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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 />MAXFIELD RESEARCH & CONSULTING, LLC 110
<br />TABLE HA -4
<br />ELK RIVER MARKET AREA
<br />HOUSING AFFORDABILITY - BASED ON
<br />HOUSEHOLD INCOME
<br />For -Sale (Assumes 10% down payment and good credit)
<br />Entry -Level
<br />Move -Up
<br />Executive
<br />Entry -Level
<br />Move -Up
<br />Executive
<br />Price of House
<br />$175,000
<br />$250,000
<br />$300,000
<br />$150,000
<br />$225,000
<br />$300,000
<br />Pct. Down Payment
<br />10.0%
<br />10.0%
<br />10.0%
<br />10.0%
<br />10.0%
<br />10.0%
<br />Total Down Payment Amt.
<br />$17,500
<br />$25,000
<br />$30,000
<br />$15,000
<br />$22,500
<br />$30,000
<br />Estimated Closing Costs (rolled into mortgage)
<br />$5,250
<br />$7,500
<br />$9,000
<br />$4,500
<br />$6,750
<br />$9,000
<br />Cost of Loan
<br />$162,750
<br />$232,500
<br />$279,000
<br />$139,500
<br />$209,250
<br />$279,000
<br />Interest Rate
<br />4.000%
<br />4.000%
<br />4.000%
<br />4.000%
<br />4.000%
<br />4.000%
<br />Number of Pmts.
<br />360
<br />360
<br />360
<br />360
<br />360
<br />360
<br />Monthly Payment (P & I)
<br />-$777
<br />- $1,110
<br />- $1,332
<br />-$666
<br />-$999
<br />- $1,332
<br />(plus) Prop. Tax
<br />-$219
<br />-$313
<br />-$375
<br />-$188
<br />-$281
<br />-$375
<br />(plus) HO Insurance /Assoc. Fee for TH
<br />-$58
<br />-$83
<br />-$100
<br />-$100
<br />-$100
<br />-$100
<br />(plus) PMI /MIP (less than 20 %)
<br />-$71
<br />-$101
<br />-$121
<br />-$60
<br />-$91
<br />-$121
<br />Subtotal monthly costs
<br />- $1,125
<br />- $1,607
<br />- $1,928
<br />- $1,014
<br />- $1,471
<br />- $1,928
<br />Housing Costs as % of Income
<br />30%
<br />30%
<br />30%
<br />30%
<br />30%
<br />30%
<br />Minimum Income Required
<br />$44,984
<br />$64,263
<br />$77,116
<br />$40,558
<br />$58,837
<br />$77,116
<br />Pct. of ALL Elk River HHDS who can affordl
<br />75.9%
<br />60.8%
<br />52.0%
<br />79.8%
<br />65.9%
<br />52.0%
<br />No. of Elk River HHDS who can affordl
<br />6,092
<br />4,886
<br />4,176
<br />6,413
<br />5,295
<br />4,176
<br />Pct. of Elk River owner HHDs who can affordl
<br />81.4%
<br />65.9%
<br />55.8%
<br />84.0%
<br />71.9%
<br />55.8%
<br />No. of Elk River owner HHDs who can affordl
<br />5,076
<br />4,111
<br />3,478
<br />5,240
<br />4,483
<br />3,478
<br />No. of Elk River owner HHDS who cannot affordl
<br />1,160
<br />2,125
<br />2,758
<br />996
<br />1,753
<br />2,758
<br />Rental (Market Rate)
<br />11311
<br />21311
<br />31311
<br />11311
<br />21311
<br />3BR
<br />Monthly Rent
<br />$850
<br />$950
<br />$1,300
<br />$950
<br />$1,200
<br />$1,350
<br />Annual Rent
<br />$10,200
<br />$11,400
<br />$15,600
<br />$11,400
<br />$14,400
<br />$16,200
<br />Housing Costs as % of Income
<br />30%
<br />30%
<br />30%
<br />30%
<br />30%
<br />30%
<br />Minimum Income Required
<br />$34,000
<br />$38,000
<br />$52,000
<br />$38,000
<br />$48,000
<br />$54,000
<br />Pct. of ALL Elk River HHDS who can affordl
<br />84.8%
<br />80.5%
<br />70.3%
<br />80.5%
<br />73.4%
<br />68.8%
<br />No. of Elk River HHDS who can affordl
<br />6,812
<br />6,464
<br />5,645
<br />6,464
<br />5,892
<br />5,528
<br />Pct. of Elk River renter HHDs who can affordl
<br />59.3%
<br />50.9%
<br />74.4%
<br />50.9%
<br />38.3%
<br />32.1%
<br />No. of Elk River renter HHDs who can affordl
<br />1,066
<br />914
<br />1,336
<br />914
<br />688
<br />576
<br />No. of Elk River renter HHDS who cannot affordl
<br />730
<br />882
<br />460
<br />882
<br />1,108
<br />1,220
<br />' Based on 2015 household income for ALL households
<br />z Based on 2013 ACS household income by tenure (i.e. owner and renter
<br />incomes. Owner incomes = $85,739 vs. renter incomes
<br />= $41,109)
<br />Source: Maxfield Research & Consulting, LLC
<br />MAXFIELD RESEARCH & CONSULTING, LLC 110
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