Comprehensive Housing Market Analysis for Grand Rapids, Minnesota

Transcription

1 Comprehensive Housing Market Analysis for Grand Rapids, Minnesota Prepared for: Itasca County Housing Institute Team Grand Rapids, Minnesota June Nicollet Mall Suite 218 Minneapolis, MN

2 June 16th, 2014 Ms. Diane Larson Executive Director Itasca County HRA 102 NE Third Street Grand Rapids, MN Dear Ms. Larson: Attached is the Comprehensive Housing Market Analysis for Grand Rapids, Minnesota conducted by Maxfield Research Inc. The study projects housing demand from 2014 through 2025, and gives recommendations on the amount and type of housing that could be built in Grand Rapids to satisfy demand from current and future residents over the next decade. The study identifies a potential demand for about 930 new housing units through Demand was nearly equally divided between general occupancy housing and age restricted senior housing. Our inventory of general occupancy rental housing found a vacancy rate of only 1.4%; including a vacancy rate of only 0.5% among affordable/subsidized rental products and 2.6% for market rate rental housing. The low vacancy rate indicates pent up demand for additional rental units in Grand Rapids. Although new residential lots will be needed over the next decade, the current lot supply is sufficient to meet demand in the short term. Detailed information regarding recommended housing concepts can be found in the Conclusions and Recommendations section at the end of the report. We have enjoyed performing this study for you and are available should you have any questions or need additional information. Sincerely, MAXFIELD RESEARCH INC. Matt Mullins Vice President David Sajevic Analyst Attachment

3 TABLE OF CONTENTS Page EXECUTIVE SUMMARY... 1 DEMOGRAPHIC ANALYSIS... 6 Introduction... 6 Market Area Definition... 6 Population and Household Growth From 2000 to Population and Household Estimates and Projections Age Distribution Trends Household Income by Age of Householder Tenure by Age of Householder Household Type Demographic Comparison to Peer Cities/Counties EMPLOYMENT Employment Trends Employment Growth & Projections Resident Labor Force Commuting Patterns Inflow/Outflow Existing Business Mix by NAICS Major Employers Employer Survey HOUSING CHARACTERISTICS Introduction Residential Construction Trends 2004 to Present American Community Survey Age of Housing Stock Housing Units by Structure and Occupancy or (Housing Stock by Structure Type) Owner Occupied Housing Units by Mortgage Status Owner Occupied Housing Units by Value Renter Occupied Units by Contract Rent RENTAL MARKET ANALYSIS Introduction Overview of Rental Market Conditions General Occupancy Rental Projects SENIOR HOUSING ANALYSIS Senior Housing Defined Senior Housing in Grand Rapids and the Market Area... 65

4 SPECIAL NEEDS HOUSING Introduction Persons with Disabilities People with Limitations/Disabilities Housing Facilities for Disabled Persons Specialized Housing Facilities Homelessness Comparison of 2009 and 2012 Homeless Figures for Minnesota Grace House of Itasca County American Community Survey FOR SALE HOUSING ANALYSIS Introduction Overview of For Sale Housing Market Conditions Current Supply of Homes on the Market Months of Active Supply Price per Square Foot Owner Occupied Turnover Lender Mediated Properties Actively Marketing Subdivisions Realtor/Builder Interviews PLANNED AND PENDING HOUSING DEVELOPMENTS Planned and Pending Housing Projects HOUSING AFFORDABILITY Introduction Housing Cost Burden Housing Vouchers Housing Costs as Percentage of Household Income HOUSING DEMAND ANALYSIS Introduction Demographic Profile and Housing Demand Housing Demand Overview Estimated Demand for For Sale Housing Estimated Demand for General Occupancy Rental Housing Estimated Demand for Independent Adult Few Services Senior Housing Estimated Demand for Subsidized/Affordable Independent Senior Housing Estimated Demand for Congregate Senior Housing Demand Estimate for Assisted Living Housing Estimated Demand for Memory Care Housing Estimated Demand for Homeless Housing

5 RECOMMENDATIONS AND CONCLUSIONS Introduction/Overall Housing Recommendations Recommended Housing Product Types Challenges and Opportunities APPENDIX Definitions

6 LIST OF TABLES Table Number and Title Page D1. Historic Population Growth Trends, Grand Rapids Market Area, 2000 & D2. Historic Household Growth Trends, Grand Rapids Market Area, 2000 & D3. Population and Household Growth Trends and Projections, Grand Rapids Market Area, 2000 to D4. Population Age Distribution, Grand Rapids Market Area, 2000 and D5. Household Income by Age of Householder, City of Grand Rapids, 2014 & D6. Household Income by Age of Householder, Grand Rapids Market Area, 2014 & D7. Tenure by Age of Householder, Grand Rapids Market Area, 2000 & D8. Household Type, Grand Rapids Market Area, 2000 & D9. Demographic Summary, Comparable Cities Throughout Minnesota, D10. Demographic Summary, Comparable Cities Throughout Minnesota, E1. Employment Projections, Northeast Minnesota, E2. Annual Average Resident Employment, Grand Rapids & Itasca County, 2000 to E3. Covered Employment Trends, Itasca County, 2000, 2005, E4. Commuting Patterns, Grand Rapids, E5. Commuting Patterns, Itasca County, E6. Commuting Inflow/Outflow, Grand Rapids/Itasca County, E7. Business Summary by NAICS Code, City of Grand Rapids, E8. Major Employers, City of Grand Rapids, HC1. Residential Construction Building Permits Issued, City of Grand Rapids, 2004 to HC2. Age of Housing Stock, Grand Rapids Market Area, HC3. Housing Units by Structure and Tenure, Grand Rapids Market Area, HC4. Owner Occupied Housing Units by Mortgage Status, Grand Rapids Market Area, HC5. Owner Occupied Housing Units by Value, Grand Rapids Market Area, HC6. Renter Occupied Units by Contract Rent, Grand Rapids Market Area, R1. Bedrooms by Gross Rent, Renter Occupied Housing Units, Grand Rapids Market Area, R2. Market Rate General Occupancy Projects, Grand Rapids Market Area, R3. Subsidized General Occupancy Projects, Grand Rapids Market Area, R4. Affordable General Occupancy Projects, Grand Rapids Market Area, R5. Common Area Features/Amenities, Existing General Occupancy Rental Projects, Grand Rapids Market Area, S1. Market Rate Senior Projects, Grand Rapids Market Area S2. Subsidized Senior Projects, Grand Rapids Market Area, S3. Amenity Comparison, Market Rate Senior Projects, Grand Rapids Market Area, S4. Services Comparison, Market Rate Senior Projects, Grand Rapids, Market Area,

