Iowa Housing Study To create a better understanding of the housing needs of Iowans

Transcription

1 Iowa Housing Study To create a better understanding of the housing needs of Iowans

2 Iowa Housing Study What are the housing needs in Iowa? - gaps: private market and IFA programs? 2. How can IFA most effectively set programming priorities? - to address needs 3. How can IFA most effectively fulfill its role? - to finance and preserve affordable housing and promote community and economic development

3 Key Questions: 1. Housing needs change: ? 2. Impact of housing market collapse? 3. Critical housing needs Next 5 Years? 4. Housing needs: Specific demographic groups? 5. Different housing needs: Urban, Suburban, Exurban, and Rural? 6. State s workforce housing needs? 7. Share of statewide market owned by IFA?

4 Study Components Review Recent Plans/Studies Public Input Housing Analysis: Conditions & Needs Market/Foreclosure Impacts Program Evaluation/Policy Recommendations Final Report

5 Today s Presentation Review Recent Plans/Studies Housing Analysis: Conditions & Needs Market/Foreclosure Impacts Debra Jeans, Andrew Ratchford Public Input Martin Shukert Program Evaluation/Policy Recommendations Final Report

6 Analysis: Conditions and Needs

7 Work Completed Completed: Research and analysis of trends and conditions affecting housing needs Regional housing profiles Forecast of workforce housing demand Analysis of foreclosures in Iowa In Progress: Forecast of aging- and replacement-related housing needs Analysis of special housing needs Assessment of IFA programs and housing policy

8 Key Trends & Conditions Change in Farm and Nonfarm Employment by Region Farm Employment: 2000 # 2010 # Change # Change % Average Annual Growth Rate % North Tier 23,360 21,391 (1,969) (8.4) (0.88) Northeast 15,264 12,697 (2,567) (16.8) (1.82) Southeast 13,134 11,107 (2,027) (15.4) (1.66) East Central 13,288 11,397 (1,891) (14.2) (1.52) Central 9,489 7,522 (1,967) (20.7) (2.30) Northwest 12,125 9,997 (2,128) (17.6) (1.91) Southwest 7,473 5,821 (1,652) (22.1) (2.47) South Tier 15,718 12,452 (3,266) (20.8) (2.30) Total Farm 109,851 92,384 (17,467) (15.9) (1.72) Nonfarm Employment: North Tier 220, ,644 (7,460) (3.4) (0.34) Northeast 171, ,917 3, Southeast 315, ,393 (1,146) (0.4) (0.04) East Central 322, ,596 20, Central 455, ,050 39, Northwest 134, ,366 (1,619) (1.2) (0.12) Southwest 91,394 91, South Tier 99,334 96,041 (3,293) (3.3) (0.34) Total Nonfarm 1,810,857 1,860,745 49, Sources: U.S. Bureau of Economic Analysis; Gruen Gruen + Associates.

9 Key Trends & Conditions Change in Nonfarm Employment

10 Key Trends & Conditions The Economic Base Iowa s economic base continues to shift in favor of higherorder service-providing industry sectors Finance, Insurance, Real Estate and Professional & Business Services added 60,000 jobs over the decade Manufacturing and Trade lost more than 60,000 jobs The largest urban areas are capturing most job growth

11 Key Trends & Conditions The Economic Base Declining farm employment has persisted Farm jobs still large part of employment base in the North Tier and South Tier regions Many counties still heavily dependent on ag-related activity: particularly those with large food manufacturing operations Farm Jobs as Percent of Total (2010)

12 Key Trends & Conditions Growth Trends Demographic and employment trends vary by region Region Job Gains Population Gains Household Gains North Tier Northeast Southeast East Central Central Northwest Southwest South Tier State Total

13 Key Trends & Conditions Growth Trends Average Annual Population Growth Rates by Region and Metropolitan Status Metropolitan Counties 1 Micropolitan Counties 2 Non-Metro Counties 3 North Tier n/a -0.37% -0.45% Northeast 0.25% n/a -0.29% Southeast 0.44% -0.28% -0.13% East Central 1.07% 0.34% -0.12% Central 1.66% 0.10% n/a Northwest -0.18% n/a -0.48% Southwest 0.43% n/a -0.70% South Tier n/a -0.07% -0.28% State Total 0.97% -0.16% -0.36% 1 County within a Metropolitan Statistical Area. 2 County within a Micropolitan Statistical Area. 3 County not contained in any urban statistical area. Sources: U.S. Census Bureau; Gruen Gruen + Associates.

