in the US. Nearly 20% of the state's residents are 65 or older, significantly higher than the 16.8% share nationwide, according to the 2020 Census. The state is also particularly impacted by climate change — in the form of more severe wildfires and hail storms, among other extreme weather events — which is pushing its insurance premiums up among the fastest in the country.

But Montana isn't alone. Older homeowners are struggling in communities across the country. Insurance costs have risen dramatically all over — a result both of increasingly severe climate issues, including flooding and fires, and the elevated cost of home construction and repairs. Nationally, average home insurance premiums rose by 21% between May 2022 and May 2023, Policygenius found. Home repairs are also more costly these days, with a construction worker shortage and the elevated cost of materials.

The portion of homeowners 55 and older who are cost-burdened — or spend more than 30% of their income on housing and utilities — rose from 30% in 2001 to 45% in 2022, according to a new report from the Harvard Joint Center for Housing Studies on the state of US housing. "A shocking 95 percent of older adult homeowners with low incomes and mortgages are cost burdened, dramatically higher than the 56 percent of their counterparts who own their homes outright and the 74 percent of those who rent," the report found.

The housing affordability crisis comes as the country is also facing a retirement crisis. A fifth of Americans 50 and older have no retirement savings. And older people are increasingly losing their homes. The portion of unhoused people who are 50 or older has grown from about 10% to more than 50% over the last three decades.

A crisis exacerbated by the pandemic

Dashnaw works for the nonprofit NeighborWorks Montana, where she counsels existing homeowners struggling to afford their housing costs or facing foreclosure, potential first-time homebuyers, and those seeking affordable rental housing. Many of her clients are also struggling with illness.

"A lot of it is the health issues," she added. "People that got sick during Covid or even after and just couldn't manage to catch up their payments."

Those who own mobile homes but not the land the home sits on are increasingly vulnerable to rising rents.

Many older homeowners forced out of their housing end up unhoused, part of a growing homeless population in the state. Montana's homeless shelters are increasingly filled with older people.

Dashnaw said it's also become more common to see multiple families living in the same home. "That's another trend that you didn't see in years past," she noted.

While Montana's housing issues have been mounting for years, they exploded during the pandemic as tens of thousands of Californians and others took advantage of remote work and moved into the state. At the same time, the state's booming outdoor tourism has pushed long-term rentals off the market in favor of Airbnb and other short-term rentals. The surge in demand from transplants with fat wallets sent home prices and rents soaring. Statewide, home prices have soared by 60% since early 2020, while rents are among the fastest-growing in the country.

The crisis has gotten so severe that Montana's conservative governor, Greg Gianforte, and the state's Republican-majority legislature have acted, recently passing a slew of housing reforms designed to boost the supply of homes. The state loosened zoning restrictions, allowed for more housing density, and required localities to devise a land-use plan, among other measures. The measures have been hailed by pro-housing experts as the "Montana Miracle" and a model for the rest of the country.

"The bottom line, demand outstripped supply and we saw housing prices really spike," Gianforte told Business Insider earlier this year. "We knew we had to do something about it."

But Dashnaw worries there isn't enough assistance available in the meantime. The Homeowner Assistance Fund — a pot of money provided by the American Rescue Plan of 2021 and dedicated to aiding homeowners struggling with pandemic-related hardships — has been a crucial source of aid for her clients, but its funding is finite and will run out at some point, she noted. In other states, pandemic-era homeowner assistance programs have already run out.

For years, Dashnaw ran a catering business to supplement her nonprofit salary. There, she worked for second-home owners who left their large Montana houses empty for months at a time.

"The gap in the classes has just grown where you've got a middle class that's been pushed into poverty," she said, "And the wealthy are still wealthier."

Are you a homeowner struggling with rising insurance premiums or other costs? Reach out to this reporter at erelman@businessinsider.com.