7 SN1. Type of Disability by Age of Non Institutionalized Person, Itasca County, SN2. Estimates of Disability by Income Level, Itasca County, SN3. Inventory of Housing For Disabled Persons, Grand Rapids, SN4. Specialized Housing, Itasca County, SN5. Number of Homeless People, NE Minnesota and Minnesota, SN6. Age Distribution, Homeless People in NE Minnesota and Minnesota, SN7. Ethnic Background of Homeless People Surveyed, NE Minnesota and Minnesota, SN8. Monthly Income of the Homeless People Surveyed, NE Minnesota and Minnesota, October SN9. Maximum Affordable Rents Among Surveyed Homeless People, Ne Minnesota and Minnesota, SN10. Number of Bedroom Size Needed, NE Minnesota and Minnesota, SN11. Grace House of Itasca County Statistics, FS1. Home Resales, City of Grand Rapids, 2008 to FS2. Single Family and Multifamily Resident Resales, City of Grand Rapids and Market Area, 2008 through FS3. Homes Currently Listed For Sale, City of Grand Rapids and Market Area, April FS4. Active Listings by Housing Type, City of Grand Rapids, April FS5. Active Listings by Housing Type, City of Grand Rapids, April FS6. Actively Supply of Homes For Sale, rand Rapids and Itasca County, 2008 to FS7. Median Sales Price Per Square Foot, Grand Rapids & Itasca County, 2008 to FS8. Owner Occupied Turnovers, Grand Rapids Market Area FS9. Lender Mediated Sales, City of Grand Rapids and Itasca County, 2005 to FS10. Foreclosure Counts, 2005 to FS11. Actively Marketing Subdivisions in and Near Grand Rapids, P1. Housing Development Pipeline, City of Grand Rapids, May HA1. MHFA/HUD Income and Rent Limits, Itasca County, HA2. Maximum Rent Based on Household Size and Area Median Income, Itasca County, HA3. Housing Cost Burden, Grand Rapids, Itasca County and Select Geographies, HA4. Housing Choice Vouchers, Itasca County, April HA5. Housing Voucher Stats, Itasca County, April HA6. Grand Rapids Market Area Housing Affordability, Based on Household Income HD1. For Sale Housing Demand, Grand Rapids Market Area, 2014 to HD2. Rental Housing Demand, Grand Rapids Market Area, 2014 to HD3. Market Rate Active Adult Housing Demand, Grand Rapids Market Area, 2014 & HD4. Subsidized/Affordable Independent Housing Demand, Grand Rapids Market Area, 2014 & HD5. Market Rate Congregate Rental Housing Demand, Grand Rapids Market Area, 2014 &

8 HD6. Market Rate Assisted Living Demand, Grand Rapids Market Area, 2014 & HD7. Market Rate Memory Care Demand, Grand Rapids Market Area, 2014 & HD8. Estimated Demand for Homeless CR1. Summary of Housing Demand, City of Grand Rapids, June CR2. Recommended Housing Development, Grand Rapids, 2014 to

9 EXECUTIVE SUMMARY Purpose and Scope of Study Maxfield Research Inc. was engaged by the Itasca County Housing Institute Team to conduct a Comprehensive Housing Needs Analysis for the City of Grand Rapids. The Housing Needs Analysis provides recommendations on the amount and types of housing that should be developed in order to meet the needs of current and future households who choose to reside in the City. The scope of this study includes: an analysis of the demographic and economic characteristics of the City; a review of the characteristics of the existing housing stock and building permit trends; an analysis of the market condition for a variety of rental and for sale housing products; and an assessment of the need for housing by product type in the City. Recommendations on the number and types of housing products that should be considered in the City are also supplied. Demographic Analysis As of the 2010 Census, the City of Grand Rapids had 10,869 people and 4,615 households. The City of Grand Rapids is forecast to add an additional 446 people and 215 households between 2010 and The population in Grand Rapids is aging and older age cohorts are accounting for a significant percentage of the total population. Baby boomers (comprising the age groups 45 to 54 and 55 to 64 in 2010), accounted for an estimated 23.3% of the City s population. Over the next five years, the age 65 to 74 cohort will have the highest growth by percentage and numerically (294 people, or 35.2%). The growth in this age cohort can be primarily attributed to the baby boom generation aging into their young senior years. Grand Rapids had an estimated median household income of $38,518 in Overall, non senior households had a higher median household income ($41,684) compared to senior households ($31,763). Between 2000 and 2010, homeownership rates increased from 60% to 62.1% in the City of Grand Rapids. Approximately 37% of all households in Grand Rapids lived alone in Married without children households accounted for the second highest percentage at 27%. Grand Rapids had an unemployment rate of 9.7% in 2013, which is higher than the State of Minnesota (5.1%). Grand Rapids unemployment rate has been higher than the State of Minnesota in every year from 2000 to The majority of Grand Rapids residents also work in Grand Rapids (55.5%). Of those who commuted outside the City, most commuted to Coleraine, La Prairie, and Duluth. MAXFIELD RESEARCH INC. 1

