The ‘Montana Miracle’ continues through housing reform pass in 2025

Since the end of the 2008 financial crisis, Montana has experienced some of the highest home price appreciation of any state in the nation. Rapid population growth, coupled with a stagnant housing supply, has resulted in a median listing price of $639,000 as of May 2025. In response, Montana’s state legislature passed a series of housing reforms referred to as the “Montana Miracle” in 2023 (see Table 1). These included various zoning reforms, a rent control ban, parking reform, and a statewide restructuring of local planning procedure. Despite early legal challenges, in 2025, the Montana State Legislature doubled down on existing measures and expanded into other areas of housing policy, including impact fees, single-exit stairways, and manufactured housing. All these reforms are promising steps toward expanding Montana’s housing supply and bringing down home prices across the state. 

Table 1: 2023 Montana Housing Reforms and brief synopsis

Bill	Type	Summary
SB 323	Zoning	Cities with 5,000+ residents must allow duplexes on single-family lots by right.
SB 528	Zoning	Municipalities must allow one accessory dwelling unit (ADU) by right on parcels containing a single-family home.
SB 382	Planning	Requires municipalities with 5,000+ residents within counties with 70,000+ residents to adopt state-wide planning recommendations.
SB 245	Zoning/ Parking	Municipalities with 5,000+ residents must allow multiple-unit dwellings and mixed-use developments (50%+ residential) in commercial zones and may not require more than one off-street parking space per unit.
SB 406	Building Codes	Prohibits local governments from enacting building codes more stringent than state-wide codes.
SB 105	Rent Control	Prohibits rent control on private residential or commercial property.

2023 legal challenges

These bold reforms have not been without their legal challenges. In late 2023, Montanans Against Irresponsible Densification (MAID), an interest group created to challenge the state’s sweeping zoning reforms, filed a suit against the state. They claimed these new bills violated “Montana and U.S. Constitution’s Equal Protection guarantees” as well as “substantive due process protections” by reversing local zoning restrictions without sufficient justification. As written in the original plaintiff’s motion for temporary restraining order specifically against Senate Bills 323 and 528 (see Table 1), the essence of these concerns rests on a fear that residents may “wake up one morning to find that, without any notice at all, a new duplex or ADU is going up next door in their previously peaceful and well-maintained single-family neighborhood.”

Initially, a Gallatin County District Court sided with MAID and granted a preliminary injunction. However, in 2024, the Montana Supreme Court overturned this initial decision and ultimately upheld the initial zoning reforms. The court concluded that housing does, indeed, constitute a legitimate state interest and provided enough justification to warrant overhauling restrictive local restrictions.

This decision by Montana’s highest court provided the basis for even bolder reforms in 2025.

Taller buildings

During the 2025 legislative session, the Montana state government passed Senate Bill 243, allowing taller buildings in areas that previously prohibited their construction. Specifically, in municipalities with more than 5,000 residents, maximum height restrictions are not permitted to be lower than 60 feet. Typically, this corresponds to anywhere between five and six stories. The 5,000 resident requirement is a common feature of these types of legislation because that is the Census Bureau’s qualifier for an area to be considered “urban.” This step mandates that localities allow the option for a more efficient use of space in urban areas. This law will take effect on October 1, 2026.

Impact fee reform

Impact fees are one-time fees charged to developers to offset the cost of the additional strain on public resources caused by their new construction. These fees typically go toward roads, emergency services, and schools. While impact fees are, in general, good policy tools to offset the burden on existing residents through property taxes, it is vital that these fees are proportional to the impact they are designed to mitigate. If impact fees are excessive, poorly designed, or regressive (meaning they are a higher proportion of home value for smaller homes), these fees can be unfair or even discourage development.

Through Senate Bill 133, the Montana State Legislature took steps to make sure impact fees in their state are properly designed. In addition to existing state guidelines that require impact fee calculation to be proportional and in accordance with Generally Accepted Accounting Principles (GAAP) new legislation forbids impact fees to increase by more than the rate of inflation. This provision prevents unjustified impact fee increases, taking steps to not only enact proportional impact fees but maintain them over time.

