Housing Market Analysis and Demand Estimates for Owatonna

Transcription

Housing Market Analysis and
Demand Estimates for
Owatonna, Minnesota
Prepared for:
Owatonna Housing and Redevelopment Authority
Owatonna, Minnesota
March 2010
615 First Avenue NE
Suite 400
Minneapolis, MN 55413
612.338.0012
April 5, 2010
Mr. Dave Strand
Community Development Director
Owatonna Housing and Redevelopment Authority
City of Owatonna
540 West Hills Circle
Owatonna, MN 55060
Dear Mr. Strand:
Attached is the Housing Market Analysis and Demand Estimates for Owatonna, Minnesota
conducted by Maxfield Research Inc. The study projects housing demand through 2020, and
gives recommendations on the amount and type of housing that could be built in Owatonna to
satisfy demand over the next five years. Detailed information regarding recommended housing
concepts can be found in the Housing Recommendations section at the end of the report.
We have enjoyed performing this study for you and are available should you have any questions
or need additional information.
Sincerely,
MAXFIELD RESEARCH INC.
Jay Thompson
Vice President
Attachment
Patrick Malloy
Research Analyst
TABLE OF CONTENTS
KEY FINDINGS ................................................................................................................
Introduction .....................................................................................................................
Key Findings ...................................................................................................................
Page
1
1
1
DEMOGRAPHIC ANALYSIS .........................................................................................
Introduction .....................................................................................................................
Primary Market Area Definition .....................................................................................
Population Household Growth Trends and Projections ..................................................
Population Age Distribution Trends ...............................................................................
Household Income ..........................................................................................................
Tenure by Income ...........................................................................................................
Tenure by Age of Householder .......................................................................................
Household Type ..............................................................................................................
Employment Growth Trends...........................................................................................
Major Employer Interviews ............................................................................................
3
3
3
3
6
7
11
13
16
18
21
HOUSING CHARACTERISTICS...................................................................................
Introduction .....................................................................................................................
Age of Housing Stock .....................................................................................................
Housing Stock by Structure Type ...................................................................................
Condition of Housing Stock............................................................................................
Housing Stock by Structure Type ...................................................................................
Residential Construction Trends in Steele County .........................................................
23
23
23
25
27
25
28
FOR-SALE MARKET ANALYSIS .................................................................................
Introduction .....................................................................................................................
Home Sales .....................................................................................................................
Current Supply of Homes on the Market ........................................................................
Actively Marketing and Pending For-Sale Housing Developments ...............................
Mobile Homes.................................................................................................................
For-Sale Interviews Summary.........................................................................................
30
30
30
32
34
40
41
RENTAL MARKET ANALYSIS.....................................................................................
Introduction .....................................................................................................................
General Occupancy Rental Properties ............................................................................
Housing Choice Voucher Program .................................................................................
Pending Rental Developments in the PMA ....................................................................
Rental Market Interview Summary.................................................................................
43
43
43
56
57
58
TABLE OF CONTENTS
(continued)
SENIOR HOUSING ANALYSIS .....................................................................................
Senior Housing Defined..................................................................................................
Senior Housing in the Primary Market Area...................................................................
Pending Senior Housing Developments .........................................................................
Page
60
60
61
71
CONCLUSIONS AND RECOMMENDATIONS...........................................................
Introduction .....................................................................................................................
Demographic Profile and Housing Demand ...................................................................
Housing Demand Calculations........................................................................................
Senior Housing Demand .................................................................................................
Owatonna Recommendations..........................................................................................
72
72
72
73
76
77
LIST OF TABLES
Table Number and Title
Page
1. Population and Household Growth Trends and Projections, Primary Market Area,
1990 to 2020 ....................................................................................................................
4
2. Households by Size, Primary Market Area, 2009............................................................
5
3. Population Age Distribution, Primary Market Area, 1990 to 2020.................................
7
4. Household Income by Age of Householder, PMA, 2009 ................................................
9
5. Household Income by Age of Householder, PMA, 2014 ................................................
10
6. Tenure by Household Income, PMA, 2009 .....................................................................
12
7. Tenure by Age, PMA, 2000 and 2009 .............................................................................
15
8. Household Type Trends, PMA, 1990 to 2009 .................................................................
17
9. Resident Employment, Steele County, 2000 to 2009 ......................................................
19
10. Covered Employment by Industry, PMA, 2000, 2008. 2009 ..........................................
20
11. Major Employers, City of Owatonna and Surrounding Areas, March 2010 ...................
22
12. Age of Housing Stock, Steele County, 2000 ...................................................................
24
13. Housing Stock by Units in Structure, Steele County, 2000.............................................
26
14. Condition of Single-Family and Townhomes, City of Owatonna, 2009 .........................
27
15. Residential Construction, Owatonna & Remainder of Steele County, 2000 to 2009......
29
16. Home Resale Trends, Primary Market Area, 2000 to 2009.............................................
31
17. Traditional and Bank Owned Home Sales, Primary Market Area, 2000 to 2009 ...........
32
18. Single-Family Homes Currently Listed For-Sale, Primary Market Area, March 2010...
33
19. Bedrooms and Listing Price of Single-Family Homes, Primary Market Area, March 2010 34
20. Active Single-Family Subdivisions, PMA, March 2010 .................................................
36
21. Active Townhome and Patio Home Subdivisions, PMA, March 2010 ...........................
38
22. Mobile Home Parks, Primary Market Area, March 2010................................................
41
23. Market Rate General Occupancy Rental Housing, City of Owatonna, March 2010.......
45
24. Affordable General Occupancy Rental Housing, Owatonna and the Remainder of PMA,
March 2010 ......................................................................................................................
51
25. Subsidized General Occupancy Rental Housing, Owatonna and the Remainder of PMA,
March 2010 ......................................................................................................................
54
63
26. Market Rate Senior Housing, Owatonna and the Remainder of PMA, March 2010.......
27. Subsidized Senior Housing, Owatonna and the Remainder of PMA, March 2010.........
69
28. Housing Demand Summary, City of Owatonna, 2010 to 2020 .......................................
74
29. Senior Housing Demand Summary, City of Owatonna, 2010 - 2020 .............................
76
30. Recommended Housing Development, Owatonna, 2010 to 2015...................................
78
KEY FINDINGS
Introduction
Maxfield Research Inc. was engaged by the Owatonna Housing and Redevelopment Authority to
provide an assessment of housing needs for the City of Owatonna, Minnesota. This study is an
update of the previous housing needs assessment for HRA completed in 2006.
Detailed calculations of housing demand from 2010 to 2020 can be found in the Conclusions and
Recommendations section of the report. Recommendations on the amount and types of housing
that should be developed to accommodate the housing needs over the next five years is presented
as well. The following are key highlights from the housing needs assessment.
Key Findings
1. Steele County has experienced and will continue to experience moderate population and
growth. The population grew 9.6% between 1990 and 2000 and 10.8% between 2000 and
2010. Growth is projected to accelerate further to 11% between 2010 and 2020, although it
has presently slowed due to the weak economy. Owatonna accounts for about 70% of the
County’s population base.
2. Between 2000 and 2010, baby boomers age 45-64 accounted for the majority (52%) of the
County’s population growth. This decade the most rapid growth will be in the 55-64
(+34.4%) and 65-74 (+57.1%) as the baby boomers continue to age.
3. Overall, there is demand for about 600 to 660 new housing units in Owatonna between 2010
and 2015 and about 990 to 1,090 between 2015 and 2020. Out of that demand, 30% to 35%
will be for rental housing and 65% to 70% will be for owner-occupied housing.
4. Total projected demand by housing type from 2010 to 2015 is below:
• Single-family owner-occupied
o Entry-level
=
15-17 units
o Move-up
=
216-231 units
o Executive
=
77-83 units
• Townhomes/condominiums/cooperatives
o Entry-level
=
50-55 units
o Upper-end
=
50-55 units
• General occupancy rental
o Market rate
=
47-57 units
o Affordable/subsidized
=
23-28 units
• Senior rental
o Subsidized
=
25-30 units
o Adult/few services
=
45-50 units
o Congregate
=
50-55 units
o Assisted living
=
0 units
o Memory care
=
0 units
1
KEY FINDINGS
5. The current supply of available lots for single-family homes is sufficient to support development until 2013 while still maintaining a three-year supply. As the lots are currently
planned, they will likely meet or exceed the need for entry-level and executive housing, but
may fall slightly short of meeting the need for move-up housing. However, current market
conditions may lead developers to change some planned executive homes to move-up homes.
6. The current supply of available lots for townhomes/condominiums/cooperatives will satisfy
all need for the next five years. Among the demand for multifamily owner-occupied units,
we find that about half could be age-restricted housing in either a townhome or cooperative
development, although none is currently planned as such.
7. The overall vacancy rate for market rate general occupancy rental housing is 5.3%. Only two
properties have been added since 2000, but the overall vacancy rate between them is 3.1%
versus 6.1% in older buildings, with some having much higher rates. Therefore, we believe
that there is strong demand for a new general occupancy rental development with 45 to 60
units. However, we would not bring a new development on-line until the local job market
improves.
8. Affordable general occupancy rental properties are performing very well, with three of the
four Owatonna properties being fully occupied with waiting lists. We recommend adding
another similar rental property with 20 to 30 units when the job market improves.
9. Many of the older market rate rental units that would become available as a result of the
development of a new market rate building would be affordable to some low- and moderateincome households.
10. There is demand for 175 to 200 units of independent senior housing. Fifty units should be in
an adult building that is either rental or cooperative. We find demand for one building each,
for a total of 100 units, but we recommend adding only one during the next five years in order to promote a quicker absorption rate. Another 25 to 30 units should be in a subsidized
rental property, as demand for subsidized senior units is very high. The final 50- to 55- units
should be in a congregate building. Existing adult and congregate buildings are performing
very well.
11. The existing supply of assisted living and memory care units in Owatonna plus planned
additions will meet the need for market rate assisted living and memory care units in Owatonna over the next five years. Existing facilities are performing well, but would begin to
experience higher vacancies if additional units come on-line.
12. Assisted living and memory care facilities that can accept Elderly Waivers have no vacancies, and are thus very successful. Facilities that do not accept Elderly Waivers have high
vacancy rates, indicating that the demand for assisted living and memory care is high, but
that most of the excess demand in the Owatonna area cannot afford private pay rates at these
facilities.
2
DEMOGRAPHIC ANALYSIS
Introduction
This section of the report examines factors related to the current and future demand for both
owner- and renter-occupied housing in Owatonna, Minnesota. It includes an analysis of population and household growth trends and projections, population age trends and projections, household income data, and household tenure. A review of these characteristics provides insight into
the demand for various types of housing in the City.
Primary Market Area Definition
The draw area for determining current and future housing demand in Owatonna is based on
traffic patterns, proximity to other communities, interviews with local officials and community
stakeholders, geographic boundaries, and our knowledge of the draw areas for housing. The
Primary Market Area (PMA) is comprised of the City of Owatonna and the remainder of Steele
County, which lies in South-Central Minnesota. Rice County borders the PMA to the north,
Dodge County borders to the east, Waseca County borders to West, and Freeborn County
borders to the south.
Population and Household Growth Trends and Projections
Table 1 presents population and household growth trends for the PMA from 1990 to 2020. The
data from 1990 to 2000 is from the U.S. Census, while the projections 2009 are based on data
from Claritas and the projections for 2010 and 2020 are based on data from the Minnesota
Demographic Center. Maxfield Research Inc. has adjusted projections based on local building
trends. Table 2 presents data about household size in 2009.
Key findings of Tables 1 and 2 are:
•
The PMA contained 33,680 people and 12,846 households in 2000, and by 2009 contained
37,300 people and 14,690 households. Owatonna, with a population of 25,950 people and
10,260 households accounted for roughly 70% of the County’s population and household
base in 2009.
•
Since 1990, Steele County has experienced steady growth. Between 1990 and 2000, the total
population grew by about 9.6%. Rapid real estate development caused the growth rate between 2000 and 2010 to accelerate slightly to 11%. Similar growth of 10.8% is projected
over the next decade, although growth will occur more slowly at the beginning of the decade
due to a weak local real estate market and economy.
•
Growth within the PMA in the 1990s was very uneven. Between 1990 and 2000, Owatonna’s population grew nearly 16% and Medford’s grew by 34%. Ellendale grew slowly,
and Blooming Prairie and the remainder of the County lost population, reflecting the common trend of rural population loss.
3
TABLE 1
POPULATION AND HOUSEHOLD GROWTH TRENDS AND PROJECTIONS
PRIMARY MARKET AREA
1990 to 2020
-- U.S. Census -1990
2000
---- Change ---2000 to 2010
2010 to 2020
---- Projections ---2009
2010
2020
No.
Pct.
No.
Pct.