10 EXECUTIVE SUMMARY Housing Characteristics The City of Grand Rapids issued permits for the construction of 534 new residential units from 2004 to Beginning in 2007, which was the start of the Great Recession, building permits started declining rapidly and from 2007 to 2010 the City has averaged only twentyfour new units per year. However, since 2011, the City has averaged eighty one units per year. The majority of the homes in Grand Rapids are older. Approximately 40% of Grand Rapid s housing stock was built in the 1950 s or prior. Approximately 62% of Grand Rapids homeowners have a mortgage. About 10% of homeowners with mortgages also have a second mortgage or home equity loan. The median owner occupied home in Grand Rapids was $142,100 in The majority of the owner occupied housing stock in the City of Grand Rapids was estimated to be valued between $100,000 and $199,999 (51.0%). The median contract rent in Grand Rapids was $523 in Approximately 34% of Grand Rapids renters paying cash have monthly rents ranging from $500 to $749. Rental Housing Market Analysis In total, Maxfield Research inventoried 481 general occupancy market rate rental units in the Grand Rapids Market Area spread across eighteen multifamily developments (8 units and larger). At the time of the survey, there were nine vacant units resulting in an overall vacancy rate of 2.6%. Typically, a healthy rental market maintains a vacancy rate of roughly 5%, which promotes competitive rates, ensures adequate consumer choice, and allows for unit turnover. Affordable/subsidized projects make up 344 units and posted one vacancy. Combined with the market rate projects, the overall vacancy rate for rental housing in the Grand Rapids Market Area is about 1.4%. Senior Housing Market Analysis There are 26 senior housing facilities located in the Grand Rapids Market Area with a total of 805 units. Combined, the overall vacancy for market rate senior projects is 4.5%. Generally, healthy senior housing vacancy rates range from 5% to 7% depending on service level. There is one adult rental project, Lake Shore Place, with 60 units in Grand Rapids. There is one adult ownership development, Colony Square Cooperative, with 60 units in Grand Rapids. MAXFIELD RESEARCH INC. 2

11 EXECUTIVE SUMMARY There are nine assisted living projects located in the Grand Rapids Market Area. These projects account for 315 units and a vacancy rate of 3.6%. The newest projects are Maple Woods and Whispering Pines, which were built in There are six memory care developments. Combined the projects have 113 units and a vacancy rate of 10.6%. The newest memory care development is Whispering Pines. Since 2005, seven assisted living projects and three memory care developments have been built in the Grand Rapids Market Area. Combined, these projects account for over 50% of the total assisted living/memory care units in the Market Area. Housing Affordability About 31% of owner households and 53% of renter householders are estimated to be paying more than 30% of their income for housing costs in Grand Rapids (i.e. cost burdened). Compared to the Minnesota average, the percentage of cost burdened owner households is slightly higher than the state average. The percentage of renter cost burdened households in Grand Rapids is approximately the same as the state average of about 53%. The number of cost burdened households in Grand Rapids increases proportionally based on lower incomes. About 75% of renters with incomes below $35,000 are cost burdened and 53% of owners with incomes below $50,000 are cost burdened. For Sale Housing Market Analysis The average and median resale price of homes in Grand Rapids was approximately $164,600 and $140,000 respectively as of Over the past six years, the median sales price peaked in 2008 at $143,900. An average of 230 homes have been sold annually in Grand Rapids since Considering that Grand Rapids has a supply of about 3,100 owned occupied housing units, this represents turnover of 7.5% of the owned homes annually. The median list price of single family homes for sale in Grand Rapids was nearly $170,000 in April Based on a median list price of $170,000, a household would need an income of about $48,500 to $56,600 based on an industry standard of 3.0 to 3.5 times the median income. About 40% of Grand Rapids households have annual incomes at or above $48,500. There are only four active subdivisions in the Grand Rapids area with available lots. Collectively there are 70 vacant single family lots. The lot supply benchmark for growing communities is a three to five year lot supply. This supply of lots is appropriate as it provides adequate consumer choice but minimizes developers carrying costs. Given the number of ex MAXFIELD RESEARCH INC. 3

