2. HRSR 02-01-2016 - Laserfiche WebLink

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RECOMMENDATIONS AND CONCLUSIONS For-Sale Housing Single-Family Housing Table HD-1 identified demand for about 790 single-family housing units in Elk River through 2025. However, after accounting for the existing 188 vacant single-family newer lots in Elk River (see Table FS-9); demand is reduced to about 600 new lots in Elk River through 2025. Based on historic construction activity over the past three years, there has been an average of about 70 new single-family units per year in Elk River; down substantially from the early part of last decade when about 220 units on average were added between 2000 and 2005. The lot supply benchmark for growing communities is a three-to five-year lot supply, which ensures adequate consumer choice without excessively prolonging developer-carrying costs. Given the number of existing platted lots in Elk River and the number of homes constructed annually, the current lot supply is able to meet demand only for about two to three years. Although Table FS-9 identified 369 future lots; many of these subdivisions may still be speculative based on preliminary plat information prior to the housing bust of last decade. Therefore, new lots will need to be platted or moved from future lots to vacant developed lots to meet future demand. Due to the age and price of the existing housing stock in Elk River, most of the existing older housing stock appeals to entry-level buyers. Entry-level existing homes, which we generally classify as homes priced under$150,000 will be mainly satisfied by existing single-family homes as residents of existing homes move into newer housing products built in the Elk River Area, such as move-up single-family homes, twinhomes, rental housing and senior housing. A move- up buyer or step-up buyer is typically one who is selling one house and purchasing another one, usually a larger and more expensive home. Usually the move is desired because of a lifestyle change, such as a new job or a growing family. Based on our interviews with Elk River Realtors, move-up homes are generally priced from $250,000 to $350,000. Executive-level homes are loosely defined as those homes priced above $350,000. Most of these homes would be build- to-suit new construction in one of the city's newer subdivisions or are on larger acreages located on the fringe of Elk River. The average base price of all new construction actively marketing in Elk River is approximately $250,000, or about $135 to $140 PSF for single-family housing stock. Although there would be substantial demand for a new single-family housing product priced under$200,000, financially it will be extremely difficult to develop even with public assistance due to infrastructure costs and rising labor and material costs. Based on land and building costs, it is very difficult to build new single-family homes for less than $225,000. Because there only 188 vacant lots, new lots will be needed in the next few years to meet buyer demand. Many of the existing lots in Elk River are flat and target the first-time and move-up buyers; we also recommend additional "choice lots" that cater to executive buyers and have the topography for walk-out lots and more vegetation on the property. We also recommend MAXFIELD RESEARCH&CONSULTING,LLC 101