Population
Owatonna
19,386
22,434
25,950
26,050
29,750
3,616
16.1
3,700
14.2
Blooming Prairie
Ellendale
Medford
Remainder of County
2,043
549
733
8,018
1,933
590
984
7,739
1,970
660
1,170
7,550
1,965
655
1,165
7,535
2,030
710
1,300
7,630
32
65
181
-204
1.7
11.0
18.4
-2.6
65
55
135
95
3.3
8.4
11.6
1.3
Steele County Total
30,729
33,680
37,300
37,370
41,420
3,690
11.0
4,050
10.8
Owatonna
7,382
8,704
10,260
10,300
11,850
1,596
18.3
1,550
15.0
Blooming Prairie
Ellendale
Medford
Remainder of County
745
235
276
2,704
748
252
377
2,765
810
290
460
2,870
810
290
460
2,875
860
320
530
2,970
62
38
83
110
8.3
15.1
22.0
4.0
50
30
70
95
6.2
10.3
15.2
3.3
11,342
12,846
14,690
14,735
16,500
1,889
14.7
1,765
12.0
Households
Steele County
Sources: U.S. Census (1990 & 2000); Minnesota Demographic Center; Claritas, Inc.;
Maxfield Research Inc.
4
•
Growth strengthened between 2000 and 2010. Owatonna, Ellendale, and Medford all
experienced population growth over 10%. The strengthening real estate market also propelled Blooming Prairie to positive growth, but the remainder of the County continued to experience moderate population loss. All areas will experience growth between 2010 and
2020, with Owatonna having the most rapid growth at 14.2%.
•
In all areas for all decades, the household growth rate exceeds the population growth rate.
The average household size in Steele County declined from 2.71 people per household in
1990 to 2.62 in 2000 to a projected 2.54 in 2010 and 2.51 in 2020. Smaller families as well
as the aging of the area population, which results in increasing numbers of empty-nester
households and seniors living alone, cause the trend. An aging population largely explains
how rural parts of Steele County lost 204 people between 2000 and 2010 (-2.6%) but gained
110 households (+4.0%).
•
Smaller household sizes could be off-set to some degree should the area continue to attract
new and recent immigrants, which typically have a larger number of people in the household.
•
Two-person households are the most common in Owatonna, the remainder of Steele County,
and Steele County as a whole. They comprise 34% of Owatonna’s households, 37% of the
remainder of the County’s, and 35% of the County’s as a whole. The trend towards decreasing household size will mean continued growth of two-person households.
•
One-person households form 26% of Owatonna’s households but only 22% of those in the
remainder of the county. Owatonna attracts to a greater extent young, single households
seeking rental units and seniors living alone that require service-intensive housing.
TABLE 2
HOUSEHOLDS BY SIZE
PRIMARY MARKET AREA
2009
Household Size
1-person
2-person
3-person
4-person
5-person
6-person
7-or-more-persons
Total
Owatonna
2,688
3,532
1,469
1,560
719
190
102
10,260
Remainder
of County
992
1,645
693
661
319
105
15
4,430
Steele
County
3,680
5,177
2,162
2,221
1,038
295
117
14,690
Sources: Claritas, Inc.; Maxfield Research Inc.
5
Population Age Distribution Trends
Table 3 shows the age distribution of the PMA population in 1990 and 2000, as well as projections for 2010 and 2020. The 1990 and 2000 distributions are from the U.S. Census. Maxfield
Research Inc. derived the 2010 projections from data obtained from Claritas Inc. and the Minnesota Demographic Center.
The following are key trends in Steele County’s age distribution:
•
Growth in baby boomers, age 45 to 64, propelled the majority (52%) of Owatonna’s growth
between 2000 and 2010. Very low growth in the baby bust generation (+1.1%), age 35 to 44,
is a result of baby boomers aging out of this age group and being replaced by fewer young
people. Owatonna also attracted families with children, which accounts for the 10.3%
growth in the 17 & under age cohort. The 14.8% growth in the 18 to 24 age cohort and the
16.7% growth in the 25 to 34 age cohort is a result of rapid growth in the 17 & under and 18
to 24 groups in the previous decade.
•
Patterns in the remainder of the County heavy declines in the number of families with
children. The 35 to 44 age cohort decreased by 24.7% between 2000 and 2010 for the reasons mentioned above, which caused a 16.6% decline in the 17 & under age cohort. The
largest growth occurred among the 55 to 64 population due to aging of baby boomers.
•
Growth between 2010 and 2020 will shift to older populations in both Owatonna and the
remainder of the County. All age cohorts in Owatonna will grow except the 18 to 24 (-8.3%)
and the 45 to 54 (-6.6%) cohorts. The loss of the 45 to 54 population is a result of the very
slight growth in the previous decade of the 35 to 44 cohort not keeping up with the aging of
baby boomers. The most rapid growth will be in the 55 to 64 (+34.4%) and 65 to 74
(+57.1%) age groups due to the aging of baby boomers. In the remainder of the County, the
most severe loss will occur in the 45 to 54 age cohort due to the loss in the 35 to 44 cohort in
the previous decade. Also, all age cohorts 34 and younger will experience population loss.
6
TABLE 3
POPULATION AGE DISTRIBUTION
PRIMARY MARKET AREA
1990 to 2020
1990
Number of Persons
2000
2010
2020
---- Change ---2000 - 2010
2010 - 2020
Owatonna
17 & under
18-24
25-34
35-44
45-54
55-64
65-74
75+
No.
5,346
1,917
3,331
2,838
1,790
1,514
1,342
1,308
No.
6,302
1,875
3,058
3,637
2,912
1,754
1,417
1,479
No.
6,953
2,152
3,567
3,675
3,769
2,778
1,571
1,584
No.
8,042
1,973
3,719
4,463
3,520
3,734
2,469
1,830
No.
651
277
509
38
857
1,024
154
105
Pct.
10.3
14.8
16.7
1.1
29.4
58.4
10.9
7.1
No.
1,090
-178
151
787
-249
955
898
246
Pct.
15.7
-8.3
4.2
21.4
-6.6
34.4
57.1
15.5
Total
19,386
0.76
No.
3,446
795
1,671
1,615
1,177
995
937
707
22,434
0.77
No.
3,102
873
1,255
1,825
1,555
1,044
765
827
26,050
0.76
No.
2,587
1,022
1,392
1,373
1,842
1,370
891
843
29,750
0.81
No.
2,313
979
1,379
1,432
1,597
1,643
1,364
963
3,616
16.1
3,700
14.2
No.
-515
149
137
-452
287
326
126
16
Pct.
-16.6
17.0
10.9
-24.7
18.4
31.2
16.4
2.0
No.
-275
-43
-13
58
-244
273
473
120
Pct.
-10.6
-4.2
-0.9
4.3
-13.3
19.9
53.2
14.2
11,343
0.89
No.
8,792
2,712
5,002
4,453
2,967
2,509
2,279
2,015
11,246
0.80
No.
9,404
2,748
4,313
5,462
4,467
2,798
2,182
2,306
11,320
0.70
No.
9,540
3,173
4,959
5,049
5,611
4,148
2,462
2,427
11,670
0.64
No.
10,355
2,952
5,098
5,894
5,118
5,377
3,833
2,793
74
0.7
350
3.1
No.
136
425
646
-413
1,144
1,350
280
121
Pct.
1.4
15.5
15.0
-7.6
25.6
48.3
12.8
5.3
No.
815
-221
139
846
-493
1,228
1,371
366
Pct.
8.5
-7.0
2.8
16.8
-8.8
29.6
55.7
15.1
30,729
33,680
37,370
41,420
3,690
11.0
0.80
0.78
0.74
0.76
Sources: U.S. Census Bureau; Minnesota Demographic Center; Maxfield Research Inc.
4,050
10.8
Remainder of County
17 & under
18-24
25-34
35-44
45-54
55-64
65-74
75+
Total
Steele County
17 & under
18-24
25-34
35-44
45-54
55-64
65-74
75+
Total
Household Income
Tables 4 and 5 show the estimated distribution of household incomes in Steele County for 2009
and 2014. The data was estimated by Claritas and adjusted by Maxfield Research Inc. based on
household growth projections by the Minnesota State Demographic Center. The data helps in
7
ascertaining the demand for different housing products based on the size of the market at specific
cost levels.
The Department of Housing and Urban Development defines affordable housing costs for
families as 30% of a household’s adjusted gross income. Maxfield Research Inc. uses a figure of
25% to 30% for younger households and 40% or more for seniors, since seniors generally have
lower living expenses and can often sell their homes and use the proceeds toward rent payments.
A generally accepted standard for affordable owner-occupied housing is that a typical household
can afford to pay 2.5 to 3.0 times their annual income on a single-family home, down from 3.0 to
3.5 or even higher a few years ago when high-risk loans were easily available. Thus, a $50,000
income would translate to an affordable single-family home of $125,000 to $150,000. The
higher end of this range assumes that the person has adequate funds for down payment and
closing costs, but does not have savings or equity in an existing home which would allow them
to purchase a higher priced home.
The following are key points from Tables 4 and 5:
•
The median household income in Owatonna in 2009 was estimated to be $53,519. The
median household income is estimated to be higher in the remainder of the County – at
$58,780. Typically, cities such as Owatonna have a lower median income than surrounding
rural areas because they tend to have a greater number of lower-income households living in
subsidized rental or lower-priced housing than the surrounding rural area.
•
Overall, incomes are expected to increase by about 9% between 2009 and 2014, or slightly
less than 2% annually, in Owatonna and the remainder of the County. This will result in the
median income in Owatonna increasing to $57,932 and the median income in the remainder
of the county increasing to $64,062 by 2014. However, income in Owatonna will not likely
keep up with inflation. Between 2000 and 2009, annual inflation ranged from 1.6% to 3.8%,
and was over 2% in every year except 2002.
Non-Senior Households
•
In 2009, 6.5% of the non-senior households in Owatonna had incomes under $15,000 (522
households). All of these households would be eligible for subsidized rental housing. Another 6.2% of Owatonna’s non-senior households had incomes between $15,000 and $25,000
(500 households). Many of these households would qualify for subsidized housing, but
many could also afford “affordable” or older market-rate rentals. If housing costs absorb
30% of income, households with incomes of $15,000 to $25,000 could afford to pay $375 to
$625 per month.
8
TABLE 4
HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER
PRIMARY MARKET AREA
(Number of Households)
2009
Owatonna
Less than $15,000
$15,000 to $24,999
$25,000 to $34,999
$35,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 to $150,000
$150,000+
Total
Median Income
Remainder of Steele County
Less than $15,000
$15,000 to $24,999
$25,000 to $34,999
$35,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 to $150,000
$150,000+
Total
Median Income
Steele County
Less than $15,000
$15,000 to $24,999
$25,000 to $34,999
$35,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 to $150,000
$150,000+
Total
Median Income
Sources:
Total
15-24
25-34
Age of Householder
35-44
45-54
55-64
65 -74
75+
931
932
1,124
1,777
2,596
1,456
1,107
336
10,260
85
97
95
122
135
13
8
2
557
90
110
173
343
585
223
161
19
1,704
143
110
206
353
608
325
241
68
2,055
97
89
211
313
458
545
424
101
2,238
107
94
116
264
430
249
219
76
1,556
143
167
136
209
247
43
31
48
1,025
267
266
187
172
132
58
22
21
1,124
$53,519
$35,186
$55,826
$58,875
$72,302
$61,448
$39,732
$26,596
305
343
467
687
1,176
754
510
189
4,430
3
10
25
43
53
16
2
6
159
7
26
73
140
275
132
57
12
723
18
26
54
110
229
173
104
32
745
49
33
49
99
249
229
192
68
967
47
68
57
102
197
143
101
37
751
56
57
102
103
107
40
42
15
521
125
123
107
91
66
21
12
19
564
$58,780
$49,430
$60,441
$67,985
$75,595
$62,983
$41,682
$28,125
1,236
1,275
1,592
2,464
3,771
2,210
1,617
525
14,690
87
107
120
166
188
29
10
8
716
97
136
247
483
861
355
218
31
2,427
161
136
260
463
837
498
345
100
2,801
146
121
260
412
707
773
616
169
3,205
153
162
173
366
627
392
321
113
2,307
200
224
238
312
354
83
73
63
1,546
392
389
294
262
197
79
34
40
1,688
$55,159
$38,910
$57,302
$61,364
$73,444
$61,929
$40,374
$27,152
Claritas, Inc.; Maxfield Research Inc.
9
TABLE 5
HOUSEHOLD INCOME BY AGE OF HOUSEHOLDER
PRIMARY MARKET AREA
(Number of Households)
2014
Total
15-24
25-34
Age of Householder
35-44
45-54
882
874
1,104
1,661
2,611
1,639
1,410
519
10,700
74
88
117
95
165
26
12
8
586
88
104
148
299
499
313
191
57
1,698
120
101
167
293
509
340
271
87
1,887
90
75
174
297
429
490
532
149
2,237
117
101
128
260
532
330
318
134
1,920
151
157
183
227
314
78
45
61
1,216
241
249
187
191
163
63
40
23
1,157
$57,932
$37,170
$60,540
$62,924
$77,728
$66,647
$42,737
$29,727
Less than $15,000
283
$15,000 to $24,999
307
$25,000 to $34,999
410
$35,000 to $49,999
630
$50,000 to $74,999
1,120
$75,000 to $99,999
802
$100,000 to $150,000
706
$150,000+
261
Total
4,520
6
14
20
27
54
17
16
4
156
7
22
62
114
253
175
98
19
750
14
28
37
107
190
162
143
41
720
44
28
46
69
190
192
226
82
878
48
59
77
99
230
163
147
66
889
58
45
74
109
124
63
55
35
562
106
112
95
106
80
30
23
14
564
$64,062
$55,586
$66,804
$73,024
$83,008
$67,543
$49,423
$31,818
1,165
1,181
1,514
2,292
3,732
2,441
2,116
780
15,220
80
102
137
122
219
42
28
12
743
95
126
210
413
752
488
288
76
2,447
134
128
204
400
699
502
413
127
2,607
134
103
221
365
619
682
758
232
3,114
165
159
205
359
762
493
465
200
2,809
209
202
256
336
438
141
100
96
1,778
347
360
282
297
243
93
63
37
1,721
$59,773
$41,440
$62,645
$65,671
$79,217
$66,917
$44,908
$30,430
Owatonna
Less than $15,000
$15,000 to $24,999
$25,000 to $34,999
$35,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 to $150,000
$150,000+
Total
Median Income
Median Income
Steele County
Less than $15,000
$15,000 to $24,999
$25,000 to $34,999
$35,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 to $150,000
$150,000+
Total
Median Income
Sources:
55-64
65 -74
75+
Claritas, Inc.; Maxfield Research Inc.