12 EXECUTIVE SUMMARY isting platted lots and the annual absorption of single family lots since the Great Recession and housing downturn, we conclude that Grand Rapids has an adequate lot supply in the short term. The number of foreclosures in Itasca County peaked in 2010 and has declined annually since. All indicators project a continued decline of foreclosures in Development Pipeline As of May 2014, there are 109 multifamily units under construction and another 118 planned/pending multifamily units. Combined, over 225 new multifamily units could come on line over the next few years. Identified projects are inventoried in Table P 1 and summarized as follows: o Lakewood Heights (29 units): Market Rate Rental o 1 st Avenue Condominiums (36 units): Market Rate Rental o Majestic Pines (73 units): Senior housing o River Hills (70 units): Affordable and Market Rate Rental o Beacon Hill (48 units): Affordable Rental, Homeless, and Group Residential Housing Housing Needs Analysis Based on our calculations, demand exists in Grand Rapids for the following general occupancy product types between 2014 and 2025: o Market rate rental 64 units o Affordable rental 69 units o Subsidized rental 121 units o For sale single family 149 units o For sale multifamily 101 units o Homeless 24 beds/units In addition, we find demand for multiple senior housing product types. By 2019, demand in Grand Rapids for senior housing is forecast for the following: o Active adult ownership 45 units o Active adult market rate rental 90 units o Active adult affordable 148 units o Active adult subsidized 56 units o Congregate 76 units o Memory care 11 units Recommendations and Conclusions Based on the finding of our analysis and demand calculations, the chart on the following page provides a summary of the recommended development concepts by product type for MAXFIELD RESEARCH INC. 4

13 EXECUTIVE SUMMARY the City of Grand Rapids through Detailed findings are described in the Conclusions and Recommendations section of the report. RECOMMENDED HOUSING DEVELOPMENT CITY OF GRAND RAPIDS 2014 to 2025 Owner Occupied Homes Purchase Price/ Monthly Rent Range¹ No. of Units Development Timing Entry level >$150, Move up $150,000 $250, Executive $250, Total Townhomes/Twinhomes 2 Entry level >$150, Move up $150, Total Total Owner Occupied General Occupancy Rental Housing Market Rate Rental Housing Apartment style $700/1BR $1,150/3BR Townhomes $850/2BR $1,250/3BR Total Affordable Rental Housing Townhomes Moderate Income Apartment style Moderate Income Subsidized 30% of Income Total Total Renter Occupied Senior Housing (i.e. Age Restricted) Active Adult Senior Coop $35,000 to $70, Active Adult Affordable Rental Moderate Income Active Adult Market Rate Rental 5 $750/1BR $1,200/3BR Independent Living (Congregate) $1,400/1BR $1,700/2BR Total Total All Units ¹ Pricing in 2014 dollars. Pricing can be adjusted to account for inflation. 2 Recommendations include the absorption of some existing previously platted lots. Most entry level demand will be accommodated through the resale market 3 Affordablity subject to income guidelines per Minnesota Housing Finance Agency (MHFA). See Table HA 1 for Itasca County Income limits. 4 Subsized housing will be difficult to develop financially due to lack of federal funding from HUD 5 Alternative development concept is to combine active adult affordable and market rate active adult into mixed income senior community Note Recommended development does not coincide with total demand. Grand Rapids may not be able to accommodate all recommended housing types based on a variety of factors (i.e. development constraints, land availability, etc.) Source: Maxfield Research Inc. MAXFIELD RESEARCH INC. 5

14 DEMOGRAPHIC ANALYSIS Introduction This section of the report examines factors related to the current and future demand for both owner and renter occupied housing in Grand Rapids, Minnesota. It includes an analysis of population and household growth trends and projections, projected age distribution, household income, household types, household tenure, and peer city/county comparison. A review of these characteristics will provide insight into the demand for various types of housing in the Market Area. Market Area Definition The primary draw area (Market Area) for housing in Grand Rapids was defined based on traffic patterns, community and school district boundaries, and our general knowledge of the draw area for housing projects. Because of annexations, community and township boundaries were modified between the 2000 and 2010 Census. However, although jurisdictional boundaries changed during the decade, the overall Market Area boundary remained consistent. The Market Area per the year 2000 geography includes 14 townships (Arbo, Blackberry, Deer Lake Unorganized Territory, Deer River, Grand Rapids, Greenway, Harris, Iron Range, Lawrence, Morse, Splithand, Trout Lake, Wabana, and Wildwood) and five cities (Bovey, Cohasset, Coleraine, Deer River, and Zemple) surrounding Grand Rapids. These communities in the Market Area serve as "bedroom communities" for Grand Rapids. Some persons prefer a more rural atmosphere while others have attachments to the communities where they currently live or a spouse working in that community. The Market Area in the year 2010 includes 13 townships (Arbo, Blackberry, Deer Lake Unorganized Territory, Deer River, Greenway, Harris, Iron Range, Lawrence, Morse, Splithand, Trout Lake, Wabana, and Wildwood) and six cities (Bovey, Cohasset, Coleraine, Deer River, La Prairie, and Zemple) surrounding Grand Rapids. MAXFIELD RESEARCH INC. 6

