9.1 HRSR 05-01-2017 - Laserfiche WebLink

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HOUSING DEMAND ANALYSIS Consumer Choice /Preferences A variety of factors contribute to consumer choice and preferences. Many times a change in family status is the primary factor for a change in housing type (i.e. growing families, empty - nest families, etc.). However, housing demand is also generated from the turnover of existing households who decide to move for a range of reasons. Some households may want to move - up, downsize, change their tenure status (i.e. owner to renter or vice versa), or simply move to a new location. Supply (Existing Housing Stock) The stock of existing housing plays a crucial component in the demand for new housing. There are a variety of unique household types and styles, not all of which are desirable to today's consumers. The age of the housing stock is an important component for housing demand, as communities with aging housing stocks have higher demand for remodeling services, replacement new construction, or new home construction as the current inventory does not provide the supply that consumers seek. Pent -up demand may also exist if supply is unavailable as householders postpone a move until new housing product becomes available. Housing Finance Household income is the fundamental measure that dictates what a householder can afford to pay for housing costs. According to the U.S. Department of Housing and Urban Development (HUD), the definition of affordability is for a household to pay no more than 30% of its annual income on housing (including utilities). Families who pay more than 30% of their income for housing (either rent or mortgage) are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care. The ability of buyers to obtain mortgage financing has been increasingly challenging since the Great Recession as lenders have overcorrected from the subprime mortgage crisis. As a result, many borrowers have remained on the sidelines as lenders have enforced tight lending requirements, thereby increasing the demand for rental housing. Mobility It is important to note that demand is somewhat fluid between other northeast Iowa communities and will be impacted by development activity in nearby areas, including other communities outside Sherburne County. MAXFIELD RESEARCH & CONSULTING, LLC 82