• Median incomes for households in Owatonna peaked at $72,302 for the 45 to 54 age group in
2009. These households could afford to purchase a home valued from $180,700 to $216,900
(2.5 to 3.0 times income). However, the majority of households (84.8%) in this age group
are homeowners, so would have equity from an existing home that they could allocate toward
the purchase of a higher priced home. By 2014, the median income for the 45 to 54 age
group is projected to increase to $77,728, a 7.5% increase.
10
•
The median resale price of homes in Owatonna was $147,500 in 2009 (see Table 16). The
income required to afford a home at this price would be about $49,000 to $59,000, based on
the standard of 2.5 to 3.0 times the median income (and assuming these households do not
have a high level of debt). In 2005, 49% (4,986 households) of Owatonna’s non-senior households had incomes greater than $49,000.
Senior Households
•
Incomes drop significantly as households age. The median income in Owatonna for households age 65 to 74 is 35% less than that of the 55 to 64 age cohort. The median drops an additional 33% for the 75+ age cohort. In Owatonna, 14% of households ages 65 to 74 had incomes below $15,000, compared to 24% of households age 75 and over. Many of these lowincome older senior households rely solely on Social Security benefits. Typically, younger
seniors have higher incomes because they are still able to work or are married couples with
two pensions or higher Social Security benefits.
•
Generally, senior households with incomes greater than $25,000 can afford market-rate
senior housing. Based on a 40% allocation of income for housing, this translates to monthly
rents of at least $833. About 1,300 senior households in Owatonna (61% of senior households) had incomes above $25,000 in 2009, as did 857 senior households in the remainder of
the County (79% of senior households).
•
Seniors who are able and willing to pay 80% or more of their income on assisted living
housing would need an annual income of $33,000 to afford monthly rents of $2,200, which is
about the beginning monthly rent for assisted living in Owatonna. In Owatonna, there were
an estimated 442 older senior (ages 75 and over) households with incomes greater than
$33,000 in 2009 (39%). Seniors age 75 and over are the primary market for assisted living
housing.
Tenure by Income
Table 6 shows the number of owner and renter households in the PMA by income cohort in
2009. The data is useful because it shows the housing options and preferences for households
based on affordability. Key points from the table are:
•
As income increases, so does the rate of homeownership. In the PMA, 93% of households
earning $50,000 or more own their homes, and every income cohort has higher homeownership rates than the next lowest. Homeownership rates for the lowest income households in
Owatonna are much lower than in the remainder of the County – 37.0% versus 63.3% for
households earning less than $15,000 per year – because of lower housing costs in rural areas
and a concentration of low-cost rental properties in Owatonna. In both areas, low-income
homeowners tend to be seniors that have paid off their mortgages.
11
TABLE 6
TENURE BY HOUSEHOLD INCOME
PRIMARY MARKET AREA
2009
Owatonna
Own
No.
Less than $15,000
$15,000 to $24,999
$25,000 to $34,999
$35,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 to $150,000
$150,000+
344
485
697
1,315
2,306
1,379
1,049
324
Total
7,900
Median Income
$61,805
Pct.
37.0
52.0
62.0
74.0
88.8
94.7
94.8
96.5
77.0
Rent
No.
Pct.
587
447
427
462
291
77
58
12
2,360
$28,235
63.0
48.0
38.0
26.0
11.2
5.3
5.2
3.5
23.0
Rem. of County
Own
Rent
No.
Pct.
No.
Pct.
193
274
363
631
1,069
741
509
185
3,965
$62,475
63.3
79.9
77.7
91.9
91.0
98.2
99.9
97.6
89.5
112
69
104
55
105
13
1
5
465
36.7
20.1
22.3
8.1
9.0
1.8
0.1
2.4
10.5
$30,620
Steele County
Own
No.
538
759
1,060
1,946
3,375
2,119
1,559
509
11,865
$62,020
Pct.
43.5
59.5
66.6
79.0
89.5
95.9
96.4
96.9
80.8
Rent
No.
Pct.
698
516
532
517
396
91
58
16
2,825
56.5
40.5
33.4
21.0
10.5
4.1
3.6
3.1
19.2
$28,785
Source: US Census Bureau; Claritas Inc.; Maxfield Research Inc.
12
•
Typically, renter households with incomes of $25,000 or less qualify for government subsidized housing. In 2009, there were 1,214 such households in Steele County, or about 43% of
the total renter households. However, waitlists are often long for subsidized housing, forcing
low-income households into market rate units. If such households allocated 30% of their
monthly incomes to housing, they could afford a unit that cost no more than $625 per month.
Almost all market rate efficiency and one-bedroom apartments in Owatonna have monthly
rents below $625, but only a limited number of two-bedroom and no three-bedroom apartments have rents below $625 per month, meaning low-income families with children would
require subsidized rental housing if their housing was to be affordable.
•
Renter households with incomes of between $25,000 and $40,000 are usually the market for
“affordable” rental projects with a shallow subsidy (housing with income restrictions and
rents slightly below market rents, such as those financed through Minnesota Housing Finance
Agency’s Section 42/Low-Income Housing Tax Credit program). These households can typically afford housing costs of between $625 and $1,000 per month. As of 2009, there were
704 households in Steele County with incomes between $25,000 and $40,000. Units with
shallow subsidies are also scarce, but market rate housing in Owatonna is relatively affordable to such households. Rent for two- and three-bedroom units exceeds $1,000 per month at
only one market rate development in the city and at no others exceeds $676 for a twobedroom unit and $775 for a three-bedroom unit.
•
It is important to note that seniors are often able and willing to allocate a larger share of their
income on rental housing that meets their needs since they no longer have to save for retirement, their children’s education or major purchases (home, car, etc.). This is particularly true
in “senior” rental projects where support services and personal care assistance are available.
In fact, research has shown that, in assisted living projects, up to 50% of residents not only
allocated all of their income but spent-down assets in order to afford monthly housing and
service costs.
Tenure by Age of Householder
Table 7 shows the number of owner and renter households in the PMA by age group in 2000 and
2009. This data shows the propensity of households to own or rent their housing based on their
age. Key points derived from the table are:
•
In 2009, 80.8% of households in Steele County owned their homes compared to 80.1% in
2000. In Owatonna in 2009, 77% of households owned their home in 2009 versus 89.5% in
the remainder of the County. The rural parts of the County have higher homeownership rates
because the low densities allowed in those areas cannot support multi-family rental housing.
•
The highest homeownership rates occur in households age 55 to 64, and decline as households age. In 2009 over 90% of households age 55 to 64 owned their homes. The figure declines only slightly to 87.1% for households age 65 to 74, then drops significantly to 73.8%
for households age 75+, though the rate is still relatively high. Many senior households
choose to sell their homes and move to rental housing because of the lower maintenance re-
13
sponsibilities or because they require service-intensive housing such as assisted living or
skilled nursing.
•
The lowest homeownership rates occur in households age 15 to 24. In 2009, 42.2% of such
households in Steele County owned their home. However, only 36.6% of such households in
Owatonna versus 61.6% of such households in the remainder of the County owned their
homes. Households in the rural part of the County tend to be at the older end of the cohort
and thus more likely to own their home than households in Owatonna.
•
Although the propensity for households ages 15 to 24 to rent their housing is higher, the 25 to
34 age group had, by far, the largest number of renters (658), accounting for slightly less than
one-quarter of all renters. Their needs will therefore be a significant driving force for rental
housing development in the next decade.
•
Both Owatonna and the remainder of Steele County experienced slight increases in their
overall homeownership rates between 2000 and 2009. However, within Owatonna, the 65 to
74 age cohort dropped 3.2 percentage points and the 75+ age cohort dropped 8 percentage
points. The addition of several senior rental developments and the overall aging of older
adults resulted in the drop in Owatonna. A lack of senior rental units in the remainder of the
County precluded such a drop in rural areas. Seniors in those areas desiring rental housing
would have either moved to Owatonna or left Steele County. Homeownership rates in middle age cohorts were stable in Owatonna and the remainder of the County, but rose sharply in
both areas in the 15 to 24 and 25 to 34 cohorts. Fewer people aged into these cohorts than in
previous decades, so many in them tend to be at the older end of the cohorts and thus more
likely to own homes.
14
TABLE 7
TENURE BY AGE
PRIMARY MARKET AREA
2000 AND 2009
Age 15 - 24
Own Rent
Owatonna
Pct. Own
Rem. of County
Pct. Own
Steele County
Pct. Own
Owatonna
Pct. Own
Rem. of County
Pct. Own
Steele County
Pct. Own
Age 25 - 34
Own
Rent
Age 35 - 44
Own
Rent
Age 45 - 54
Own
Rent
2000
1,435
257
84.8%
Age 55 - 64
Own
Rent
Age 65 - 74
Own
Rent
Age 75+
Own
Rent
876
87.3%
127
766
86.8%
116
747
74.6%
255
Total
Own
Rent
143
350
29.0%
1,021
559
64.6%
1,657
80.8%
395
85
64
57.0%
475
115
80.5%
850
87.6%
120
776
92.5%
63
550
94.7%
31
429
93.7%
29
486
87.6%
69
228
414
35.5%
1,496
674
68.9%
2,507
83.0%
515
2,211
87.4%
320
1,426
90.0%
158
1,195
89.2%
145
1,233
79.2%
324
10,296
2,550
80.1%
204
353
36.6%
1,158
546
68.0%
1,672
81.4%
383
1,369
88.0%
187
857
83.6%
168
749
66.6%
376
7,900
2,360
77.0%
98
61
61.6%
611
112
84.5%
656
88.1%
89
900
93.1%
67
713
94.9%
38
489
93.9%
32
498
88.3%
66
302
414
42.2%
1,769
658
72.9%
2,328
83.1%
472
2,791
87.1%
414
2,082
90.2%
225
1,346
87.1%
200
1,247
73.8%
442
2009
1,891
347
84.5%
6,645
2,059
76.3%
3,651
88.1%
3,965
89.5%
465
11,865
2,825
80.8%
Sources: U.S. Census, Maxfield Research Inc.
491
15
Household Type
Table 8 shows a breakdown of the type of households in the PMA in 1990, 2000, and 2009. This
data is useful in assessing housing demand since the household composition often dictates the
type of housing needed and preferred. Key points from the table are:
•
During the 1990s, married couples without children surpassed married couples with children
in the PMA. This is due to couples waiting longer to have children and the baby boomers
aging into empty nester years.
•
Between 2000 and 2009, rapid development of single family homes resulted in married
couples with children increasing their portion of households 0.3 percentage points to 28.2%
and married couples without children decreasing 0.3 percentage points to 31.3%. Married
couples with children also experienced the largest absolute growth between 2000 and 2009,
adding 551 households throughout the PMA.
•
In 2009, married households without children constituted a significantly larger portion of the
population in the PMA outside of Owatonna than in Owatonna – 35.8% versus 29.4%. As of
2010 the population age 45 and older, which is less likely to have children living at home,
was only 27% of the population in Owatonna but 44% in the remainder of the County.
• Other family households, which are typically single parents with children, continued to
increase between 2000 and 2009. Owatonna added 221 (+21.6%) and the remainder of the
County gained 37 (+8.8%). These households are most likely to need affordable rental or
ownership housing.
• Between 2000 and 2009, roommate households increased slightly in Owatonna but decreased
in the remainder of the County. Younger residents are far more likely to live in a roommate
household, so the overall loss for the PMA is a result of the shrinking of younger age cohorts
in rural parts of the County.
•
Persons living alone continued to gain as a portion of households, increasing by 519 households between 2000 to 2009 to constitute 25% of all households. This reflects the increased
number of persons choosing to remain single and also an increase in the number of seniors.
As the frailty level of these seniors increases, they will be moving out of their homes creating
pressure on senior housing alternatives.