Manufactured housing

Manufactured homes are typically assembled off-site and then transported to the desired final location. Traditional homes, in contrast, are constructed on-site from start to finish. Importantly, manufactured homes do not include mobile homes or trailers. Senate Bill 252 makes a statewide change to local zoning laws, requiring local governments to treat manufactured and factory-built homes exactly as they would traditional homes. Manufactured homes are typically less costly than traditional homes, so they present an affordable option for prospective homebuyers. SB 252 takes precautions to ensure these homes are not barred from certain neighborhoods due to their construction method, expanding housing opportunities across the state.

Continuing ADU reform

Montana’s Senate Bill 532 explicitly builds on and revises SB 528, the state’s 2023 ADU reform. The original 2023 legislation made bold moves in expanding the areas in which ADUs can be built and getting ahead of many ADU killers (owner occupancy requirements, impact fees, etc.), but included some restrictions. For example, initial restrictions required that these ADUs be no larger than 1,000 feet or 75% of the floor area of the primary dwelling. SB 528 strikes this requirement.

On the other hand, SB 528 originally banned counties from requiring a parking space for ADUs. The 2025 version reinstated counties’ ability to require parking for ADUs. Finally, SB 532 qualifies ADUs on parcels already connected to public water and wastewater service for a 15-day expedited review. Largely, these 2025 revisions make it easier to permit an ADU and start construction. ADUs are an infill tool to aid existing housing supply problems. While they don’t offer a universal solution, they are great options for low-income individuals, homeowners looking to make additional income, and extended family. Likely due to intense early criticism of ADU legislation in the state, the legislature has only made this bill a trial. As currently written, this new law will sunset on September 30, 2029.

Single-exit stairways

For decades, the International Building Code (IBC) has required that buildings with multiple floors have two exit stairways accessible from each point in the building. These requirements arose from a concern over safety in the case of a fire emergency. Existing analysis suggests that having these requirements for four to six-story buildings makes construction more expensive, without realizing the promised safety difference compared to single-exit stairways. Existing estimates suggest that single stairway buildings can cut anywhere between 6%-13% off the cost of construction. Further, additional stairways either encroach on living space or require larger parcel purchases. With the Montana State Legislature actively looking to encourage new multifamily construction, they amended this requirement via Senate Bill 213. This legislation tentatively relaxes building requirements, allowing single-exit stairways in buildings no more than six stories tall, with no more than four units on each floor. To qualify, buildings must also meet specified fire safety standards, like being equipped with automatic sprinklers and having windows in each unit.

Parking reform

Excessive parking requirements substantially increase the costs of new housing construction. States across the nation have taken steps toward loosening their parking requirements to lessen the burden on developers and encourage more building. While minor parking provisions have been included in several other bills, House Bill 492 is Montana’s most extensive parking reform to date. Under this law, municipalities with more than 5,000 residents may not require more than one parking space per unit or one-half parking space for units under 1,200 square feet on multi-family developments. For residential units more broadly, this bill prohibits requiring more than one parking space per unit, or any requirement at all for non-multifamily units under 1,200 square feet. Developers are, of course, still able to add more parking if they choose. HB 492 bill is effective October 1, 2026.

Conclusion

Montana’s housing crisis has been over a decade in the making, and no policy can provide an overnight solution. Many of these 2025 reforms have yet to take effect, and it is still too early to see the results of the 2023 bills. All markets take time to adjust, construction being especially time-consuming, so these policy reforms have yet to manifest in lower home prices for Montana residents. However, expanding supply through incremental reform is the clearest path toward relief for the state’s residents. These 2025 bills, in coordination with those passed in 2023, provide a foundation for Montana’s housing market to adjust to the new challenges placed on it.

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Source: https://reason.org/commentary/the-montana-miracle-continues-through-housing-reform-pass-in-2025/