14 Key Trends & Conditions Components of Population Growth:

15 Key Trends & Conditions Hispanics are the Fastest Growing Population Segment Hispanic population grew by 84% over the decade Hispanics still only comprise 5% of total state population Non-Hispanic White population declined in all regions but the Central and East Central Region Change in Hispanics Change in Other Change in Non-Hispanic Minorities Whites North Tier 92.6% 38.6% -7.7% Northeast 93.4% 23.7% -2.6% Southeast 43.8% 40.3% -2.7% East Central 102.0% 60.1% 3.5% Central 97.3% 50.6% 9.7% Northwest 68.2% 22.8% -8.4% Southwest 104.2% 48.8% -2.9% South Tier 141.3% 67.9% -5.6% State Total 83.7% 45.1% -0.3% Sources: U.S. Census Bureau; Gruen Gruen + Associates.

16 Key Trends & Conditions A Rapidly Aging Population The largest population increase occurred in the 55 to 64 age cohort; which grew by more than 115,000 people or 45 percent In half of Iowa's counties, more than 40 percent of population is now older than 50 years of age The primary Generation Y cohorts (ages 20-29) grew moderately over the decade Change in Population by Age Cohort % 80 to % 75 to % 70 to % 65 to % 60 to % 55 to % 50 to % 45 to % 40 to % 35 to % 30 to % 25 to % 20 to % 15 to % 10 to % 5 to 9-1.0% Under % 0 50, , , , ,000

17 Key Trends & Conditions Household formation increasing; family formation declining Population growth is occurring more slowly than household formation Household sizes in Iowa, like most of the Nation, are declining Approximately 99 percent of household growth throughout Iowa over the past decade was the result of an increase in single- and two-person households The number of four- and five-person households declined Residents 65 years of age and older that live alone comprise more than 11 percent of Iowa s household base Non-family household formation accounted for approximately 75% of net household growth over the decade

18 Key Trends and Conditions Housing costs have increased more rapidly than household incomes Real household incomes declined over the decade; while inflation-adjusted housing costs grew Median ratios between incomes and housing cost have increased over the decade This is not unique to Iowa Increase Ratio of Median Home Value to Median Household Income Median Gross Rent as Percent of Median Household Income 14.3% 15.7% +1.4% Sources: U.S. Census Bureau; Gruen Gruen + Associates.

19 Key Trends and Conditions Iowa Homeowner Cost-Burden Rates ( ) 25.0% 20.0% % 19.2% 22.7% 18.8% 21.0% 19.8% 16.9% 16.7% 16.8% 15.0% 10.0% 5.0% 0.0% North Tier Northeast Southeast East Central Central Northwest Southwest South Tier STATE Sources: U.S. Census Bureau; Gruen Gruen + Associates.

20 Key Trends and Conditions Iowa Renter Cost-Burden Rates ( ) 60.0% % % 47.2% 48.1% 47.3% 50.5% 43.2% 45.9% 40.0% 39.9% 38.7% 30.0% 20.0% 10.0% 0.0% North Tier Northeast Southeast East Central Central Northwest Southwest South Tier STATE Sources: U.S. Census Bureau; Gruen Gruen + Associates.

21 Key Trends and Conditions Cost-Burden Rates Among Lower-Income Renters in Iowa Less than $20,000 $20,000 to $34,999 $35,000 to $49,999 Sources: U.S. Census Bureau; Gruen Gruen + Associates.

22 Key Trends & Conditions Iowa s Housing Stock Changes in Statewide Housing Inventory and Vacancy Total Housing Stock Vacancy Rate 2000 # 2010 # Change # 2000 % 2010 % Change Percentage Points North Tier 166, ,660 4, Northeast 125, ,923 6, Southeast 212, ,958 11, East Central 200, ,768 26, Central 263, ,087 49, Northwest 99, ,956 1, Southwest 76,298 80,154 3, South Tier 87,881 88,911 1, State 1,232,511 1,336, , Source: U.S. Census Bureau; Gruen Gruen + Associates.