16
TABLE 8
HOUSEHOLD TYPE TRENDS
PRIMARY MARKET AREA
1990 to 2009
Family Households
Total Households
1990
2000
2009
Number of Households
Owatonna
Rem.of County
Steele County
Non-Family Households
Married
With Children
1990 2000 2009
Married
w/o Children
1990 2000 2009
Other
Family
1990 2000 2009
Persons
Living Alone
1990 2000 2009
2,324 2,354 2,858
1,412 1,232 1,279
3,736 3,586 4,137
2,177 2,564 3,016
1,439 1,490 1,587
3,616 4,054 4,603
678 1,021 1,242
298
416
453
976 1,437 1,695
1,922 2,317 2,688
698
837
985
2,620 3,154 3,673
7,382
3,960
11,342
8,704
4,142
12,846
10,260
4,430
14,690
Owatonna
Rem.of County
Steele County
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
31.5
35.7
32.9
27.0
29.7
27.9
27.9
28.9
28.2
29.5
36.3
31.9
29.5
36.0
31.6
29.4
35.8
31.3
9.2
7.5
8.6
11.7
10.0
11.2
12.1
10.2
11.5
26.0
17.6
23.1
26.6
20.2
24.6
Minnesota
100.0
100.0
100.0
30.1
24.7
24.4
29.8
29.4
28.8
9.6
10.8
11.1
26.4
29.3
Other
(Roommates)
1990 2000 2009
281
113
394
448
167
615
456
126
582
26.2
22.2
25.0
3.8
2.9
3.5
5.1
4.0
4.8
4.4
2.8
4.0
31.6
4.1
5.8
4.1
Percent of Total
Sources: U.S. Census Bureau (1990 & 2000); Claritas Inc. (2009)
Maxfield Research Inc.
17
Employment Growth Trends
Since employment growth generally fuels household growth, employment trends are a reliable
indicator of housing demand. Typically, households prefer to live near work for convenience.
However, housing is often less expensive in smaller towns, making longer commutes attractive
for households concerned about housing affordability.
Recent employment growth trends for Steele County are shown in Tables 9 and 10. Table 9
presents resident employment data for Steele County from 2000 through January 2010. Resident
employment data is calculated as an annual average and reveals the work force and number of
employed persons living in the County. It is important to note that not all of these individuals
necessarily work in the County. Table 10 presents covered employment in Steele County from
2000 through 3rd Quarter 2010. Covered employment data is calculated as an annual average and
reveals the number of jobs in the County, which are covered by unemployment insurance. Most
farm jobs, self-employed persons, and some other types of jobs are not covered by unemployment insurance and are not included in the table. The data in both tables is from the Minnesota
Department of Employment and Economic Development. The following are key trends from the
employment data:
Labor Force/Resident Employment
•
With the exception of dips between 2001 and 2002 and again between 2002 and 2003,
employment increased every year between 2000 and 2009, for a total increase of 6.0% over
the decade. The total labor force also grew throughout the period, with dips in the same
years as total employment dropped. Such a trend is typical in periods of increased unemployment because some people who have lost jobs choose to stop seeking employment, at
which point they are no longer considered part of the labor force.
•
The unemployment rate in Steel County closely tracked that of Minnesota as a whole
throughout the decade. Through 2009, it never deviated more than 0.4 percentage points
from the State’s rate, and was within 0.1 points in six of the nine years. From 2000 through
January 2010, the County’s and the State’s unemployment rates have been below the United
States’ rate as a whole. However, unemployment in the County began to rise sharply after
2008. From 2008 to 2009, it increased by 3.3 percentage points, and then increased again by
0.8 percentage points going into January 2010. By January 2010, the County’s unemployment rate was 1.0 point higher than the State’s. The largest sector in Steele County’s economy is manufacturing, which has experienced a larger decline than many other industries in
the present recession.
18
TABLE 9
RESIDENT EMPLOYMENT
STEELE COUNTY
2000 to 2009
Unemployment Rate
Steele
County
MN
U.S.
Year
Labor
Force
Employment
Unemployment
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010*
19,478
19,802
19,675
19,543
19,650
19,668
20,050
20,432
20,932
21,885
20,572
18,918
19,034
18,785
18,581
18,751
18,836
19,241
19,542
19,869
20,051
18,687
560
768
890
962
899
832
809
890
1,063
1,834
1,885
2.9%
3.9%
4.5%
4.9%
4.6%
4.2%
4.0%
4.4%
5.1%
8.4%
9.2%
3.1%
3.8%
4.5%
4.9%
4.6%
4.2%
4.1%
4.6%
5.4%
8.0%
8.2%
4.0%
4.7%
5.8%
6.0%
5.6%
5.1%
4.6%
4.6%
5.8%
9.3%
10.6%
Number
Percent
2,407
12.4
1,133
6.0
Change 2000-2009
1,325
236.6%
---
---
---
* For January 2010 only.
Sources: MN Department of Employment and Economic Development; Maxfield Research Inc.
Covered Employment by Industry
•
The Manufacturing sector accounted for the largest portion (26%) of the jobs in Steele
County as of 3rd Quarter in 2009. Its loss of 1,666 jobs since 2000 almost completely offset
gains in other industries. Losses in Construction (-224 jobs) and Information (-97 jobs), fully
offset gains, leading to a net loss 137 (-0.7%) jobs between 2000 and 3rd Quarter 2009.
•
Because Steele County’s population grew rapidly between 2000 and 2009, comparing total
jobs in each of those years does not fully capture the effects of the recession. From 2008 to
3rd Quarter 2009, Steele County lost 1,540 jobs. Manufacturing accounted for 54% (-836) of
these lost jobs. Manufacturing, however, has been losing jobs for several years, so this figure
is only about half of the jobs it lost between 2000 and 2009. Reduced revenues led to a loss
of 363 government jobs (-20.4%). Losses in Construction were modest because construction
had nearly come to a halt by late 2008. The only industries to gain employment were Education & Health Services (101 jobs) and Leisure & Hospitality (28 jobs), although their gains
were very modest.
•
Wages dropped significantly in most industries between 2008 and 3rd Quarter 2009, and job
losses were concentrated in the highest paying industries, such as Manufacturing,
Trade/Transportation/Utilities, and Government. The losses have significantly depressed
demand for new and higher-value housing.
19
TABLE 10
COVERED EMPLOYMENT BY INDUSTRY
PRIMARY MARKET AREA
2000 & 2008 Annual Average and 3rd Quarter 2009
No.
2000
Avg. Wage
No.
2008
Avg. Wage
3rd Quarter 2009
No.
Avg. Wage
Chg. 2000-2009
No.
Pct.
Chg. 2008-2009
No.
Pct.
Goods Producing Industries
7,809
$34,750
6,797
$47,227
5,965
$46,124
-1,844
-23.6%
-832
-13.9%
Manufacturing
Natural Resources & Mining
Construction
6,887
137
785
$34,530
$27,520
$37,939
6,057
166
575
$47,759
$31,092
$46,194
5,221
183
561
$44,725
$31,457
$47,859
-1,666
46
-224
-24.2%
33.6%
-28.5%
-836
17
-14
-16.0%
9.3%
-2.5%
Service Providing Industries
10,319
$23,348
12,442
$32,565
12,098
$33,176
1,779
17.2%
-344
-2.8%
996
2,781
238
1,961
956
1,500
1,418
469
$32,987
$16,115
$32,164
$38,350
$19,374
$26,887
$8,988
$18,767
1,212
3,151
149
2,124
1,879
1,976
1,506
466
$41,793
$21,491
$48,759
$68,985
$16,566
$38,437
$10,926
$23,944
1,069
2,971
141
2,105
1,794
2,077
1,534
407
$40,460
$22,099
$38,602
$56,872
$15,809
$38,112
$11,321
$25,730
73
190
-97
144
838
577
116
-62
7.3%
6.8%
-40.8%
7.3%
87.7%
38.5%
8.2%
-13.2%
-143
-180
-8
-19
-85
101
28
-59
-13.4%
-6.1%
-5.7%
-0.9%
-4.7%
4.9%
1.8%
-14.5%
Government
1,851
$31,011
2,143
$36,867
1,780
$39,765
-71
-3.8%
-363
-20.4%
Total
19,980
-137
-0.7%
-1,540
-7.8%
Trade, Transportation & Utilities*
Retail Trade
Information
Financial Activities
Professional & Business Services
Education & Health Services
Leisure and Hospitality
Other Services
$28,513
21,383
$37,655
19,843
$35,181
* Excludes retail trade and includes wholesale trade
Sources: Minnesota Department of Employment and Economic Development; Maxfield Research Inc.
20
Major Employer Interviews
Maxfield Research Inc. interviewed representatives of large employers in Owatonna in March
2010. The interviews covered topics such as recent trends in job growth, projected job growth,
job types, and average hourly wages or annual salaries. Representatives were also asked about
housing needs of their employees. Interviews with the area’s largest employers not only provide
data regarding commercial job growth, but also reveal employer attitudes and perceptions
regarding housing demand in any given area. Table 11 on the following page shows the top 25
employers located in the PMA. All except one are located in Owatonna.
The following are key points from the interviews with major employers:
•
Table 10 shows there were 9,204 jobs with the top 25 employers in the PMA in March 2010.
The number is down about 8.3% from the last study in February 2006.
•
Most employers said that housing is not a typical concern for the employees that they hire.
Most manufacturing and retail employees are from the Owatonna area and do not need to
find housing. In cases where new employees do not live in Steele County, they typically
commute from cities just outside Steele County such as Rochester, Austin, and Waseca, and
do not choose to relocate to Owatonna.
•
The largest employer in Owatonna is now Federated Insurance Company, which employs
about 1,500 people. Its employment numbers have remained stable through the recession. It
was the only company interviewed whose new employees regularly had to relocate to Owatonna. Most relocating employees are executives from other areas of Minnesota and the
United States, and many seek new, large homes with many amenities. New employees have
not had difficulty finding such homes in Owatonna.
•
Viracon is the second largest employer, with 1,200 employees. It had about 1,500 employees
during the last study, and peaked in 2008 with 1,900 employees. A manager estimated that
the company would shed an additional 100 employees over the next year, primarily through
attrition. The company has no plans to return to its peak workforce, both because it does not
project demand to increase sufficiently and its productivity per employee has increased
through the recession.
•
Manufacturers have experienced the highest job losses. Besides Viracon, Mustang Manufacturing Corporation and Slidell, Inc. both shut down since the last study, resulting in the loss
of 300 jobs. SPX Power Team shed 210 jobs, but believes it will not cut more jobs and may
hire incrementally in 2010 to fill specific needs. Wenger Corporation has eliminated about
100 jobs during the recession, but also expects its employment numbers to remain stable during the next year.
•
Several assisted living and memory care senior housing facilities opened in Owatonna since
the last study. Although they are not in the top 25 employers, they have resulted in job creation in the senior housing industry and have provided some of the limited construction work
in the city since then.
21
HOUSING CHARACTERISTICS
TABLE 11
MAJOR EMPLOYERS
CITY OF OWATONNA AND SURROUNDING AREAS
March 2010
Employer
Products/Services
Federated Insurance Co
Viracon/Curvlite Inc
Truth Hardware
Owatonna Hospital and Clinic
Owatonna Public School District 761
SPX Power Team
Wenger Corp
Jostens
Cabela's
Steele County
Wal-Mart
Cybex Corp
Lakeside Foods, Inc.
McQuay International
Pearson NCS
Crane Creek Construction
Blount Inc
City of Owatonna
Holiday Inn & Suites
Crown Cork & Seal Company, Inc.
Cash Wise Foods
Hy-Vee Food Store
Prairie Manor (Blooming Prairie)
Caterpillar
Target
Insurance Carriers
Glass & Glass Product Manufacturing
Metalworking Machinery Manufacturing
General Medical & Surgical Hospitals, Physicians
Elementary & Secondary Schools
Other Electrical Equipment & Component Mfg.
Other Miscellaneous Manufacturing
Printing & Related Support Activities
Sporting Goods, Hobby, & Musical Instrument Stores
Executive, Legislative, & Other Gen. Govt. Support
Department Stores
Fruit & Vegetable Preserving & Spec. Food Mfg.
Vent., Heating, Air-Cond. & Comm. Refrig. Equip. Mfg.
Printing & Related Support Activities
Highway, Street & Bridge Construction
Machine Shops;Turned Prod.;& Screw,Nut & Bolt Mfg.
Executive, Legislative, & Other Gen. Govt. Support
Hotels (exc. Casino Hotels) & Motels
Grocery Stores
Grocery Stores
Skilled Nursing Facility
Machinery, Equipment, & Supplies Merchant Wholesalers
Department Stores
Employee Count*
1,500
1,200
704
700
700
540
450
420
329
325
315
250
240
175
160
145
135
126
125
120
115
115
115
100
100
Total
9,204
* Employment figures are estimated.
Sources: MN Department of Employment and Economic Development; Maxfield Research Inc.
22
Introduction
The variety and condition of the housing stock in a community provides the basis for an attractive living environment. Housing is the primary building block of neighborhoods, supporting
goods and services. We examined the housing market in Owatonna and the remainder of Steele
County by: 1) reviewing data on the age of the existing housing in Steele County from the 2000
Census; 2) examining the housing stock by structure type; 3) examining recent residential
building trends since 2000; and 4) examining condition of single-family, duplex, and triplex
homes in Owatonna.
Age of Housing Stock
Table 12 on the following page shows the age of the PMA’s occupied housing stock in 2000.
The table includes the number of housing units built in both Owatonna and the remainder of the
County over the previous six decades as well as the number of units built prior to 1940. The
table further breaks down the data by number of owner-occupied and renter-occupied units. The
following are key points from Table 12:
•
In 2000, the largest share of the PMA’s housing stock was built before 1940 (27% of the
total), followed by the 1970s (19% of the total), and the 1990’s (16% of the total). With
2,002 units being added between 2000 and 2009 (see Table 15), the 2000’s are the decade
with the fourth most building activity.
