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Market Gaps Elk River Comprehensive Plan Maintaining Neighborhoods Existing neighborhoods, particularly older ones, are an important part of the fabric of the community. These neighborhoods define the character and the heritage of Elk River. Older neighborhoods provide lower cost housing than new developments. Maintaining housing quality in these areas is an essential part of providing affordable housing. There are several aspects of maintaining neighborhoods. One of the desired by- products of building strong neighborhoods and community is pride in property. This sense of pride leads to a personal value in the maintenance of buildings and grounds. All other approaches are more difficult when maintenance is not important to the property owner. Economics is part of the maintenance equation. As more income is required simply to obtain housing, less funds are available to pay for maintenance activities. Current low interest rates help this situation by making home equity loans more affordable. Higher interest rates not only reduce the affordability of debt for home improvements, but require more income for the same housing. Similar constraints apply to rental housing. The ability to finance building maintenance comes from rent income. If the ability to charge an adequate rent is constrained by market forces, then maintenance activities get deferred. In considering Historic Preservation and neighborhood revitilization projects, there is a difference between the correction of deferred maintenance and the correction of functional obsolescence. Programs developed to address housing and preservation goals must recognize this distinction, and the cost of each in the long term. The City will assess its involvment with such projects on a case by case basis. Market forces are not likely to fill all housing needs in Elk River. Gaps in the operation of the housing market point to potential public roles. Market gaps tend to change over time with demographic and economic changes in the community. City housing initiatives should focus on identifying these gaps and determining the appropriate responses. Gaps may relate to the need for specific types of housing. Gaps are also linked to mortgage financing and market conditions. An ongoing concern is the down payment and other factors needed to qualify for a mortgage loan. The city and local banks can pursue programs to promote homeownership. Finally, the physical deterioration of structures often creates a barrier to private investment. Rather than fix the problem, the market avoids the unit. If unchecked, blight may spread to adjacent properties. 82 / Chapter 7: Housing — Market Gaps Elk River Comprehensive Plan Maintaining Neighborhoods Existing neighborhoods, particularly older ones, are an important part of the fabric of the community. These neighborhoods define the character and the heritage of Elk River. Older neighborhoods provide lower cost housing than new developments. Maintaining housing quality in these areas is an essential part of providing affordable housing. There are several aspects of maintaining neighborhoods. One of the desired by- products of building strong neighborhoods and community is pride in property. This sense of pride leads to a personal value in the maintenance of buildings and grounds. All other approaches are more difficult when maintenance is not important to the property owner. Economics is part of the maintenance equation. As more income is required simply to obtain housing, less funds are available to pay for maintenance activities. Current low interest rates help this situation by making home equity loans more affordable. Higher interest rates not only reduce the affordability of debt for home improvements, but require more income for the same housing. Similar constraints apply to rental housing. The ability to finance building maintenance comes from rent income. If the ability to charge an adequate rent is constrained by market forces, then maintenance activities get deferred. In considering Historic Preservation and neighborhood revitilization projects, there is a difference between the correction of deferred maintenance and the correction of functional obsolescence. Programs developed to address housing and preservation goals must recognize this distinction, and the cost of each in the long term. The City will assess its involvment with such projects on a case by case basis. Market forces are not likely to fill all housing needs in Elk River. Gaps in the operation of the housing market point to potential public roles. Market gaps tend to change over time with demographic and economic changes in the community. City housing initiatives should focus on identifying these gaps and determining the appropriate responses. Gaps may relate to the need for specific types of housing. Gaps are also linked to mortgage financing and market conditions. An ongoing concern is the down payment and other factors needed to qualify for a mortgage loan. The city and local banks can pursue programs to promote homeownership. Finally, the physical deterioration of structures often creates a barrier to private investment. Rather than fix the problem, the market avoids the unit. If unchecked, blight may spread to adjacent properties. 82 / Chapter 7: Housing