23 Key Trends & Conditions Iowa s Housing Stock More than 25% of Iowa s housing is now greater than 70 years old Regions with oldest housing inventory tend to be those with the largest declines in population, labor force, and employment Percentage of Housing Stock by Year Built South Tier Southwest Northwest Central East Central Southeast Northeast North Tier % 20% 40% 60% 80% 100% 2000 or later 1990 to to to to or earlier

24 Impact of Foreclosures Rate of foreclosure in Iowa has and continues to be considerably lower than many other states and regions of the country Undoubtedly a reflection of Iowa's comparatively affordable housing market and less severe job losses resulting from the Great Recession, the rate of mortgage delinquency is quite low. Fewer homeowners falling behind on mortgage payments naturally results in a lower rate of foreclosure action High-risk mortgage loans - such as subprime, jumbo, and Alt-A loans - represent a much smaller share of active loans throughout the state than they do throughout the Nation

25 Impact of Foreclosures On-the-whole, Iowa's metropolitan areas have been less severely affected by the foreclosure crisis than its micropolitan or rural area While the rate of foreclosure is low in Iowa, concentrations of foreclosure activity in pockets of several urban areas leave these areas more vulnerable to negative destabilizing effects

26 Impact of Foreclosures Foreclosure Rate Current Metropolitan Area March 2010 % March 2011 % March 2012 % National Rank 1 Ames Cedar Rapids Davenport-Moline-Rock Island Des Moines-West Des Moines Dubuque Iowa City Omaha-Council Bluffs Sioux City Waterloo-Cedar Falls Note: Foreclosure rate denotes the percentage of mortgage loans in foreclosure. 1 Out of 366 Metropolitan Statistical Areas nationwide. Sources: Foreclosure-Response.org, Metro Delinquency Rates; Gruen Gruen + Associates.

27 Workforce Housing Demand Forecast 1: Job Growth by Sector and Geography 2: Net New Workforce by Age of Worker 3: New Workers by Household Type 4: New Workforce Households by Type and Size 5: New Workforce Households by Income 6: Forecast by Type, Tenure, and Price of Housing

28 Workforce Housing Demand Forecast Secondary Projection of Nonfarm Job Growth ( ) Nonfarm Job Growth Nonfarm Job Growth % of Total Average Annual Growth Rate % # North Tier 20, Northeast 23, Southeast 37, East Central 44, Central 74, Northwest 14, Southwest 9, South Tier 9, State Total 234, Figures are rounded. Total may not add due to rounding and disclosure requirements for some very small industry sectors in some regions of the state. Sources: Labor Force & Occupational Analysis Bureau, Iowa Workforce Development; Gruen Gruen + Associates.

29 Workforce Housing Demand Forecast Key Results & Conclusions Nonfarm job growth expected to be concentrated in Central and East Central regions of Iowa Financial Activities, Professional and Business Services, and Education and Healthcare represent 53% of forecast growth Approximately 131,000 new workforce households are expected over the decade Forecast Net Additional Workforce Household Growth by Region ( ) South Tier Southwest Northwest Central East Central Southeast Northeast North Tier ,000 20,000 30,000 40,000 50,000 Forecast Workforce Household Growth (#)

30 Workforce Housing Demand Forecast Key Results & Conclusions Majority (55%) of net new workforce households added over the decade will be single- or two-person households Workforce households without children forecast to comprise more than 60 percent of statewide growth over the decade Approximately 37,000 rental units and 94,000 for-sale units are forecast to be needed to accommodate the IWD forecast growth in employment and workers Given housing arrangements of existing workforce households, the majority of need is for detached single-family housing units

31 Workforce Housing Demand Forecast Forecast Demand by Price (Owner-Occupied Units): For-Sale Demand by Price Below $100,000 # Units $100,000 to $140,000 # Units $140,000 to $220,000 # Units $220,000 to $290,000 # Units $290,000 and Above # Units North Tier 1,603 1,229 2,204 1,389 1,852 Northeast 1,631 1,328 2,410 1,571 2,048 Southeast 2,656 2,150 3,951 2,567 3,334 East Central 2,902 2,384 4,188 3,032 5,680 Central 4,719 3,954 6,964 5,037 9,560 Northwest 1, ,538 1,003 1,319 Southwest South Tier , State Total 15,872 12,978 23,284 15,912 25,522 % of Total

32 Workforce Housing Demand Forecast Forecast Demand by Price (Renter-Occupied Units): Rental Demand by Gross Rent $600 to $800 # Units $800 to $1,250 # Units $1,250 to $1,700 # Units $1,700 and Above # Units Below $600 # Units North Tier 2, Northeast 2, Southeast 3,426 1, East Central 3,495 1,217 1, Central 5,775 2,043 1, Northwest 1, Southwest South Tier State Total 19,724 6,480 5,749 3,214 1,849 % of Total