•
The significant proportion of homes in the PMA built prior to 1940 indicates that there is
likely a substantial need for rehabilitation and/or replacement. This is particularly true in the
largely rural remainder of the County where 42% of the housing units were built prior to
1940, versus 20% of the housing units in Owatonna.
•
Overall, the number of housing units over 60 years old was roughly equal in Owatonna
(1,731) and the remainder of the County (1,766). In contrast, the number of housing units
built between 1990 and 2000 in Owatonna (1,615) was nearly 3.5 times greater than in the
remainder of the County (463).
•
Nearly one-third of the rented units in the PMA in 2000 (695) were built prior to 1940.
Many of these units in the outside of Owatonna are likely to be older single-family homes
and farmsteads that are rented.
•
Twenty-five percent of all units rented in 2000 were built during the 1970s. The significant
number of rental units built in PMA during this period was due, in part, to the development
of federally subsidized rental projects during the decade.
23
TABLE 12
AGE OF HOUSING STOCK
STEELE COUNTY
2000
Year Structure Built
Total
Units
Owatonna
Owner-Occupied
Renter-Occupied
Subtotal
<1940
No.
Pct.
1940s
No.
Pct.
1950s
No.
Pct.
1960s
No.
Pct.
1970s
No.
Pct.
1980s
No.
Pct.
1990s
No.
Pct.
6,651
2,043
8,694
1,242
489
1,731
18.7
23.9
19.9
345
98
443
5.2
4.8
5.1
1,082
192
1,274
16.3
9.4
14.7
812
186
998
12.2
9.1
11.5
1,207
538
1,745
18.1
26.3
20.1
605
283
888
9.1
13.9
10.2
1,358
257
1,615
20.4
12.6
18.6
Owner-Occupied
3,653
Renter-Occupied
499
Subtotal
4,152
1,560
206
1,766
42.7
41.3
42.5
217
39
256
5.9
7.8
6.2
332
35
367
9.1
7.0
8.8
309
45
354
8.5
9.0
8.5
595
96
691
16.3
19.2
16.6
208
47
255
5.7
9.4
6.1
432
31
463
11.8
6.2
11.2
Steele County Total
Owner-Occupied
10,304
Renter-Occupied
2,542
Total
12,846
2,802
695
3,497
27.2
27.3
27.2
562
137
699
5.5
5.4
5.4
1,414
227
1,641
13.7
8.9
12.8
1,121
231
1,352
10.9
9.1
10.5
1,802
634
2,436
17.5
24.9
19.0
813
330
1,143
7.9
13.0
8.9
1,790
288
17.4
11.3
16.2
2,078
Sources: Bureau of the Census; Maxfield Research Inc.
24
AGE OF HOUS ING S TOCK
S TEELE COUNTY
2000
2,000
1,745
1,731 1,766
1,615
1,600
No. of Units
1,274
1,200
998
888
691
800
443
256
400
367
463
354
255
0
Before 1940
1940s
1950s
O watonna
1960s
1970s
1980s
1/90-3/00
Remainde r of County
Housing Stock By Structure Type
Table 13 shows the housing stock in Owatonna and in Steele County by type of structure and
tenure as of 2000. This indicates the types of housing structures occupied or vacant and whether
they are owned or rented. The following are key points from the table:
•
The dominant housing type is a single family detached home with this type representing 91%
of all owner-occupied housing and 77% of all occupied units in 2000. Single-family homes
accounted for 72% of all occupied housing units in Owatonna versus 88% in the remainder
of Steele County. Since 2000, 66% of Owatonna’s new housing units and 78% of the remainder of the County’s units have been single-family (see Table 15).
•
Attached housing in structures of one to four units accounted for another 1,164 units or 9%
of all occupied housing units in Steele County. The number of single attached structures
(townhomes) that were owned outnumbered those rented 2-to-1. Conversely, the number of
units rented in structures of two to four units outnumbered those owned units by about 5-to-1.
Rental units dominated in structures with two or more units.
•
In 2000, there were 545 occupied mobile home units in Steele County, comprising 4% of the
County’s occupied housing units. The vast majority (90%) of the County’s occupied mobile
homes are owner-occupied. Nearly half (46%) of the County’s occupied mobile homes are
located outside of Owatonna compared to 32% of the total number of occupied housing units.
25
•
As of 2000 vacancy rates of the housing stock in the PMA ranged from 1.9% in buildings of
20 to 49 units to 6.3% for structures of five to nine units. Single-family homes had a vacancy
rate of 3.0% (2.0 % in Owatonna and 4.6% in the remainder of the County).
TABLE 13
HOUSING STOCK BY UNITS IN STRUCTURE
STEELE COUNTY
2000
Owatonna
No
Pct.
Rem. of County
No
Pct.
Steele County
No
Pct.
Owner occupied:
1, detached
1, attached
2 to 4 units
5- to 9-plex
10 to 19 units
20 to 49 units
50 + units
Mobile home
6,651
5,990
187
128
8
5
53
0
280
100.0
90.1
2.8
1.9
0.1
0.1
0.8
0.0
4.2
3,653
3,393
30
17
0
0
0
0
213
100.0
92.9
0.8
0.5
0.0
0.0
0.0
0.0
5.8
10,304
9,383
217
145
8
5
53
0
493
100.0
91.1
2.1
1.4
0.1
0.0
0.5
0.0
4.8
Renter occupied:
1, detached
1, attached
2 to 4 units
5- to 9-plex
10 to 19 units
20 to 49 units
50 + units
Mobile home
2,043
222
101
603
226
398
405
76
12
100.0
10.9
4.9
29.5
11.1
19.5
19.8
3.7
0.6
499
278
6
92
18
49
16
0
40
100.0
55.7
1.2
18.4
3.6
9.8
3.2
0.0
8.0
2,542
500
107
695
244
447
421
76
52
100.0
19.7
4.2
27.3
9.6
17.6
16.6
3.0
2.0
Total occupied:
1, detached
1, attached
2 to 4 units
5- to 9-plex
10 to 19 units
20 to 49 units
50 + units
Mobile home
8,694
6,212
288
731
234
403
458
76
292
100.0
71.5
3.3
8.4
2.7
4.6
5.3
0.9
3.4
4,152
3,671
36
109
18
49
16
0
253
100.0
88.4
0.9
2.6
0.4
1.2
0.4
0.0
6.1
12,846
9,883
324
840
252
452
474
76
545
100.0
76.9
2.5
6.5
2.0
3.5
3.7
0.6
4.2
242
129
12
46
17
19
9
4
6
2.7
2.0
4.0
5.9
6.8
4.5
1.9
5.0
2.0
218
178
0
6
0
3
0
0
31
5.0
4.6
0.0
5.2
0.0
5.8
0.0
0.0
10.9
460
307
12
52
17
22
9
4
37
3.5
3.0
3.6
5.8
6.3
4.6
1.9
5.0
6.4
Vacant/Vac. Rate:
1, detached
1, attached
2 to 4 units
5- to 9-plex
10 to 19 units
20 to 49 units
50 + units
Mobile home
Sources: US Census Bureau, Maxfield Research Inc.
26
Condition of Housing Stock
Data provided by the Steele County Assessor’s Office gives an indication of the condition of
homes in Owatonna. The Assessor assigns one of 15 ratings ranging from Excellent to Poor to
each single-family home, duplex, and triplex. Table 14 shows the number of homes by rating
and the percent of the total homes assigned to each rating. The following are key points from
Table 14:
•
About 39% of homes are rated Very Good, Very Good +, or Excellent. Only about 1% of
homes are rated Average or lower. Only two homes are rated Fair, and none are rated
Fair/Poor or Poor.
•
Based on a windshield survey of homes in Owatonna, the overall housing stock is in good
condition. However, comparing a sample of homes from the windshield survey to their Assessor’s record indicates that many homes rated lower than Good/Very Good are visually in
need of at least some minor maintenance such as new shingles, windows, siding, or paint.
About 30% of homes are rated lower than Good/Very Good.
•
The most prevalent exterior maintenance problems were roofs in poor condition and siding in
need of new paint or replacement. It was common to see roofs that may not have been replaced in over 20 years, if ever.
TABLE 14
CONDITION OF SINGLE-FAMILY AND TOWNHOMES
CITY OF OWATONNA
2009
Condition*
Excellent
Very Good +
Very Good
Very Good Good/Very Good
Good +
Good
Good Average/Good
Average +
Average
Average Average/Fair
Fair
Fair/Poor
Poor
Number
1,418
397
1,348
1,060
1,464
937
733
346
231
81
41
20
21
2
0
0
Percent
17.51%
4.90%
16.64%
13.09%
18.08%
11.57%
9.05%
4.27%
2.85%
1.00%
0.51%
0.25%
0.26%
0.02%
0.00%
0.00%
Med. Yr. Built
2003
1996
1988
1965
1960
1955
1951
1950
1930
1916
1920
1898
1925
1923
-
Med. Sq. Ft.
2,117
2,173
1,969
1,794
1,740
1,642
1,596
1,573
1,448
1,459
1,552
1,187
1,513
704
-
Med. Value
$201,550
$184,900
$162,100
$140,400
$132,900
$123,100
$116,600
$107,650
$93,500
$87,400
$71,900
$67,750
$68,100
$27,000
-
Med. Val./Sq. Ft**
$93.67
$87.73
$84.44
$80.22
$77.65
$74.96
$72.20
$68.11
$63.44
$59.01
$55.37
$55.68
$47.35
$40.10
-
* Condition rating is determined by the Steele County Assessors' Office
** Median Value/Sq. Ft. does not equal median sq. ft. divided by median value because it is calculated from raw data
on each record.
Sources: Steele County Assessor's Office, Maxfield Research Inc.
27
•
The strongest determinant of a home’s condition is its age, with newer homes being in better
condition. Homes in Excellent condition are largely new construction concentrated in the
northern and eastern edges of Owatonna. Homes rated Average or lower are scattered
throughout older areas of Owatonna.
Residential Construction Trends in Steele County
We obtained data from the Owatonna Building and Inspection Office, Steele County Planning
Office, as well as from individual cities in the County on the number of building permits issued
for new housing units in the PMA. This data is presented in Table 15, which displays the total
number of building permits issued in Owatonna, as well as the remainder of the County for
single-family homes, townhomes/twinhomes, and multifamily units each year since 2000. The
following are key points about housing units added since 2000:
•
The City of Owatonna added 1,693 total housing units between 2000 and 2009, 66% of
which were single-family homes. The remainder of Steele County added 309 housing units,
78% of which were single-family homes. A higher proportion of the remainder of the County’s new housing units was single-family due to the more rural nature of the area.
Residential New Construction (Building Permits) in Owatonna
2000 to 2009
180
160
Number of Units
140
120
100
80
60
40
20
0
2000
2001
2002
Single-Family Homes
•
2003
2004
2005
Townhomes/Twinhomes
2006
2007
2008
2009
Multi-Family Homes
The largest percent increase in single-family unit permits in Owatonna (39%) occurred
between 2001 and 2002 as the economy recovered from a short recession and began to experience booming growth. Total single-family permits peaked in 2003 at 161. Except for a
slight increase between 2005 and 2006, single-family permits declined every year between
28
2003 and 2009. The decline accelerated as the recession began, with permits dropping 42%
between 2006 and 2007, 54% between 2007 and 2008, and 59% between 2008 and 2009.
TABLE 15
RESIDENTIAL CONSTRUCTION
OWATONNA & THE REMAINDER OF STEELE COUNTY
2000 to 2009
Owatonna
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Total
2000-2009
SingleFamily
Homes
135
116
161
171
161
123
129
75
34
14
1,119
SingleFamily
Homes
240
Townhomes/
Twinhomes
MultiFamily
Homes
Total
Housing
Units
12
20
26
22
22
25
28
15
2
5
177
52
68
18
0
92
0
138
3
26
0
397
199
204
205
193
275
148
295
93
62
19
1,693
MultiTownhomes/
Family
Twinhomes
Homes
36
33
Total
Housing
Units
309
Sources: City of Owatonna; Steele County Planning Department;
various city clerks; Maxfield Research Inc.
•
Townhomes/twinhomes have experienced a similar decline in permit activity in Owatonna.
After peaking at 28 permits in 2006, permits declined 46% between 2006 and 2007, and then
87% between 2007 and 2008. Total permits issued increased by 3 to a total of 5 between
2008 and 2009, but activity is still down 82% from the decade’s peak.
•
Senior housing comprised the majority of multi-family housing construction during the last
decade. Whispering Oaks in Ellendale, opened in 2006, makes up 21 of the 33 multi-family
units added in the remainder of the County. Of the 397 multi-family units added in Owatonna, 285 (72%) were in senior housing developments. Since 2006, all of the multi-family
units added in Owatonna have been in four senior developments. Senior housing has performed well in a poor real estate market because the population of the PMA is aging and
need rather than overall economic conditions tends to drive demand for senior housing.
29
FOR-SALE MARKET ANALYSIS
Introduction
Maxfield Research Inc. analyzed the for-sale housing market by collecting data on: 1) singlefamily home sales in the City of Owatonna and the remainder of Steele County; 2) the residential
lot supply in the Owatonna area; 3) pending for-sale developments in the Owatonna area; and 4)
interviewing local real estate professionals, civic leaders and other community members directly
involved in the local housing market to solicit their impressions of existing market conditions
and trends.
