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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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slide1

Region VI Phase I

Housing Findings

Presented to: South Central Dakota Regional Council

Presented by: Maxfield Research Inc.

February 15, 2013

slide2

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
slide3

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

slide4

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
slide5

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
slide6

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
slide8

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
slide9

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
slide10

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%
slide11

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
slide14

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

slide15

Region VI Employment Inflow/Outflow by County

----- Worker Outflow-----

-----Worker Inflow-----

slide16

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

slide17

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)
slide18

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
slide19

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
slide20

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)
rental housing all ages general occupancy bldgs 4 units
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
slide22

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
slide23

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
slide24

Phase I Demand Summary

  • Demand for over 2,600 housing units through 2020
slide25

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
slide26

Housing Affordability

  • Majority of HHDS. can afford housing in Region VI
  • Older properties are indirectly meeting the needs of households who need affordable housing
slide27

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
slide28

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…
slide29

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…
slide30

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
slide31

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
slide32

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