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Region VI Phase I Housing Findings

Region VI Phase I Housing Findings. Presented to: South Central Dakota Regional Council Presented by: Maxfield Research Inc. February 15, 2013. Agenda | Processes. Agenda │ Processes. Maxfield Research Overview Project Scope Phase I & Phase II Overview

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Region VI Phase I Housing Findings

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  1. Region VI Phase I Housing Findings Presented to: South Central Dakota Regional Council Presented by: Maxfield Research Inc. February 15, 2013

  2. Agenda | Processes Agenda │ Processes • Maxfield Research Overview • Project Scope • Phase I & Phase II Overview • Methodology and Sources Used • Demographic Findings • Employment • Housing Characteristics • For-Sale Housing • Rental Housing • Senior Housing • Phase I Demand Summary • Housing Affordability • Challenges • Opportunities • Next Steps • Questions

  3. Maxfield Research Inc. • 30 years of experience • Market experts in all real estate/land use types • Diverse clientele • Work closely with governmental agencies • Customized work programs • Detailed recommendations • Objective analysis Real Estate Research & Consulting

  4. Project Scope Custom-built studies based on the needs of Region VI Objective Provide custom comprehensive housing study Approach Identify current & future housing needs for residents in Region VI and provide framework for meeting housing needs Outcome Research and analysis will provide decision makers with an objective overview of housing conditions for existing and future residents Key Recommendations • Short and long-term housing needs • Recommendations guiding future housing development • Tools/policies to implement the plan Deliverables • Key study checkpoints • Phase I complete (January 2013) • Phase II ongoing • Final: TBD

  5. Phase I & Phase II Phase I Phase II • High-level assessment • Review of 2012 ND Statewide Housing Needs Assessment • Initial Findings based on: • Demographic/economic projections • Household characteristics • Building permits, etc. • Demand by housing type to 2020 • Refine Phase I findings • In progress (Spring 2013) • Field work & Interviews, Interviews, Interviews… • Detailed recommendations by County/Submarket • Product types, pricing, absorption, target markets, etc. • Challenges & Opportunities

  6. Methodology Data Sources: • Census Bureau • Baseline 2010 • 2012 ND Statewide Housing Needs Assessment • Model 1: Historic trends • Model 2: Future growth based on recent changes • American Community Survey • On-going survey • Data collected ‘07-’11 • Samples diminish in rural areas • Margin of error varies • ESRI • Nat’l demographic provider • Estimates per July 2012 • Multiple data sources • Maxfield Research • Projections adjusted based on local data & our methodologies

  7. North Dakota Planning Regions

  8. Demographic Findings • Region VI population declined between 1990 & 2010 (-15% | -9,931 people) • Population (2010) • Region VI: 56,363 (8.4% of ND) • Stutsman: 37.4% • Barnes: 19.6% • Projected population growth in Region VI 2010-2020: +1,924 (+3.4%) • Most Region VI growth in Stutsman & Barnes • Baby boomers driving growth

  9. Demographic Findings • Average household size has decreased steadily over the years… • 2.55 in 1990 • 2.30 in 2010 (-9.6%) • Household sizes throughout North Dakota are somewhat larger, but experienced a similar drop… • 2.65 in 1990 • 2.39 in 2010 (-9.7%) • This trend is an indication of an aging household base • By 2020, the Region is expected to add +934 households

  10. Demographic Findings • About 72% of all households owned their housing in 2010 • 65.4% statewide • Estimated 19,350 households (79%) in 2012 are income-qualified for rental housing (based on the median gross rent of $470) • By 2020, the total income‐qualified population is projected to increase +4.0%

  11. Demographic Findings • Married couple households with children declining • ‐26.1% (2000-2010) • Non-family households with roommates increased +27.2% (+315 households) and single-person households increased by +264 (+3.3%) • An increase in the percentage of these households indicates a shift in housing needs that favors rental development

  12. Region VI employment grew 6%

  13. North Dakota Planning Region Wage Comparison

  14. Region VI Employment Inflow/Outflow 7,154 5,549 • Inflow (Employed in Area, Live Outside) • Outflow (Live in Area, Employed Outside) • Interior Flow (Employed and Live in Area) 16,985

  15. Region VI Employment Inflow/Outflow by County ----- Worker Outflow----- -----Worker Inflow-----

  16. Region VI Employment Inflow/Outflow by Metropolitan/Micropolitan Area • Inflow (Employed in Area, Live Outside) • Outflow (Live in Area, Employed Outside) Minot Grand Forks 293 workers 380 workers 340 workers 591 workers Region VI 1,226 workers Fargo 1,290 workers 2,567 workers Bismarck 687 workers 234 workers Wahpeton 201 workers 158 workers 208 workers Aberdeen

  17. Housing Characteristics • Housing stock is predominantly single-family homes, ranging • from 68.7% in Stutsman County to 92.5% in McIntosh County • Barnes and Stutsman Counties had the greatest portion of large multifamily structures (20+ units)