15 DEMOGRAPHIC ANALYSIS MAXFIELD RESEARCH INC. 7

16 DEMOGRAPHIC ANALYSIS MARKET AREA DEFINITION 2000 AND 2010 COMPARISON Market Area Boundary Market Area Boundary City Township City Township Bovey Arbo Bovey Arbo Cohasset Blackberry Cohasset Blackberry Coleraine Deer Lake UT Coleraine Deer Lake UT Deer River Deer River Deer River Deer River Grand Rapids Grand Rapids Grand Rapids Greenway Zemple Greenway La Prairie Harris Harris Zemple Iron Range Iron Range Lawrence Lawrence Morse Morse Splithand Splithand Trout Lake Trout Lake Wabana Wabana Wildwood Wildwood Note: Due to annexations, some municipipal and township boundaries were changed. However the greater Market Area boundaries are consistent between 2000 and 2010 Source: Maxfield Research Inc. Population and Household Growth from 2000 to 2010 Tables D 1 and D 2 present the population and household growth, respectively, of each Market Area city and township for 2000 and The data is from the U.S. Census. Population Grand Rapids population grew by 3,105 people (+40%) between 2000 and The population growth is largely contributed to annexations within the Market Area that occurred during the decade. Growth slowed during the late 2000s due to the housing downturn. While the City of Grand Rapids population grew by 40.0% between 2000 and 2010, the Remainder of the Market Area lost 1,669 people ( 7.0%). Overall, the Market Area added +1,436 persons between 2000 and 2010, increasing the Market Area population to 32,936 persons in This was a growth rate of 4.6%. MAXFIELD RESEARCH INC. 8

17 DEMOGRAPHIC ANALYSIS In 2010, the Market Area includes roughly 73% of the total population in Itasca County. Grand Rapids accounts for 33% of the Market Area. Households Household growth trends are typically a more accurate indicator of housing needs than population growth since a household is, by definition, an occupied housing unit. However, additional demand can come from changing demographics of the population base, which results in demand for different housing products. Grand Rapids added 1,169 households during the 2000s (an increase of 33.9%), increasing its household base to 4,615 households as of The Remainder of the Market Area lost 284 households during the decade ( 3.1% decrease), decreasing to 8,947 households. Household growth rates outpaced population growth in the Market Area during 2000s. The Market Area s population increased 4.6% compared to a 7.0% increase in households between 2000 and This is the result of fewer persons in each household, caused by demographic and social trends such as increasing divorce rates, an increasing senior base, and couples decisions to have fewer children or no children at all. Population Trends 35,000 30,000 Remainder of Market Area Grand Rapids 25,000 Population 20,000 15,000 23,736 22,067 10,000 5,000 7,764 10, Year MAXFIELD RESEARCH INC. 9

18 DEMOGRAPHIC ANALYSIS TABLE D 1 HISTORIC POPULATION GROWTH TRENDS GRAND RAPIDS MARKET AREA 2000 & No. Pct. Grand Rapids 7,764 10,869 3, % Remainder of Market Area Arbo, Twp % Blackberry, Twp % Bovey, Cty % Cohasset, Cty. 2,481 2, % Coleraine, Cty. 1,110 1, % Deer Lake UT, Twp. 3,286 3, % Deer River, Cty % Deer River, Twp % Grand Rapids, Twp.* 3,378 n/a n/a n/a Greenway, Twp. 2,018 1, % Harris, Twp. 3,328 3, % Iron Range, Twp % La Prairie, Cty % Lawrence, Twp % Morse, Twp % Splithand, Twp % Trout Lake, Twp , % Wabana, Twp % Wildwood, Twp % Zemple, Cty % Sub total 23,736 22,067 1, % Market Area Total 31,500 32,936 1, % Itasca County 43,992 45,058 1, % *Due to annexation, 2010 census data is unavailable. Sources: U.S. Census Bureau; Maxfield Research Inc. MAXFIELD RESEARCH INC. 10

19 DEMOGRAPHIC ANALYSIS TABLE D 2 HISTORIC HOUSEHOLD GROWTH TRENDS GRAND RAPIDS MARKET AREA 2000 & No. Pct. Grand Rapids 3,446 4,615 1, % Remainder of Market Area Arbo, Twp % Blackberry, Twp % Bovey, Cty % Cohasset, Cty , % Coleraine, Cty % Deer Lake UT, Twp. 1,304 1, % Deer River, Cty % Deer River, Twp % Grand Rapids, Twp.* 1,199 n/a n/a n/a Greenway, Twp % Harris, Twp. 1,290 1, % Iron Range, Twp % La Prairie, Cty % Lawrence, Twp % Morse, Twp % Splithand, Twp % Trout Lake, Twp % Wabana, Twp % Wildwood, Twp % Zemple, Cty % Sub total 9,231 8, % Market Area Total 12,677 13, % Itasca County 17,789 18, % *Due to annexation, 2010 census data is unavailable. Sources: U.S. Census Bureau; Maxfield Research Inc. MAXFIELD RESEARCH INC. 11

20 DEMOGRAPHIC ANALYSIS Household Trends 16,000 14,000 Remainder of Market Area Grand Rapids 12,000 Households 10,000 8,000 9,231 8,947 6,000 4,000 2,000 3,446 4, Year Population and Household Estimates and Projections Table D 3 presents population and household growth estimates and projections for the Market Area through Estimates for 2014 and projections through 2025 are based on information from ESRI (a national demographics service provider) and Minnesota Planning with adjustments calculated by Maxfield Research Inc. The adjustments are intended to reflect growth that will likely be realized after considering the impact of the housing market slowdown and recession. Due to the slowdown in the housing market and other economic pressures, we project that the City of Grand Rapids will slightly grow during the next decade. We project that Grand Rapids will increase by 446 persons (+4.1%) and 215 households (+4.7%) between 2010 and Between 2000 and 2010, the population in the Remainder of the Market Area decreased by 1,669 persons ( 7.0%). It is projected to increase by 333 people (+1.5%) between 2010 and The number of households is also projected to increase by 233 households (+2.6%). Overall, the Market Area population is projected to increase between 2010 and The Market Area is expected to increase by nearly 779 people (+2.4%) by 2019, for a total of 33,715 people. Household growth is projected to increase by 448 households (+3.3%) by MAXFIELD RESEARCH INC. 12

