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Home My WebLink About10 10 2016 Maxfield Research PresentationScott County Housing Needs Study Update –Prior Lake Presented to: City of Prior Lake Presented by: | Maxfield Research & Consulting LLC October 10, 2016 Maxfield Research & Consulting, LLC is a full-service real estate advisory company providing strategic value to our private and public sector clients’ real estate activities. Overview 32 years experience Diverse client base Multi-Sector Capable residential commercial public + private entities Market driven strategies Recommending highest & best uses Provide actionable plans Maxfield Research & Consulting, LLC OBJECTIVE Update previous housing needs study from 2011 –Post-Recession APPROACH Identify current & future housing needs for cities and townships in Scott County PROJECT DELIVERABLES •Short and long-term housing needs •Recommendations guiding future housing development KEY DATES •Data collection: 2nd Quarter 2016 •Draft: June 2016 •Final: October 2016 Project Scope Housing Study Objective Develop a basis for community leaders, stakeholders, and decision-makers to guide future housing needs initiatives throughout Scott County. Identify existing and future housing needs for cities and townships in Scott County that will assist communities with guiding and attracting new housing development. End User Benefits •Guide policy making decisions •Assist the Comprehensive Planning process •Assists area banks and lending-institutions to streamline the financial component •Solicit interest from builders/developers for various housing product types across the County •Help raise funding for housing and community development programs •Better define the relationship between housing and economic development •Create framework for accommodating future growth •Help deliver strategic housing priorities Market Areas Originally defined as: •Five submarkets •Demand adjusted for each of the cities + townships (aggregate) Because of Scott County’s location in the Metro Area, a portion of demand will be generated from outside of Co. Strong Growth; but not as robust as last decade... Prior Lake –2000-2010 Population +6,879 (43.2%) Households +2,802 (49.6%) Scott County-2000-2010 Population +40,430 (45.2%) Households +14,416 (47.0%) Historic Findings Projections (2016-2040) Population and Households gains projected to 2040 Prior Lake Population +12,551 (+50.1%) Households +5,520 (+60.1%) Scott County Population +69,072 (+49.0%) Households +28,912 (+59.8%) Projected growth in most age cohorts Prior Lake to experience population growth in all age cohorts except Under 18 and 35- 44 (‘20-’30) and 45-64 (’30-’40). •65+ age cohort will account for the most adult population growth (2020 and beyond) •Baby boomers are 21% of the pop. In (Prior Lake), rise to 33% (‘40) Household types: •Increase in all HH types •35% of households are Married without Children in PL with Children in PL (2016) Household size will gradually decrease from 2.72 (2016) to 2.56 (2040) 82% est. home ownership rate (2016) •82% Prior Lake •82% Scott County •69% Twin Cities Metro Above Average Household Incomes Median Income (2015): •$96,691 –Prior Lake •$91,020 –Scott County •$67,795 –Twin Cities Metro Highest earners (2015) •$111,136 –Prior Lake 35 -44 age cohort •$107,854 –Scott County 35-44 age cohort 2015 Income disparity by tenure (Prior Lake) •$103,488 (owner) vs. $40,610 (renter)Projected increase by 2020: •+9.9% to $106,274 (Prior Lake) •+11.6% to $101,559 (Scott Co.) Employment Scott County unemployment rate: 3.2% vs Metro Area 3.3% Job growth more rapid than labor force growth causing decrease in Unemp. Rate Commuting Patterns Prior Lake is an exporter of workers •5,890 workers came into PL while 10,418 workers left •-4,528 daily outflow Avg. weekly wages (2015) •Prior Lake: $784 •Highest in the Construction sector: $1,122 Slowdown in housing starts since recession… 802 housing units constructed in Prior Lake (2010 through 2015) •Avg. 134 units/year •2000 -2009: 322 units/year SF & MF American Community Survey (2016) Housing stock (Prior Lake): •61% built prior to 2000s •39% built after 2000 Single Family Detached: 77% of all owner-occupied housing structures New Construction Activity Rental Housing-Prior Lake Overall 278 units | 8 properties 3.9% vacancy rate Market Rate 145 units |4 properties Avg. age = 44 years 7.6% vacancy rate Average Rent range: •1BR: $756 •2BR: $810 Est. avg. price per sq. ft. $0.97 Shallow and Deep-Subsidy 133 units | 4 properties 0% vacancy rate 5% Vacancy = Market Equilibrium Subsidized131 units | 4 projects 0.8% vacancy rate Senior housing vacancy rates low Market Rate 54 units active adult rental 80 units active adult for-sale 139 