  18. For-Sale Housing • For-Sale Housing Stock (per ACS) • 17,600+ owner-occupied units • Median value of $77,000 • $49,700 (McIntosh) • $92,800 (Stutsman) • 52% of housing stock located in Stutsman & Barnes • 31% of owner-occupied homes in Region VI valued <$50,000

  19. For-Sale Housing • New Construction • Newer subdivisions • Avg. lot cost w/services: $30k+ • Home value w/lot: $175k+ • Mostly build-to-suit, few spec • Lot availability • Premium for new construction ($140 PSF+) • Infrastructure costs – risk to builders/developers • Active Listings (Feb. 2013) • Limited inventory • Lack of centralized MLS • Median List price: • Jamestown: $135,000 • Valley City: $130,000 • Dickinson: $294,000 • Williston: $241,610 • State: $180,000

  20. Rental Housing • Region VI Rental Stock (per ACS) • 6,500 rental units • 64% of rental units in Stutsman and Barnes Counties • Most rentals are single-family (34%) • 30% of rental stock in 10+ unit buildings • Median contract rent averaged $397/mo. • $304 (Griggs) • $433 (Stutsman)

  21. Rental Housing(All Ages General-Occupancy Bldgs. 4+ Units) • Vacancy factor • Affordable – higher vacancies than market rate • No. of Properties • Maxfield surveyed 99 properties | 53 responses | 1,175 units • Ongoing • Housing Stock • Older rental housing stock • Avg. rent per square foot well under $1.00/PSF • Typical Market Rate Rents • 1BR - $420 • 2BR - $505 • 3BR - $670

  22. Senior Housing • Inventory • 700+ units • 53% of units AL or AL/Basic Care • 58% of product in Stutsman & Barnes Counties • Nearly all rental units (6 units are for-sale) • 27 properties contacted | 18 responses | 485 units

  23. Phase I Demand Summary • Phase I Demand • Household growth & tenure • Turnover • Percent capturable by county • Demand Drivers • Demographics • Economy & Job Growth • Consumer Choice | Preferences • Turnover • Supply (i.e. Existing Hsg. Stock) • Replacement need (i.e. functionally /physically obsolete) • Financing • Phase II Demand • Refined based on market findings • Income-qualified households • Demand by product type | Preferences • Percent capturable by submarket

  24. Phase I Demand Summary • Demand for over 2,600 housing units through 2020

  25. Phase I Demand Summary • Rental housing = 60% of total general-occupancy demand • Senior housing accounts for 36% of total demand • Active adult (few services) has highest senior demand • Stronger senior demand in more rural counties • 42% of all demand in Stutsman County

  26. Housing Affordability • Majority of HHDS. can afford housing in Region VI • Older properties are indirectly meeting the needs of households who need affordable housing

  27. Challenges • Development Cost/Price Sensitivity • Financially difficult to plat new lots • i.e. raw land costs, entitlements, infrastructure, financing, etc. • Developers sensitive to carrying costs of unsold lots • Lot-to-home ratio % low in Region VI • Nationally 18% to 25% • Region VI <15% • Multifamily Development Costs • Difficult to cash-flow given achievable rents/development costs

  28. Challenges • Competition for labor in oil patch • Lack of workers & housing could hinder economic development • Where do new employees working in the region live? • Wages are lower than other North Dakota regions • Land & construction costs up • Loss of housing stock from flood buy-outs • Older housing stock • Housing development talk…but no action • Rural water dispute | Infrastructure costs • Financing/Lenders • Others…

  29. Opportunities… • Housing costs are affordable & lower than most ND submarkets • Capitalize on other markets with housing shortages (i.e. oil patch, Bismarck, Fargo, Aberdeen, etc.) • Rising cost of housing in oil patch driving existing residents elsewhere • “Bakken spillover” from the oil patch to Region VI • Capitalize on new employment growth opportunities • Private/public partnerships • Access and Transportation • Upgrade and diversity housing stock in the Region • Temporary housing • Public relations campaign • Others…

  30. Next Steps… Provide Critical Recommendations to Guide Future Housing Development in Region VI • Quantify demand for all housing products (By submarkets) • Identify untapped market niches for target markets for new housing • Recommend specific housing concepts • Product type • Units/type/mix/amenities, etc. • Pricing/timing • Discuss need for public/private partnerships to strengthen development potential • Identify and discuss additional challenges and opportunities for Region VI communities

  31. Next Steps… Housing Programs • Home Improvement Programs • Fix-up/Rehab Loans • Energy Efficiency Programs • Deferred Loan Programs • Remodeling Advisor • Home Fairs • Recommend housing programs & resources • Review housing policies | modify as necessary • Discuss need for public/private partnerships to strengthen development potential • Identify and discuss additional challenges and opportunities • First-time Home Buyer Programs • Down Payment Assistance • Homeownership Education & Counseling • ND Housing Finance Agency • Military Assistance • Lower interest rates • Land Trust • Rent to Own

  32. Questions Questions …. www.maxfieldresearch.com Matt Mullins Maxfield Research Inc. 612.904.7971 mmullins@maxfieldresearch.com http://twitter.com/realestatedev https://www.facebook.com/pages/Maxfield-Research-Inc/ http://www.linkedin.com/company/maxfield-research-inc

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