33 Workforce Housing Demand Forecast More than 25% of forecast demand for owner-occupied housing is at higher price points above $290k More than one-third of existing units available are listed at the lowest price point (of less than $100,000) Percent of Units Available Percent of Units Needed 13.3 Less than $100, $100,000 to $139, $140,000 to $219, $220,000 to $289,999 $290,000 and Above

34 Workforce Housing Demand Forecast Majority of demand for rental housing is forecast at lower price points (below $600 in Monthly Gross Rent) Most demand for rental units is forecast to materialize at prices unlikely to amortize and support new construction costs

35 Workforce Housing Demand Forecast Estimate of Monthly Apartment Rents Needed to Support New Construction Costs 1-Bedroom Unit 800-Square-Foot Average Unit Size 2-Bedroom Unit 1,100-Square-Foot Average Unit Size 3-Bedroom Unit 1,400-Square-Foot Average Unit Size Total Development Cost Per Unit 1 Monthly Gross Rent Necessary to Support New Construction 2 $93,000 - $115,000 $128,000 - $154,000 $163,000 - $196,000 $850 - $1,000 $1,150 - $1,400 $1,500 - $1,800 1 Not including land acquisition costs. Based on a review of RSMeans construction cost data for 3-story apartment buildings within Iowa. Assumes soft costs (i.e. design, engineering, legal, entitlement, permits) comprise 20 percent of total construction cost. Total development costs per unit include a 12 percent developer return on cost, or profit margin. 2 Calculations assume operating expenses comprise 45 percent of gross rents and a six percent (6%) capitalization rate on the sale of an apartment property. Sources: RSMeans, Quick Cost Calculator; National Apartment Association, 2011 Survey of Operating Income & Expenses; Gruen Gruen + Associates.

36 Public Input: The Survey

37 Access to Housing Access to Appropriate Housing Effect of Economy on Demand Respondent s Employment Majority believe that: Iowans lack access to affordable housing. Economy is dampening demand

38 Overall Needs Obstacle to Employee Recruitment Local Supply Meets Needs? Needs by Group 1/3 considers housing an obstacle to recruitment. Greatest current needs for LMI households and young families with children Empty nesters (young and old) and single professionals best accommodated.

39 Equity Housing Issues Supply and Demand Supply by Price Price Trends Majority believe that: Demand generally exceeds supply. Shortages occur at affordable price ranges, under $125,000. Housing prices in communities are stable or moderately increasing.

40 Equity Housing Issues Lot Availability Rehab/New Construction Focus Target Needs Majority believe that: Buildable lots are in short supply. Most prevalent single-family/ownership need is affordable workforce housing. Rehabilitation is the most important focus in communities

41 Rental Housing Issues Supply and Demand Supply by Price Rent Trends Majority believe that: Rental demand exceeds supply. Undersupply is most pronounced at lower to moderate rents below $600. Rent levels are increasing.

42 Rental Housing Issues Target Markets Rehab/New Construction Options Rent-to-Own Applicability Majority believe that: Best rental markets are young professionals or single households, and LMI households Rent to own programs are useful Rehabilitation of rental units is a significant need.

43 Housing Conditions Owner-Occupied Rental Majority believe that: A substantial majority of units experience at least deferred maintenance A significant percentage (almost one-third) of rental units are substandard

44 Senior Housing Issues Senior Housing Choices Senior Housing Products Majority believe that: Senior housing supply is adequate for the most part. Most consumer interest is for rentals with additional services or support services allowing seniors to stay in place.

45 Homelessness Presence of Homeless People Adequacy of Resources Nature of Homeless Population Majority believe that: Their communities have homeless populations Major client groups are single men, people with substance abuse issues, people with disabilities, and single women. Existing facilities don t meet needs.

46 Barriers Rental Tenant Issues Barriers to New Construction Obstacles to Homeownership Majority believe that: Lack of money for deposits prevents tenants from qualifying for rental units. Credit is a major obstacle to prospective homeowners. Leading new construction obstacles are construction cost, feasibility, land cost.