21 DEMOGRAPHIC ANALYSIS In 2010, the average household size was 2.36 in Grand Rapids and 2.47 in the Remainder of the Market Area. Household sizes are projected to slowly decline over the next decade; mostly due to the aging of the population and smaller family sizes. Population 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Population Projections Remainder Grand Rapids 22,067 22,400 22,600 23,736 7,764 10,869 11,315 11, Year Household Projections Households 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Remainder Grand Rapids 8,947 9,180 9,300 9,231 3,446 4,615 4,830 5, Year MAXFIELD RESEARCH INC. 13

22 DEMOGRAPHIC ANALYSIS TABLE D 3 POPULATION AND HOUSEHOLD GROWTH TRENDS AND PROJECTIONS GRAND RAPIDS MARKET AREA 2000 to 2025 Change U.S. Census Estimate Estimate Forecast Forecast 2000 to to No. Pct. No. Pct. POPULATION Grand Rapids 7,764 10,869 10,906 10,986 11,315 11,700 3, Remainder of the PMA 23,736 22,067 22,154 22,230 22,400 22,600 1, Primary Market Area 31,500 32,936 33,060 33,216 33,715 34,300 1, Itasca County 43,992 45,058 45,199 45,501 46,185 46,986 1, , HOUSEHOLDS Grand Rapids 3,446 4,615 4,646 4,680 4,830 5,000 1, Remainder of the PMA 9,231 8,947 9,033 9,064 9,180 9, Primary Market Area 12,677 13,562 13,679 13,744 14,010 14, Itasca County 17,789 18,773 18,938 19,036 19,404 19, Persons per Household Grand Rapids Remainder of the Market Area Market Area Itasca County Sources: U.S. Census Bureau; ESRI; State Demographic Center; Maxfield Research Inc. MAXFIELD RESEARCH INC. 14

23 DEMOGRAPHIC ANALYSIS 2.60 Persons Per Household 2000 to Pesons per HH Grand Rapids Remainder of the Market Area Geography Market Area Itasca County Age Distribution Trends Age distribution affects demand for different types of housing since needs and desires change at different stages of the life cycle. Table D 4 shows the distribution of persons within nine age cohorts for Grand Rapids and the Market Area in 2000 and 2010 with estimates for 2014 and projections for The 2000 and 2010 age distribution is from the U.S. Census Bureau and the 2014 figures are an estimate based on 2010 Census data. Maxfield Research Inc. derived the 2019 projections by adjustments made to data obtained from ESRI. The following are key points from the table. The majority of the growth in Grand Rapids occurred in the middle aged and senior population (ages 45+). All age cohorts experienced growth in the Market Area, which was due largely to annexations. The Grand Rapids population of 18 to 34 year olds, which consists primarily of renters and first time homebuyers, increased by 22.4% between 2000 and 2010, and is projected to slightly decline between 2014 and Mirroring trends observed across the nation, the aging baby boomer generation is substantially impacting the composition of the Market Area s population. Born between 1946 and 1964, these individuals comprised the age groups 45 to 54 and 55 to 64 in As of 2010, baby boomers accounted for an estimated 26.9% of the Market Area s population. MAXFIELD RESEARCH INC. 15

24 DEMOGRAPHIC ANALYSIS TABLE D 4 POPULATION AGE DISTRIBUTION GRAND RAPIDS MARKET AREA 2000 to 2019 Census Estimate Projection Change Age No. No. No. No. No. Pct. No. Pct. Grand Rapids Under 18 1,718 2,418 2,365 2, to to ,317 1,318 1, to 44 1,080 1,107 1,092 1, to 54 1,031 1,449 1,451 1, to ,386 1,500 1, to , to and over Subtotal 7,764 10,869 10,986 11,315 3, Remainder of Market Area Under 18 n/a 4,962 4,877 4,802 n/a n/a to 24 n/a 1,412 1,418 1,312 n/a n/a to 34 n/a 2,173 2,213 2,214 n/a n/a to 44 n/a 2,567 2,457 2,381 n/a n/a to 54 n/a 3,596 3,463 3,188 n/a n/a to 64 n/a 3,626 3,815 3,970 n/a n/a to 74 n/a 2,286 2,471 2,962 n/a n/a to 84 n/a 1,102 1,124 1,170 n/a n/a and over n/a n/a n/a Subtotal 23,736 22,067 22,230 22,400 n/a n/a Market Area Total Under 18 n/a 7,380 7,243 7,201 n/a n/a to 24 n/a 2,340 2,345 2,198 n/a n/a to 34 n/a 3,490 3,531 3,564 n/a n/a to 44 n/a 3,674 3,549 3,470 n/a n/a to 54 n/a 5,045 4,914 4,560 n/a n/a to 64 n/a 5,012 5,315 5,573 n/a n/a to 74 n/a 3,123 3,402 4,093 n/a n/a to 84 n/a 1,943 1,943 2,035 n/a n/a and over n/a ,022 n/a n/a Total 31,500 32,936 33,216 33,715 n/a n/a Sources: U.S. Census Bureau; ESRI; Maxfield Research Inc. MAXFIELD RESEARCH INC. 16