Home Resales
Table 16 displays data on home sales in the City of Owatonna and the remainder of Steele
County for the years 2000 through 2009. Table 17 shows the number of traditional sales relative
to bank-owned sales in 2000 and between 2004 and 2009. The Steele County Assessor’s Office
provided the data. The table shows the annual number of sales, average sales price, median sales
price, and percentage increase in average sales price.
The following are key points from the table:
•
The housing market was at its peak in Owatonna between 2005 and 2007. The number of
homes sold declined from its high in 2005 of 559 to 335 by 2007, but prices continued to
rise, reaching the highest average sales price of $174,240 in 2007. The average sales price in
2007 was 53% higher than in 2000, consistent with the real estate boom that was occurring
nationwide.
•
The remainder of Steele County experienced a similar real estate boom, with average sales
prices increasing 55% between 2000 and the peak in 2006. Sales volume peaked in 2004 at
143 homes.
•
Owatonna accounted for 79.6% of all home sales in Steele County between 2000 and 2009.
In 2009, 77.9% of sales were in Owatonna.
•
The housing market declined between 2007 and 2009. The average sales price in Owatonna
decreased 9% and the median sales price decreased 5%, much lower than in large metropolitan areas. Although Owatonna experienced rapid growth, the values of its homes did not increase at the same rate as those in larger metropolitan areas. However, the total number of
sales dropped about 35% in Owatonna.
•
Sales of bank owned properties has put downward pressure on prices of non-bank owned
properties and has made it more difficult to sell them. There were only 13 bank owned sales
in 2000, but 111 in 2009 as a result of high numbers of foreclosures. According to realtors,
most foreclosures now are a result of unemployment, not sub-prime loans. Therefore, foreclosures and bank owned sales are expected to continue until unemployment decreases.
30
TABLE 16
HOME RESALE TRENDS*
PRIMARY MARKET AREA
2000 to 2009
Owatonna
Steele County Total
Year
No.
Sold**
Avg. Sales
Price
Avg. %
Change
Median
Price
No.
Sold**
Avg. Sales
Price
Avg. %
Change
Median
Price
No.
Sold**
Avg. Sales
Price
Avg. %
Change
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
382
465
432
546
549
556
391
335
222
219
$113,639
$122,635
$135,516
$153,467
$156,958
$169,942
$169,750
$174,240
$168,100
$158,820
7.9%
10.5%
13.2%
2.3%
8.3%
-0.1%
2.6%
-3.5%
-5.5%
$108,200
$116,000
$126,000
$143,250
$147,000
$155,000
$160,000
$155,000
$153,750
$147,500
109
118
108
136
143
131
103
73
65
62
$98,099
$114,126
$113,961
$131,629
$140,015
$136,454
$152,520
$146,200
$145,270
$141,520
16.3%
-0.1%
15.5%
6.4%
-2.5%
11.8%
-4.1%
-0.6%
-2.6%
$89,500
$99,800
$109,600
$122,850
$129,900
$119,900
$142,800
$127,500
$141,000
$125,250
491
583
540
682
692
687
494
408
287
281
$110,189
$120,913
$131,205
$149,112
$153,457
$163,556
$166,158
$169,223
$162,929
$155,003
9.7%
8.5%
13.6%
2.9%
6.6%
1.6%
1.8%
-3.7%
-4.9%
00 - '07 Change
53%
43%
49%
42%
54%
07 - '09 Change
-9%
-5%
-3%
-2%
-8%
* Does not include bank-owned sales (e.g., foreclosures, short sales, liquidation, deed in-lieu of foreclosure)
** Includes single-family homes and duplex and triplex units.
Sources: Steele County Assessor, Maxfield Research Inc.
31
TABLE 17
TRADITIONAL AND BANK-OWNED HOME SALES
PRIMARY MARKET AREA
2000 and 2004 to 2009
---- Steele County ---Bank
Percent
Owned
Total
Bank Owned
Sales*
Sales
Sales
Year
Traditional
Sales
2000
491
13
504
2.6%
2004
2005
2006
2007
2008
2009
692
687
494
408
287
281
18
29
30
45
87
111
710
716
524
453
374
392
2.5%
4.1%
5.7%
9.9%
23.3%
28.3%
* Bank owned sales include foreclosures, short sales, liquidations, and
deeds in-lieu of foreclosure.
Sources: Steele County Assessor's Office, Maxfield Research Inc.
•
Home resale data for Owatonna from 2009 through March 2010 was reviewed from the
Northstar Multiple Listing Service (241 total sales were reported in Owatonna). The data
revealed that the average resale price of single-family homes was $157,730 for traditional
sales and $94,800 for bank-owned sales and foreclosures. The bank-owned/foreclosure sales
tended to be smaller, older homes in comparison to traditional sales. The average year built
and finished square feet averaged 1951 and 1,687, respectively, for bank-owned/foreclosure
sales and 1970 and 2,163 square feet for traditional sales.
Current Supply of Homes on the Market
Table 18 shows the number of homes currently listed for sale in Owatonna and the remainder of
Steele County (including the Cities of Blooming Prairie, Ellendale, and Medford), distributed
into six price ranges. The Southeast Minnesota Association of Realtors MLS provided the data.
Table 19 shows the listing prices by number of bedrooms. Key findings from our assessment of
the actively listed homes in the PMA are:
•
A total of 269 homes were listed with the regional Multiple Listing Service in Steele County
in March 2010. In Owatonna there were 218 and in the remainder of the County there were
51. The median listing price for the PMA was $136,900 and the average price was $165,700
due to a large number of homes priced over $200,000.
•
Listing prices suggest a continuing deterioration of the Owatonna housing market and a
possible stabilization of the market in the remainder of the County. The median listing price
in Owatonna of $137,200 is about 7% lower than the median sale price of $147,500 in 2009,
and it is unlikely that the median sale price will be equal to the median listing price. The
32
median listing price of $135,000 in the remainder of the County is about 8% higher than the
median sale price of $125,250 in 2009. Although the volume of sales may be low, it is possible that the median sale price will be close to that of 2009.
•
Because of decreasing real estate values, 56.5% of homes are now listed under $150,000.
The minimum income needed for a household that spent 3.0 times its annual income on housing to afford a home listed for $150,000 is $50,000. About 55% of all household in Steele
County earn above $50,000, so the majority of households could afford a typical home for
sale in Steele County.
•
Three-bedroom homes, which could serve the needs of many family households, are even
more affordable. About 42% of homes for sale in Steele County in March 2010 had threebedrooms. With a median list price of $129,900, a household would need an income of
$43,300 to afford a typical three-bedroom home if it spent 3.0 times its annual income.
About 63% of all Steele County households have an income of at least $43,300.
•
About a quarter of homes for sale in both Owatonna and the remainder of Steele County are
listed for $200,000 or over. These homes are likely to have four or five bedrooms and would
require an annual income at least $66,700 to afford a $200,000 home. About 39% of households have incomes of at least $66,700. Because many homes in the $200,000 and over category are listed for far more than $200,000, these homes would be unaffordable to most
households in PMA.
TABLE 18
SINGLE-FAMILY HOMES CURRENTLY LISTED FOR-SALE
PRIMARY MARKET AREA
March 2010
Owatonna
Remainder of PMA*
Price Range
No.
Pct.
<$100,000
$100,000 to $124,999
$125,000 to $149,999
$150,000 to $174,999
$175,000 to $199,999
$200,000 and Over
41
44
37
28
14
54
218
18.8%
20.2%
17.0%
12.8%
6.4%
24.8%
100%
Min.
Max.
Med.
Avg.
$27,999
$598,500
$137,200
$168,743
Total PMA
Price Range
No.
Pct.
<$100,000
$100,000 to $124,999
$125,000 to $149,999
$150,000 to $174,999
$175,000 to $199,999
$200,000 and Over
16
8
6
7
1
13
51
31.4%
15.7%
11.8%
13.7%
2.0%
25.5%
100%
Min.
Max.
Med.
Avg.
$31,900
$485,500
$135,000
$152,961
Price Range
No.
Pct.
<$100,000
$100,000 to $124,999
$125,000 to $149,999
$150,000 to $174,999
$175,000 to $199,999
$200,000 and Over
57
52
43
35
15
67
269
21.2%
19.3%
16.0%
13.0%
5.6%
24.9%
100%
Min.
Max.
Med.
Avg.
$31,900
$598,500
$136,900
$165,751
* Includes the Cities of Blooming Prairie, Ellendale, and Medford
Sources: Southeast Minnesota Association of Realtors MLS, Maxfield Research Inc.
33
•
The median sale price is generally a more accurate indicator of housing values in a community than the average sale price. Average sale prices can be easily skewed by a few very
high-priced or low-priced home sales in any given year, whereas the median sale price better
represents the pricing of a majority of homes in a given market.
TABLE 19
BEDROOMS AND LISTING PRICE OF SINGLE-FAMILY HOMES
PRIMARY MARKET AREA
March 2010
Bedrooms
1
2
3
4
5
6
Total
No.
5
35
94
68
15
1
218
Pct.
2.3%
16.1%
43.1%
31.2%
6.9%
0.5%
Owatonna
Med. Price
Avg. Price
$79,900
$100,900
$110,000
$115,343
$129,700
$145,595
$179,900
$210,901
$315,000
$272,893
$123,900
$123,900
Bedrooms
1
2
3
4
5
6
Total
No.
0
14
18
13
4
2
51
Pct.
27.5%
35.3%
25.5%
7.8%
3.9%
Remainder of PMA
Med. Price
Avg. Price
$107,950
$116,414
$147,000
$151,533
$124,900
$142,000
$209,900
$208,175
$382,450
$382,450
Min. Price
$31,900
$44,900
$54,900
$63,000
$279,900
Max. Price
$214,900
$326,000
$289,900
$349,900
$485,000
Bedrooms
1
2
3
4
5
6
Total
No.
5
49
112
81
19
3
269
Pct.
1.9%
18.2%
41.6%
30.1%
7.1%
1.1%
Total PMA
Med. Price
Avg. Price
$79,900
$100,900
$110,000
$115,649
$129,900
$146,549
$172,000
$199,843
$284,900
$259,268
$279,900
$296,267
Min. Price
$39,900
$38,760
$27,999
$54,900
$47,500
$123,900
Max. Price
$214,900
$214,900
$375,000
$598,500
$399,900
$485,000
Min. Price
$39,900
$38,760
$27,999
$64,900
$47,500
$123,900
Max. Price
$214,900
$229,900
$375,000
$598,500
$399,900
$123,900
Sources: Southeast MN MLS; Maxfield Research Inc.
Actively Marketing and Pending For-Sale Housing Developments
Maxfield Research Inc. interviewed City administrators and developers/builders of single-family
subdivisions and for-sale multi-family developments that are currently being marketed or are
pending in the PMA. We identified 21 actively marketing subdivisions in four communities
(Owatonna, Blooming Prairie, Medford, and Ellendale) and two pending subdivisions in Owatonna. As of December 31, 2009, according to the Housing and Redevelopment Agency, there
34
were a total of 949 vacant single-family lots and 238 townhome lots platted, some with sewer
and some without. Many of these are in older neighborhoods, are individual lots, or are in areas
without plans sufficiently advanced to consider pending subdivisions. This study focuses only
on lots in subdivisions currently being marketed or that are pending.
Table 20 shows information regarding single-family subdivisions and Table 21 shows information regarding townhome and patio home subdivisions. A map showing the locations of the
subdivisions follows the tables.
The following are key points about these subdivisions:
•
Thirteen of the 21 actively marketing subdivisions are in Owatonna. Four are in Blooming
Prairie, two are Ellendale, and two are in Medford. Among the subdivisions there are 404
single-family lots available, 81% of which are in Owatonna. Available multi-family lots will
hold 193 units, 69% of which are in Owatonna, if developed as planned.
•
Very little building is occurring in any of the actively marketing subdivisions. Before the
recession developers were adding about 130 single-family units per year in Owatonna. The
current supply of 328 would have lasted about two and a half years at that pace, but will last
much longer at the current rate of building.
•
All of the subdivisions pending at the time of the February 2006 study and three additional
subdivisions are now actively marketing. Due to the recession, only two new subdivision
have been planned since the previous study. Highlands, planned by Welker Custom Homes
Inc., is adjacent to Maple Creek Highlands to the West and will feature 16 single-family
homes and 10 townhome units in five structures. The developer will not seek final approval
until the economy recovers, and has not yet set price points. Riverwood Parks, planned by
the owner of Morehouse Place, is platted for six quad-homes and two condominium units
with an undetermined number of units. The developer does not plan to build for at least two
years. Two existing subdivisions also have pending phases. Majestic Oaks has an additional
102 single-family homes planned whose lots have not yet received infrastructure and Maple
Creek Estates has an additional 15 lots. Developers are not actively marketing these lots.
•
Actively marketing subdivisions predominantly target households seeking move-up housing.
Of all the available single-family lots in Owatonna, 285, or 87%, are in subdivisions with at
least some single-family homes priced over $250,000, and 139, or 42%, are in subdivisions
with no single-family homes priced below $250,000.