47 Appropriate Public Sector Roles

48 Public Input: Discussions

49 Regional Meeting Sites 40 meetings 16 communities 310 participants + 4 tired fingers

50 Commonly Raised Topics/Subjects Central East- Central North Northeast Northwest South Southeast Southwest Total Moderate Income Housing Shortage x x x x x x x x 8 Rental Units Shortage x x x x x x x 7 Rehabilitation of Existing Housing Needed x x x x x x x 7 Low Income Housing Shortage x x x x x x 6 Options for Seniors Needed x x x x x x 6 Demolition of Deteriorated Housing Needed x x x x 4 Shortage of All Housing x x x 3 Streamline program regulations x x x 3 Increase program flexibility x x 2 Infrastructure development Disposal of foreclosed houses Transitional settings for homeless Education for Tenants Housing for Disabled Poor Conditions in Rental Units Lead Paint Obstacle for Rehab x x x x

51 Housing Access Themes Overall availability and affordability scarcities for new arrivals, recruits, workforce households Shortage of quality market-rate rentals Existing rental supply puts potential professional recruits off. Unusually low numbers of listings in many markets Inadequate transitional supply for people coming out of shelters/housing support programs Need for alternative independent living settings for older adults Perry Housing Corporation duplexes, Perry, Iowa

52 New Construction Themes Disparity between market value and replacement value in rural markets. Construction and development costs take new single-family production out of supportable costs ranges. Market tends not to support rents needed to make unassisted new construction feasible: perception of rents stuck in the 1970s, despite evidence to the contrary. Subdivision development is considered unprofitable and risky, leading to several communities filling the gap themselves. Builders cannot take on the financial exposure of building inventory of speculative, moderately priced homes. For projects assisted by HOME, LMI income restrictions limit the number of qualified applicants. Few income-eligible applicants are bankable. Midtown Terrace Town Homes, Sioux City

53 Existing Supply Themes Many communities, large and small, have serious concerns about the condition of their existing housing stock. Rehabilitation is increasingly viewed as the prime pathway to delivering affordable homeownership. Combining housing acquisition and rehabilitation into one mortgage loan (in a streamlined version of the FHA 203k) would be useful. Acquisition/rehab/resale programs have experienced some success. Bungalows in Central Coralville

54 Existing Supply Themes Houses in foreclosure or sold by older adults are often being purchased as rental properties by investors. Acquisition and demolition of deteriorated houses, followed by infill new development, is a focus for communities. Lead abatement requirements are limiting the usefulness of comprehensive rehab. The $25,000 threshold on hazard reduction versus abatement is low given current costs. New affordable senior housing with desirable features would open existing housing stock for younger households. Neighborhood Stabilization Program rehab, Sioux City

55 Rental Themes Expectations of market rents are typically too low to meet debt service and cash flow requirements. Market rate rentals are untested, and appear too risky in many places for developers. Tax credits are essential to quality workforce housing development. Smaller cities and towns report difficulties in getting tax credits to work because of small project scale and various other criteria. Downtown housing on upper levels has been effective in places where it has been used, achieving higher rents, stronger districts, and new rental housing. Concerns exist about future of this program focus. Upper level adaptive reuse project, Burlington

56 Rental Themes Human service organizations have great difficulty finding habitable units for transitional clients. Deposit requirements prevent potential tenants from qualifying for rental housing. Tenant abuse of property poses a disincentive to property improvement and reinvestment. Iowa is experiencing in-migration of Section 8 applicants from other states, notably Illinois. Multifamily development, De Witt

57 Program Themes Locally-administered Housing Trust Funds are highly regarded, but resources are too limited. Downpayment assistance has been (and should continue as) a long-term staple of local programs. LHAP (Local Housing Assistance Program) was valued for its flexibility and responsiveness to local projects. COG s, RPA s, and local development corporations have considerable expertise in project administration and delivery. Excellent project and program models pervade Iowa. Greater ongoing communication and knowledge sharing among agencies, developers, and IFA would be helpful. Homeownership and tenant skill-building educational programs are needed. Rural towns and inner-city neighborhoods experience similar problems with common programmatic solutions. Country View, an affordable single-family development of the Sioux Center Land development Co.

58 Project Team Questions and General Discussion Gary Lozano, AICP Project Manager RDG/Des Moines Martin Shukert, FAICP Principal Planner RDG/Omaha Lorin Ditzler Planner RDG/Des Moines RDG Planning & Design Aaron Gruen Principal Gruen Gruen + Associates Debra Jeans Principal Gruen Gruen + Associates Andrew Ratchford Senior Analyst Gruen Gruen + Associates Gruen Gruen + Associates

59 At Your Tables...

60 Iowa Housing Study 2012 Questions and General Discussion...To create a better understanding of the housing needs of Iowans