units congregate (independent living) 82 units assisted living 44 units memory care Deep-Subsidy 39 units active adult 0.0% vacancy rate Market Area Overall 438 units | 5 properties 0.7% vacancy rate Shallow-Subsidy 168-unit active adult rental Under construction Home sales prices continue to rebound… Median resale price: •Highest in 2006: $335,000 •2015: $329,250 •Lowest in 2011: $124,900 •Resales highest in 2015: 416 sold ResalesOverall Market activity improving New construction increasing, but still slow compared to last decade Lender-mediated proportions down substantially (7% -Scott Co.) Supply Side-Scott County/Prior Lake Active Listings (September 2016) 121 listings in the Market Area Median list price: $415,335 in Prior Lake Average price: $497,241 79% single-family listings, 21% condo/townhomes Avg. Price Per Sq. Ft. Prior Lake SF: $138/PSF MF:$117/PSF Scott Co. •SF: $127/PSF •MF: $111/PSF New Construction-Scott County/Prior Lake Lot Inventory/Supply 162 vacant lots in active subdivisions Limited future lots in many areas as previous plats have expired Newer subdivisions Avg. off-lake lot cost $45k+ Lake view much higher -$130k+ Avg. home value w/lot: $390+ Lot widths ‘75 to ‘90 feet wide New Construction Market 112 SF/10 MF housing starts in Prior Lake in 2015 Avg. new construction SF: $147+ PSF Most new product: $450k+ Includes upgrades No new plats as yet for 2016 Demand Overview Household growth & tenure Turnover Income-qualified households Demand by product | Preferences Demand Driver Examples •Demographics •Economy & Job Growth •Consumer Choice | Preferences •Turnover/Mobility •Supply (i.e. Existing Hsg. Stock) •Replacement need (i.e. functionally /physically obsolete) •Financing Demand Assumptions/Methodology Household growth adjusted for local factors (i.e. building permits, etc.) Demand Summary General Occupancy Demand by Type-Prior Lake Note: vacant lots in active subdivisions are subtracted. Demand for 163 senior housing units in 2021 3 to 5-year lot supply would equate to 375 to 625 lots available Existing lot supply reflects a current level of about 1-2 years based on recent construction. Lot supply for owned multifamily housing is less than one year. Still challenging to get builders to consider multifamily product, but gradually bringing more into the market Entry-level SF construction very difficult given development costs and resales in the Twin Cities are very low Single-Family Demand-Prior Lake Demand for 927 units Potential housing types: Detached townhomes Twinhomes Row Homes Quad Homes (entry-level) Demand by price point: Entry-level (<$225k) Move-up ($225k -$300k) Executive ($300k+ Multifamily For-Sale Demand Demand for 1,096 units •698 market rate •258 shallow-subsidy •140 deep-subsidy Clear need for newer, contemporary rental units Demand for all incomes, HH types, and product types Recommend the following types: Market rate rental – apartment & townhome style Targeted shallow-subsidy - MN Housing-point system Rental Housing Demand-Prior Lake Senior Housing Demand-Prior Lake Demand for 1,065 units to 2040 Demand across most service-levels. Negative demand for Shallow- subsidy reflects demand that will be captured from surrounding areas and some from active adult rental Recommend the following: Continuum of Care Campus Expansion of existing facilities McKenna Crossing Keystone –Prior Lake Age-restricted Senior Cooperative (50 units) •Numerical growth remains strong; growth in the northern portion of Scott County has been stronger than the southern portion; growth is occurring across all of the County •Younger (25 to 34) and older adult (55+) growth will impact alternative housing types to the greatest degree; mix of housing is likely to shift •Low 3.2% unemployment rate (Scott County and Prior Lake) & job exporter •Limited new rental construction in most communities | low vacancy rates throughout the County and in Prior Lake; job growth is fueling rental demand •Moderate but growing senior housing demand w/ current low vacancy rates •Home resale prices increasing, months of supply for resales is very low; limited entry-level housing because of tight resale supply and lack of townhomes •New construction sector primarily move-up/executive buyers | lot inventory generally low and very low in some areas of Scott County •Continued demand for all housing types, but development of some products will necessitate public-private partnerships Key Takeaways… Mary Bujold Maxfield Research & Consulting, LLC 612.904.7977 mbujold@maxfieldresearch.com www.maxfieldresearch.com http://twitter.com/realestatedev https://www.facebook.com/pag es/Maxfield-Research-Inc/ http://www.linkedin.com/co mpany/maxfield-research-inc Contact Information: Questions & Comments