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CHALLENGES AND OPPORTUNITIES
<br /> Challenges and Opportunities
<br /> Table CR-2 identified and recommended housing types that would satisfy the housing needs in
<br /> Elk River over the next ten years. The following were identified as the greatest challenges and
<br /> opportunities for developing the recommended housing types (in no particular order-
<br /> alphabetically).
<br /> • Affordability. Based on current home prices, about 75%of Elk River householders could
<br /> afford to purchase an entry-level home given today's pricing (see table on the following
<br /> page). Likewise, most householders (85%) can also afford the average market rate rent at a
<br /> one-bedroom rental project in Elk River. Because of this condition, some householders who
<br /> would not consider purchasing may do so earlier since the cost to own an entry-level home
<br /> is on-par with rental housing costs. The following chart compares the costs of
<br /> homeownership to rentals given today's housing costs based on a 30%allocation of income
<br /> to housing. We do note, however, that not all householders will have the credit scores and
<br /> down payment that would qualify them to purchase for-sale housing.
<br /> TABLE HA-4
<br /> ELK RIVER MARKET AREA HOUSING AFFORDABILITY-BASED ON HOUSEHOLD INCOME
<br /> For-Sale(Assumes 10%down payment and good credit)
<br /> Single-Family Townhome/Twinhome
<br /> Entry-Level Move-Up Executive Entry-Level Move-Up Executive
<br /> Price of House $175,000 $25u,uuu $3u. $150,000 $225,000 $300,000
<br /> Pct.Down Payment 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
<br /> Total Down Payment Amt. $17,500 $25,000 $30,000 $15,000 $22,500 $30,000
<br /> Estimated Closing Costs(rolled into mortgage) $5,250 $7,500 $9,000 $4,500 $6,750 $9,000
<br /> Cost of Loan $162,750 $232,500 $279,000 $139,500 $209,250 $279,000
<br /> Interest Rate 4.000% 4.000% 4.000% 4.000% 4.000% 4.000%
<br /> Number of Pmts. 360 360 360 360 360 360
<br /> Monthly Payment(P&I) yi i i -$1,110 -$1,ss.. -$666 -$999
<br /> (plus)Prop.Tax -$219 -$313 -$375 -$188 -$281 -$37-.
<br /> (plus)HO Insurance/Assoc.Fee for TH -$58 -$83 -$100 -$100 -$100 $1'
<br /> (plus)PMI/MIP(less than 20%) -$71 -$101 -$121 -$60 -$91
<br /> Subtotal monthly costs -$1,125 -$1,607 -$1,928 $1,014 -$1,471
<br /> Housing Costs as%of Income 30% 30% 30% 30% 30% 30%
<br /> Minimum Income Required $44,984 $64,263 $77,116 $40,558 $58,837 $77,116
<br /> Pct.of ALL Elk River HHDS who can affordl 75.9% 60.8% 52.0% 79.8% 65.9% 52.0%
<br /> No.of Elk River HHDS who can affordl 6,092 4,886 4,176 6,413 5,295 4,176
<br /> Pct.of Elk River owner HHDs who can afford2 81.4% 65.9% 55.8% 84.0% 71.9% 55.8%
<br /> No.of Elk River owner HHDS who can afford2 5,076 4,111 3,478 5,240 4,483 3,478
<br /> No.of Elk River owner HHDS who cannot afford2 1,160 2,125 2,758 996 1,753 2,758
<br /> Rental(Market Rate)
<br /> Existing Rental New Rental
<br /> 1BR 2BR 3BR 1BR 2BR 3BR
<br /> Monthly Rent $850 $950 $1,300 $950 $1,200 $1,350
<br /> Annual Rent $10,200 $11,400 $15,600 $11,400 $14,400 $16,200
<br /> Housing Costs as%of Income 30% 30% 30% 30% 30% 30%
<br /> Minimum Income Required $34,000 $38,000 $52,000 $38,000 $48,000 $54,000
<br /> Pct.of ALL Elk River HHDS who can affordl 84.8% 80.5% 70.3% 80.5% 73.4% 68.8%
<br /> No.of Elk River HHDS who can affordl 6,812 6,464 5,645 6,464 5,892 5,528
<br /> Pct.of Elk River renter HHDS who can afford2 59.3% 50.9% 74.4% 50.9% 38.3% 32.1%
<br /> No.of Elk River renter HHDs who can afford2 1,066 914 1,336 914 688 576
<br /> No.of Elk River renter HHDS who cannot afford2 730 882 460 882 1,108 1,220
<br /> 'Based on 2015 household income for ALL households
<br /> 'Based on 2013 ACS household income by tenure(i.e.owner and renter incomes.Owner incomes=$85,739 vs.renter incomes=$41,109)
<br /> Source: Maxfield Research&Consulting,LLC
<br /> MAXFIELD RESEARCH&CONSULTING,LLC 112
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