25 DEMOGRAPHIC ANALYSIS No. of Persons 3,000 2,500 2,000 1,500 1, Population Age Distribution City of Grand Rapids 2000, 2010, & Under to to to to to to to and over Age Group Market Area Age Distribution and over 75 to to to to to to to 24 Under % 5.7% 6.1% 2.5% 9.5% 4.7% 10.6% 2.1% 28.5% 20.0% 10.0% 0.0% 10.0% 20.0% 30.0% 40.0% The 65 to 74 age cohort is projected to have the greatest growth (by percentage and numerically) increasing by 970 people (+31.1%) in the Market Area. The growth in this age cohort can be primarily attributed to the baby boom generation aging into their young senior years. The social changes that occurred with the aging of the baby boom generation, such as higher divorce rates, higher levels of education, and lower birth rates has led to a greater variety of lifestyles than existed in the past not only among the baby boomers, but also among their parents and children. The increased variety of lifestyles has fueled demand for alternative housing products to the single family homes. Seniors, in particular, and middle MAXFIELD RESEARCH INC. 17

26 DEMOGRAPHIC ANALYSIS aged persons tend to do more traveling and participate in more activities than previous generations, and they increasingly prefer maintenance free housing that enables them to spend more time on activities outside the home. Household Income by Age of Householder The estimated distribution of household incomes in Grand Rapids and the Market Area for 2014 and 2019 are shown in Tables D 5 and D 6. The data was estimated by Maxfield Research Inc. based on income trends provided by ESRI. The data helps ascertain the demand for different housing products based on the size of the market at specific cost levels. The Department of Housing and Urban Development defines affordable housing costs as 30% of a household s adjusted gross income. For example, a household with an income of $50,000 per year would be able to afford a monthly housing cost of about $1,250. Maxfield Research Inc. uses a figure of 25% to 30% for younger households and 40% or more for seniors, since older adults generally have lower living expenses and can often sell their homes and use the proceeds toward rent payments. A generally accepted standard for affordable owner occupied housing is that a typical household can afford to pay 3.0 to 3.5 times their annual income on a single family home. Thus, a $50,000 income would translate to an affordable single family home of $150,000 to $175,000. The higher end of this range assumes that the person has adequate funds for down payment and closing costs, but also does not include savings or equity in an existing home which would allow them to purchase a higher priced home. Grand Rapids had an estimated median household income of $38,518 in It is projected to increase over the next five years to $42,896 in 2019 (+11.4%). With a household income of $37,922, a younger household (the median household income for the 25 to 34 cohort) could afford a monthly housing cost of about $948, based on an allocation of 30% of income toward housing. A senior household (75+) with an income of $21,516 (the median household income of seniors in Grand Rapids) could afford a monthly housing cost of $538, based on an allocation of 40% of income toward housing. MAXFIELD RESEARCH INC. 18

27 DEMOGRAPHIC ANALYSIS Growth and Income Trends by Age of Householder City of Grand Rapids: 2014 & 2019 No. of Households 1, Income 57,072 48,335 37,922 42,502 42,009 22,588 21,516 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, Median Income Age of Householder 0 Non Senior Households In 2014, 11.6% of the non senior (under age 65) households in the Market Area had incomes under $15,000 (1,128 households). All of these households would be eligible for subsidized rental housing. Another 10% of the Market Area s non senior households had incomes between $15,000 and $25,000 (979 households). Many of these households would qualify for subsidized housing, but many could also afford affordable or older market rate rentals. If housing costs absorb 30% of income, households with incomes of $15,000 to $25,000 could afford to pay $375 to $625 per month. Median incomes for households in the Market Area peak at $59,771 for the 45 to 54 age group in Households in this age group are in their peak earning years. By 2019, the median income for the 45 to 54 age group is projected to increase to $64,672, an 8.2% increase. The median resale price of homes in Grand Rapids was roughly $138,900 through 2013 (see Table FS 1). The income required to afford a home at this price would be about $39,685 to $46,300, based on the standard of 3.0 to 3.5 times the median income (and assuming these households do not have a high level of debt). Incomes are expected to increase by 14.5% between 2014 and 2019 in the Market Area. This equates to an increase of 2.9% annually. MAXFIELD RESEARCH INC. 19

28 DEMOGRAPHIC ANALYSIS Senior Households The oldest householders are likely to have lower incomes in In the Market Area, 15.2% of households ages 65 to 74 had incomes below $15,000, compared to 26.8% of households ages 75 and over. Many of these low income older senior households rely solely on social security benefits. Typically, younger seniors have higher incomes due to the fact they are still able to work or are married couples with two pensions or higher social security benefits. The 2014 median income for Market Area householders age 65 to 74 and 75+ are $40,631, and $22,301, respectively. Generally, senior households with incomes greater than $30,000 can afford market rate senior housing. Based on a 40% allocation of income for housing, this translates to monthly rents of at least $1,000. About 2,074 senior households in Grand Rapids (51.6% of senior households) had incomes above $30,000 in Seniors who are able and willing to pay 80% or more of their income on assisted living housing would need an annual income of $33,000 to afford monthly rents of $2,200, which is about the beginning monthly rent for assisted living projects in the Market Area. There were an estimated 678 older senior (ages 75 and over) households with incomes greater than $30,000 in Seniors age 75 and over are the primary market for assisted living housing. The median income for seniors age 65+ in the Market Area is $32,086 in It is projected to increase by $4,213 (13.1%) to $36,299 by MAXFIELD RESEARCH INC. 20