•
Emerald Acres, Linnhaven, Sherwood Heights and Skyview Estates are market rate developments targeted to entry-level buyers. Base home prices are under $200,000 for most
homes in these subdivisions. Autumn Hills is a project by the Owatonna HRA, Greater Minnesota Housing Fund, and Southwest Minnesota Housing Partnership to develop owneroccupied homes affordable to households earning 80% or less of the area median income.
Four units are market rate and the others are subsidized. Three affordable units and one market rate unit have been built so far, though Habitat for Humanity built the market rate unit, so
the household that lives in it ultimately purchased it for a lower-than-market-rate price.
35
TABLE 20
ACTIVE SINGLE-FAMILY SUBDIVISIONS
PRIMARY MARKET AREA
March 2010
Subdivision Name
Lot/Unit Inventory
Approved
Available
Base Lot Price /
Average Price
Base Home Price
(incl. lot price)
$225,000 - $500,000
Upper income, professionals, families.
$300,000 - $400,000
Upper income professionals.
Buyer Profile/Comments
Owatonna
Country Creek 5th
71
59
Country Creek 6th
24
17
$29,900 - $36,900
$36,350
N/A
Country Creek 3rd & 4th
62
24
N/A
$235,000 - $305,000
Move-up housing for professionals.
Emerald Acres # 3
50
26
$26,900 - $31,900
$28,700
$140,000 - $300,000
Entry-level buyers for low-end, move-ups for
$240,000+.
Linnhaven 2nd & 3rd Add.
32
6
$150,000 - $200,000
Starter homes, younger families.
Majestic Oaks
48
42
$26,000 - $34,000
$30,000
$39,900 - $74,900
$49,500
North Bluff Estates
135
57
$260,000 - $700,000
North Country #2 & #3
65
26
Sherwood Heights #5
27
8
Maple Creek Highlands
52
14
Skyview Estates
37
29
Autumn Hills
15
11
$38,900 - $72,900
$45,700
$29,900 - $74,900
$36,700
$25,950 - $55,950
$34,950
$25,900 - $79,900
$44,250
$31,900 - $38,900
$35,600
$25,000 - $40,000
Maple Creek Estates
40
9
Total - Owatonna
658
328
$31,500 - $33,500
$32,500
$300,000+
$190,000 - $600,000
$184,000 - $300,000
$250,000 - $350,000
$170,000 - $350,000
$119,000 - $132,000
($136,000 - $154,000)
$300,000 - $600,000
SF lots. 4-phases. Total development planned
for 150 units; 48 currently platted with
infrastructure.
Range from move-up to executive housing.
Some building occurring.
Move-up and upper-end homes with families and
some empty nesters.
Entry-level homes.
Move-up housing. Some construction currently
occurring.
Under construction. Streets remain unpaved.
City-owned lots. 4 for market rate, 11 for
affordable at 80% AMI.
Upper-income buyers. 28-unit phase 1
complete. 12 lots with infrastructure in phase 2
with 3 built. 15 add. lots planned.
36
TABLE 20 (Continued)
ACTIVE SINGLE-FAMILY SUBDIVISIONS
PRIMARY MARKET AREA
March 2010
Subdivision Name
Lot/Unit Inventory
Approved
Available
Base Lot Price /
Average Price
Base Home Price
(incl. lot price)
Blooming Prairie
Peterson 2nd Addition
11
11
$30,000 - $40,000
$200,000+
Stalled indefinitely due to the recession.
Bray Addition
18
18
N/A
N/A
Stalled indefinitely due to the recession.
Haberman Addition
7
5
N/A
$250,000 - $450,000
High-end single-family homes.
Prairie 3rd Addition
9
7
$45,000
$300,000
High-end single-family homes.
Ellendale
Countryview Estates
30
24
$22,000 - $27,000
$25,300
$150,000+
Move-up single-family homes. No construction
since 2006.
Edgewood Heights
8
7
$24,000 - $26,000
$25,600
$150,000+
Move-up single-family homes. No construction
since 2006.
Medford
Scenic Heights
12
4
$29,700 - $42,900
$300,000-$400,000
Total - Rem. of PMA
95
76
Single-family, twinhomes, & patio homes.
Source: Maxfield Research Inc.
37
TABLE 21
ACTIVE TOWNHOME AND PATIO HOME SUBDIVISIONS
PRIMARY MARKET AREA
March 2010
Subdivision Name
Active Subdivisions
Owatonna
Eden Valley 2nd Addition
-- Lot/Unit Inventory -Approved
Available
Base Lot
Price
Base Home Price
(incl. lot price)
$32,000-$34,000
$28,000
$26,900
$175,000 - $185,000
$175,000
$165,000 - $195,000
Middle income, starter homes. 112 total units. 64
in four-plexes, 48 in twinhomes.
Singles, working professionals and seniors
Upper-end SF and TH lots. Mostly target upper
management professionals, doctors, etc. TH's
along the pond. 4-phases
Upper-end townhomes.
112
92
Emerald Acres No. 3
17
12
Majestic Oaks
22
22
$20,000-$30,000
$25,000
$250,000
North Bluff Estates
36
24
$29,900
$200,000 - $250,000
Country Creek 6th Addition
12
8
N/A
N/A
Maple Creek Highlands
12
8
$20,000-$25,000
$175,000-$200,000
Skyview Estates
19
15
$33,900-$39,900
$26,900
$220,000 - $240,000
Blooming Prairie
Prairie 3rd Addition
14
14
$20,000
$150,000
High-end townhomes. 14 homes on 7 lots.
Medford
Scenic Heights
24
22
$29,700-$42,900
$200,000
16 twinhome units on 8 lots and 8 patio home
units on 8 lots. One twinhome (2 units)
constructed.
Riverview Addition
24
24
N/A
N/A
Platted for 12 lots with 24 townhomes. Stalled
indefinitely due to recession
Total - Owatonna
Total - Rem. of pma
230
62
181
60
Higher-end move-up townhomes..
Construction ongoing.
Under construction. Streets remain unpaved.
38
Active Housing Subdivisions in Owatonna
•
In Owatonna, towhomes in Eden Valley 2nd Addition, Emerald Acres, Maple Creek Highlands, and Skyview Estates would attract entry-level buyers. Most are priced below
$200,000. Majestic Oaks and Country Creek 6th Addition are targeted at higher-income
households, with prices going as high as $250,000.
•
Before the recession an average of 18 townhomes for a total of 36 units were developed each
year in Owatonna. The current supply of 133 units would have lasted almost four years at
that pace. With townhome construction almost completely stopped, we do not believe any
additional townhome lots will be platted until after the housing market recovers.
•
Eighty percent of available single-family lots outside of Owatonna remain vacant. Only four
homes have been developed in Blooming Prairie’s new subdivisions. No development has
39
occurred in the Bray Addition or the Peterson 2nd Addition. Single-family homes in these
subdivisions are planned with prices over $200,000. In Ellendale, only six out of 24 units are
built in Countryview Estates and one out of seven are built in Edgewood Heights. Scenic
Heights in Medford has been the most successful, with only four out of 12 single-family lots
remaining vacant.
•
Almost no multi-family development has occurred recently outside of Owatonna. All of the
lots remain available at Prairie 3rd Addition in Blooming Prairie and Riverview Addition in
Medford. Scenic Heights in Medford still has seven townhome lots and eight patio home lots
available, which will support 22 additional units.
•
All of the single-family and multi-family subdivisions in the remainder of Steele County
entered the market in 2004 or later. The housing market in the remainder of the County began to soften between 2006 and 2007, and as a result all of the subdivisions have struggled to
attract residents.
Mobile Homes
Maxfield Research Inc. investigated the availability of mobile homes in mobile home parks in
Steele County. Traditionally, research shows that mobile homes usually serve as an alternative
to permanent housing, and during times of housing scarcity, the number of homes usually rises.
Table 22 displays information pertaining to the identified traditional mobile home parks in the
County. Our research revealed that two traditional mobile home parks exist in the City of
Owatonna and one exists in the City of Medford. Currently, Colonial Manor houses 216 mobile
homes, Skyline Gardens contains 97 homes, and Lazy U Mobile Park has 165 homes, for a total
of 478 pads. As of March 2010, we identified a total of 27 vacant pads at all of the properties,
for a vacancy rate of 5.6%. However, 20 of the 27 vacant pads were at Colonial Manor. The
following paragraphs summarize the mobile home parks in the County.
Colonial Manor is located at 24th Avenue Northwest in Owatonna and contains a total of 216
pads. All of the pads are rented for $250 per month to residents with owned homes (Colonial
Manor does not rent any homes). Tenants pay all utilities (water/sewer, garbage, electric). As of
March 2010, 20 pads were vacant. The primary reason is not lack of demand, but that potential
residents have a very difficult time obtaining financing for a new mobile home. Most of the
homes are occupied by working families and seniors. The majority of the tenants work in
Owatonna.
Skyline Gardens is located at 2126 3rd Avenue Northwest in Owatonna and has a total of 97
pads. As of March 2010, only four pads were vacant. Skyline Gardens offers financing to
people purchasing mobile homes in their park. This has enabled Skyline Gardens to remain
almost full despite the inability of potential residents to obtain financing elsewhere. Pads are
rented to residents with owned homes ranging from $250 to $260 per month. Tenant pays all
utilities (garbage pick-up included). The majority of the residents are working families with very
only a few seniors.
40
Lazy U Mobile Park is located at 4100 66th Street Northwest in Medford and has a total of 165
pads. As of March 2010 there were only three vacant pads. All of the pads are rented for $275
per month to residents with owned homes. The rent includes water, sewer, and garbage, while
the tenants pay the electricity. Most of the units are three-bedrooms, with a few one- and twobedrooms. There is a wide mix of tenants, including families and a few snowbirds. Most of the
tenants work in Medford or Owatonna.
TABLE 22
MOBILE HOME PARKS
PRIMARY MARKET AREA
March 2010
Project Name/
Address
Total
Pads
Vacant
Comments
Rent Range
Owatonna
Colonial Manor
24th Avenue NW
216
20
$250
(pad only)
Skyline Gardens
2126 3rd Ave. NW
97
4
$250 - $260
(pad only)
All owned by residents, no rentals owned by park owner.
Garbage pick-up included in rent. Management requires
upkeep of units. Wide range of residents. Difficulty getting
lending to purchase mobile homes has caused recent
vacancies.
All owned by residents. Garbage pick-up included in rent.
Profile: mostly families, not many seniors, most work in
Owatonna. Skyline Gardens provides financing to owners to
purchase homes.
Medford
Lazy U Mobile Park
4100 66th St. NW
165
3
$275
(pad only)
Only owner-occupied homes, no renters allowed in the park;
water/sewer/garbage are included in rent. Profile: wide range
of people, mostly families and a few snow birds.
For-Sale Interviews Summary
Maxfield Research Inc. interviewed area real estate agents, local developers, builders, and other
persons familiar with Owatonna’s owner-occupied market to solicit their impressions of the
current for-sale housing market in the community. The following are key points from those
interviews.
•
Almost every person interviewed said that the housing market in Owatonna and Steele
County is extremely soft. The average length of time to sell a home has increased and the
average price for homes has decreased.
•
Higher than normal unemployment is greatly affecting the housing market. Layoffs are
widespread at local industries and until employment improves, the housing market will stay
soft.
41
•
Because of the poor resale housing market, activity is down because homeowners who may
have considered moving up in the past are instead staying in their homes to avoid equity loss.
In addition, fewer renters are purchasing homes, despite decreased home prices and the first
time homebuyer tax credit available through the American Recovery and Reinvestment Act
of 2009 because of uncertainty in their employment. This is impacting home resales and the
sales of new housing. Sales could slow further when the first time homebuyer credit is no
longer available beginning in May 2010.
•
The inventory of homes on the market is very high. With a stable housing market, Owatonna
should have about 150 homes listed for sale but there have been over 200 homes listed for
sale for a long time. This large supply of homes for sale has put downward pressure on prices.
•
Foreclosures have greatly increased in Owatonna. At first, most of the foreclosures were
among people who simply couldn’t make their mortgage payments but increasingly there are
homeowners who are going into foreclosure because they owe much more money than the
home is worth.
•
Construction of new homes has fallen dramatically over the past few years. At the current
pace of construction, the lot supply in Owatonna will last several years at least.
42
RENTAL MARKET ANALYSIS
Introduction
Maxfield Research Inc. identified and surveyed rental properties of twelve or more units in
Owatonna. In addition, interviews were conducted with real estate agents, rental housing management firms, private owner landlords, and others in the community familiar with Owatonna’s
rental housing stock.
For purposes of analysis, we have classified rental properties into two groups: general occupancy and senior (age restricted). All senior properties are included in the Senior Rental Analysis. The general occupancy rental properties are divided into three groups: market rate (those
without income restrictions), affordable, (those receiving tax credits in order to keep rents
affordable), and subsidized (those with income restrictions).
Although it was beyond the scope of the study to inventory and aggregate the number of scattered single-family homes that are rented in the PMA, Maxfield Research Inc. did interview
some private homeowners on the properties that they manage to get a rough gauge of the singlefamily home, duplex, and triplex rental market. We are well aware of the role these homes play
in the general occupancy rental housing market. Rented single-family homes, duplexes, triplexes, and general occupancy market rate apartments compete for some of the same target
markets. Results of the survey can be found in the Rental Market Interview Summary.