29 DEMOGRAPHIC ANALYSIS Total Under Less than $15, $15,000 to $24, $25,000 to $34, $35,000 to $49, $50,000 to $74, $75,000 to $99, $100,000 to $149, $150,000 to $199, $200, Total 4, Median Income $38,518 $22,588 $37,922 $48,335 $57,072 $42,502 $42,009 $21, Less than $15, $15,000 to $24, $25,000 to $34, $35,000 to $49, $50,000 to $74,999 1, $75,000 to $99, $100,000 to $149, $150,000 to $199, $200, Total 4, Median Income $42,896 $24,123 $42,362 $54,604 $62,252 $50,680 $46,183 $22,068 Change 2014 to 2019 Less than $15, $15,000 to $24, $25,000 to $34, $35,000 to $49, $50,000 to $74, $75,000 to $99, $100,000 to $149, $150,000 to $199, $200, Total Median Income $4,378 $1,535 $4,440 $6,269 $5,180 $8,178 $4,174 $552 Sources: ESRI; Maxfield Research Inc. TABLE D 5 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER CITY OF GRAND RAPIDS (Number of Households) 2014 & 2019 Age of Householder MAXFIELD RESEARCH INC. 21

30 DEMOGRAPHIC ANALYSIS Total Under Less than $15,000 1, $15,000 to $24,999 1, $25,000 to $34,999 1, $35,000 to $49,999 2, $50,000 to $74,999 2, $75,000 to $99,999 1, $100,000 to $149,999 1, $150,000 to $199, $200, Total 13, ,657 1,859 2,699 3,099 2,144 1,872 Median Income $43,965 $28,731 $43,007 $52,612 $59,771 $48,911 $40,631 $22, Less than $15,000 1, $15,000 to $24,999 1, $25,000 to $34,999 1, $35,000 to $49,999 2, $50,000 to $74,999 3, $75,000 to $99,999 1, $100,000 to $149,999 1, $150,000 to $199, $200, Total 14, ,651 1,803 2,472 3,219 2,546 1,942 Median Income $50,334 $32,007 $49,218 $58,432 $64,672 $54,170 $46,238 $23,268 Change 2014 to 2019 Less than $15, $15,000 to $24, $25,000 to $34, $35,000 to $49, $50,000 to $74, $75,000 to $99, $100,000 to $149, $150,000 to $199, $200, Total Median Income $6,369 $3,276 $6,211 $5,820 $4,901 $5,259 $5,607 $967 Sources: ESRI; Maxfield Research Inc. TABLE D 6 HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER GRAND RAPIDS MARKET AREA (Number of Households) 2014 & 2019 Age of Householder MAXFIELD RESEARCH INC. 22

31 DEMOGRAPHIC ANALYSIS Tenure by Age of Householder Table D 7 shows the number of owner and renter households in the Market Area by age group in 2000 and This data is useful in determining demand for certain types of housing since housing preferences change throughout an individual s life cycle. The following are key findings from Table D 7. In 2000, 80.8% of all households in the Market Area owned their housing. By 2010, that percentage decreased to 78%. The housing market downturn contributed to the decrease in the homeownership rate during the late 2000s as it became more difficult for households to secure mortgage loans, households delayed purchasing homes due to the uncertainty of the housing market, and foreclosures forced households out of their homes. The number of owner households in the Market Area increased by 3.2% compared to a 22.7% in renter households between 2000 and In 2000, 60% of all households in Grand Rapids owned their own housing. By 2010, that percentage increased to 62.1%. These percentages are much lower than the Remainder of the Market Area. In 2000, 88.5% of all households in the Remainder of the Market Area owned their own housing. In 2010, that percentage decreased to 86.2%. As households progress through their life cycle, housing needs change. The proportion of renter households decreases significantly as households age out of their young adult years. However, by the time households reach their senior years, rental housing often becomes a more viable option than homeownership, reducing the responsibility of maintenance and a financial commitment. In 2010, 74.6% of the Market Area s households between the ages of 15 and 24 rented their housing, compared to 38.7% of households between the ages of 25 and 34. Householders between 35 and 64 were overwhelmingly homeowners, with no more than 25% of the householders in each 10 year age cohort renting their housing. The significantly higher homeownership rates in the Remainder of the Market Area (86.2%) compared to the City of Grand Rapids (62.1%) reflects the rural character of the area, where lack of infrastructure typically cannot support higher density rental housing. In addition, homeownership is more feasible in outlying rural areas because the cost of owning a single family home is typically lower than in communities the size of Grand Rapids or larger. MAXFIELD RESEARCH INC. 23

32 DEMOGRAPHIC ANALYSIS Pct Household Tenure by Age of Householder Percentage of Renters 2010 Grand Rapids Remainder Market Area Age MAXFIELD RESEARCH INC. 24

33 DEMOGRAPHIC ANALYSIS City of Grand Rapids TABLE D 7 TENURE BY AGE OF HOUSEHOLDER GRAND RAPIDS MARKET AREA 2000 & 2010 Remainder of Market Area Market Area Total Age No. Pct. No. Pct. No. Pct. No. Pct. No. Pct. No. Pct Own Rent Total Own , Rent Total , , , Own , , , , Rent Total , , , , Own , , , , Rent Total , , , , Own , , , , Rent Total , , , , Own , , , , Rent Total , , , , Own Rent Total , , Own Rent Total TOTAL Own 2, , , , , , Rent 1, , , , , , Total 3, , , , , , Sources: U.S. Census Bureau; Maxfield Research Inc. MAXFIELD RESEARCH INC. 25