General-Occupancy Rental Properties
Our research of the PMA’s general occupancy rental market included a survey of 33 larger
apartment properties in March 2010. These properties represent a combined total of 877 units,
including 456 market rate units, 163 affordable units, and 258 subsidized units. At the time of
our survey, 25 market rate units, five affordable units, and ten subsidized units were vacant,
resulting in an overall vacancy rate of 4.6%. Our previous study, completed in February 2006,
found 35 vacancies among market rate units, eight in affordable units, and eleven in subsidized
properties, for an overall vacancy rate of 6.3%.
The overall vacancy rate of 4.6% is near the industry standard of 5% vacancy for a stabilized
rental market, which promotes competitive rates, ensures adequate choice, and allows for unit
turnover. The market indicates a stable supply of rental housing in the community.
Tables 23, 24, and 25 summarize information on general occupancy properties surveyed. Table
23 shows information on market rate properties, Table 24 shows information on affordable
properties, and Table 25 shows information on subsidized properties. Photographs accompany
each section of text and a map follows the final photographs. The following are key points from
our survey of these developments.
Market Rate Properties
•
There are 456 units in the 19 rate developments surveyed. A total of 25 vacant units were
identified, for a vacancy rate of 5.5%. Vacancies were scattered among many buildings in
43
Owatonna, but buildings with vacancy rates over 5% tended to be older. This vacancy rate is
somewhat lower than the rate of 6.3% when surveyed in February 2006, which may reflect a
higher demand for rental housing. Many households can no longer qualify to purchase a
home and turnover is lower because people are staying in their apartments rather than upgrading due to uncertain job prospects.
•
Of all the buildings, 42% had vacancy rates over 5%, but those buildings only accounted for
28% of all market rate units and all except one were more than 30 years old.
•
No new market rate rental buildings have been added to the city since the previous survey as
a result of the recession and insufficient demand. Gateway Apartments, built in 2004, is the
newest market rate general occupancy building. It has the highest rents in Owatonna, at $825
per month for one-bedroom units, $985 to $1,010 per month for two-bedroom units, and
$1,150 per month for three-bedroom units. Currently, there are three vacancies in the building. Although monthly rents at Gateway are about 60% higher than the average in Owatonna, the added features and amenities, such as underground parking, in-unit washer and
dryers, and bay windows warrant these higher rents.
•
There have been only three market rate general occupancy developments built since 1980;
and only two built since 2000. Many of the older units, which are concentrated along 21st
and 22nd Street NW and on or near State Avenue appear in need of renovations and updates,
and it is likely that even well-maintained older units have outdated interiors.
•
The majority of market rate units are two-bedroom (260 units, or about 57%), followed by
one-bedroom (160 units, or 35%), and then studios (20 units, or 4.4%) and three-bedroom
units (16 units, or 3.5%). There were only four properties that offered studio units and four
properties that offered three-bedroom units.
•
The monthly rents for studios ranged from $250 to $565, and averaged $390. One-bedroom
monthly rents ranged from $400 to $825, and averaged $510. Two-bedroom monthly rents
ranged from $530 to $1,010 and averaged about $650. Three-bedroom monthly rents ranged
from $620 to $1,150, and averaged about $860. It should be noted that we were unable to
obtain current rents for Topaz Holdings.
44
TABLE 23
MARKET RATE GENERAL OCCUPANCY RENTAL HOUSING
CITY OF OWATONNA
March 2010
Year
Built
Total
Units
Vacant
Gateway Apartments
325 Hoffman Drive
Owatonna
2004
60
3
Park Village Apts I & II
114 22nd Street NW/
2250 N. Cedar Ave.
Owatonna
2001/
2002
36
Subland Apartments
140 West Pearl
Owatonna
1999
Crestwood Apartments
216 12th St. NE
Owatonna
Summit Manor
166 22nd Street NW
Owatonna
Rent Range
Unit Size
23 - 1BR
28 - 2BR
9 - 3BR
$825
$985 - $1,010
$1,150
721 - 768
884 - 1,098
1,105 - 1,325
0
4 - 1BR
32 - 2BR
$525 - $625
$625 - $725
15
3
14 - 1BR
1 - 2BR
$435
$610
700
N/A
3-story building. Features: off-street parking, coin laundry, some
balconies. Tenant pays heat and electric.
1979
11
2
1978
18
0
2
7
2
1
17
$595
$725
$850
$500
$625 - $650
740
836
932
650
828
One 2 1/2-story building. Features: off-street parking, coin-op laundry.
Rent includes all utilities. Profile: Mostly married w/children, 2
singles, 1 couple, rest single-parents.
Features: detached garage, wall-unit A/C, coin-op laundry, dishwasher,
balcony/patio. Tenant pays all utilities. Profile: Half 50 and over, 2
couples with children.
Hilltop Manor
1208 NE 3rd Avenue
Owatonna
1978
12
0
1 - 1BR
11 - 2BR
$500
$675
700
1,000
3-story building, balcony. Features: detached garage for $47/mo., coinlaundry, off-street parking. Tenant pays electric. Profile: about half
couples, half singles.
Apache Apartments
236 12th St. NE
Owatonna
1976
11
1
2 - 1BR
7 - 2BR
2 - 3BR
$575
$675
$775
740
836
932
One 2-story building. Features: off-street parking, coin-op laundry,
some walk-in showers. Rent includes all utilities. Profile: mix of
singles and couples, some kids and seniors.
Northwest Manor
218 21st Street NW
Owatonna
1975
24
0
9 - 1BR
15 - 2BR
$450
$550 - $600
650
750 - 800
Features: four 2BR units have balconies, 16 detached garages at
$45/mo. Gas and heat included in rent. Profile: wide range, mostly
single, 4 seniors.
Project Name/ Address
Unit Mix
-
1BR
2BR
3BR
1BR
2BR
700
928 - 1,028
Comments
3-story building. Features: UG parking (included), community room,
exercise room, game room, in-unit W/D, storage, walk-in closets,
patio/balcony, bay windows, cable included. Tenant pays gas/electric.
Profile: mix of singles, couples, and families.
Features: detached garage, automatic garage door opener, dishwasher,
balcony (2nd & 3rd floor only), storage in unit, coin-op laundry in
building, laundry hookups in units (new building only), garbage
disposal. Tenant pays electric. Profile: wide range, including some
seniors.
45
CITY OF OWATONNA
March 2010
Year
Built
Total
Units
Vacant
Clifton Apartments
1927-2019 Hartle Ave
Owatonna
1974
48
2
Cedar Hills
215 22nd Street NW
Owatonna
1970s
42
Academy Apartments
706/714 Academy St.
Owatonna
1968
Schuh Apartments
445 State Avenue
Owatonna
Rent Range
Unit Size
Comments
12 - 1BR
36 - 2BR
$545
$625
700
1,000
Two 3-story 18-unit and one 12-unit building. Features: coin-op
laundry, some balconies, off-street parking, 38 detached garages at
$40/mo. Tenant pays electric. Profile: mostly single workers, families,
few seniors.
0
6 - EFF
12 - 1BR
24 - 2BR
$250
$400 - $450
$550 - $600
N/A
N/A
N/A
3-story building. Features: laundry on each floor, storage rooms, offstreet parking, some balconies. Tenant pays electricity. Profile:
primarily younger singles. Half month free rent on six month lease.
22
0
12 - 1BR
10 - 2BR
$595
$676
600
750
Two 11-unit buildings. Features: detached garages-$40/mo., coin-op
laundry, cats allowed w/deposit, picnic area, storage lockers. Renter
pays gas and electric. Profile: wide range of residents, few seniors.
Waitlist of 9 households.
1965
14
5
2 - EFF
4 - 1BR
8 - 2BR
$555 - $565
$650
$750
600 - 700
700 - 800
1,000
2-story building. Features: off-street parking (23 spots), coin-laundry,
a/c unit (charges extra). All utilities included. Profile: mixture of
residents but primarily singles.
MontClair Apartments
205-213 13th St. SW
Owatonna
1950s
21
0
21 - 1BR
$485
400
Three seven-unit bldgs. Features: no garages, wall-unit A/C, coin-op
laundry, outdoor patio. Electric not included in rent. Profile: Avg. age
55 years, mostly singles, from young adults to seniors, no children.
West Hills Estates
421-431 State Avenue
Owatonna
1932
22
3
8 - EFF
10 - 1BR
4 - 2BR
$400 - $425
$425 - $475
$625 - $650
312 - 319
436 - 637
572 - 671
Two 3-level buildings (11 units each); Residents pay electric. Features:
3 detached garages for $50/mo. (all occupied); off-street parking, wallunit A/C; some fireplaces; coin-op laundry; Profile: Mostly singles,
some families.
Cedar Ridge
107 NW 22nd Street
Owatonna
N/A
18
2
3 - 1BR
15 - 2BR
$520
$570 - $585
N/A
N/A
Unit Mix
3-story building. Features: balcony, off-street parking, coin-laundry,
detached garage for $40/mo. Tenant pays electricity.
46
CITY OF OWATONNA
March 2010
Year
Built
Total
Units
Vacant
Rent Range
Unit Size
Topaz Holdings*
112 NW 21st Street
Owatonna
N/A
18
2
3 - 1BR
15 - 2BR
N/A
N/A
2-story building, balcony
Westgate Apartments
585 Adams Avenue
Owatonna
N/A
23
0
11 - 1BR
9 - 2BR
3 - 3BR
$475
$530
$620 - $705
N/A
N/A
N/A
3-story building. Features: detached garages for $40/mo., off-street
parking, wall A/C, coin laundry. Tenant pays all utilities except water
& cable. Profile: single-parents, families, couples. Has had chronic
problems with vacanies; full now b/c offered one mo. free rent with one
yr. lease.
North View Estates
250 21st Street NW
Owatonna
N/A
18
1
18 - 2BR
$550 - $600
N/A
2-story building. Features: balcony, detached garage (included),
laundry. Utilities vary by resident. Profile: mostly middle-aged singles.
Modern Air Apartments
811 E. School Street
Owatonna
1950
23
1
4 - EFF
16 - 1BR
3 - 2BR
$395 - $400
$500 - $535
$650 - $745
192 - 320
640
750 - 900
456
25
5.5%
Totals
Unit Mix
Unit Mix =
20
160
260
16
Comments
Two 1-story buildings. Features: off-street parking, detached garages
included with some units, coin-op laundry, 1/2 acre lawn. All utilities
included. Profile: all single, 2 single women with children,
predominantly adults age 40-50.
-
EFF
1BR
2BR
3BR
*Current data not available.
47
Market Rate General Occupancy Rental
Gateway Apartments
Park Village Apartments
Subland Apartments
Crestwood Apartments
Summit Manor Apartments
Hilltop Manor
Apache Apartments
Northwest Manor
48
Clifton Apartments
Cedar Hills
Schuh Apartments
MontClair Apartments
West Hills Estates
Cedar Ridge
Topaz Holdings
Westgate Apartments
49
Northview Apartments
Modern Air Apartments
Affordable Properties
•
We identified five affordable properties (including four in Owatonna and one in Blooming
Prairie), all of which were financed through the Low Income Housing Tax Credit (LIHTC)
program, otherwise known as the Section 42 program. The maximum income limit for residency at these properties ranges from 40% to 60% of the area median income. Income limits
are shown in Figure 1.
FIGURE 1
Income Limits
Steele County
Low Income Housing Tax Credit Program
Family
Size
1 Person
2 People
3 People
4 People
5 People
40% AMI
$19,080
$21,840
$24,560
$27,280
$29,480
60% AMI
$28,620
$32,760
$36,840
$40,920
$44,220
Source: MN Housing Finance Agency
•
Five vacant units were identified (3.1% vacancy rate) in Steele County as of March 2010. As
in February 2006, all vacancies were units located at Woodbridge Apartments. Woodbridge
is an apartment-style building, versus townhome units like the other affordable properties.
Contributing to vacancies is the fact that it is a little older, lacks some of the amenities found
at the newer properties, and has small two-bedroom unit sizes. Excluding Woodbridge
Apartments, there are no vacant affordable rental units in Owatonna and long waiting lists at
each property.
•
The five affordable apartment properties contain a total of 163 units. The majority of the
units are three-bedroom (104 units) followed by two-bedroom (56 units). There are only
three one-bedroom units and no studio or efficiency affordable units. The vast majority of
tenants are families, including a high percentage of single-parents.
50
TABLE 24
AFFORDABLE GENERAL OCCUPANCY RENTAL HOUSING
OWATONNA AND THE REMAINDER OF PMA
March 2010
Year
Built
Total
Units
Vacant
Willow Run I Townhomes
2630 3rd Avenue NE
Owatonna
1999
24
0
Willow Run II Townhomes
2785 3rd Avenue NE
Owatonna
2004
32
Prairie Village Townhomes
320-342 4th St. SE
Blooming Prairie
2000
Cedar Run Townhomes
2300 Cedar Avenue N
Owatonna
Woodbridge Apartments
614/616/618 Bridge St.
Owatonna
Unit Mix
Rent Range
Unit Size
Comments
24 - 3BR
$805
$940 (MR)
1,200
Section 42 tax credit building. Target income: 60% AMI - $36,840 for
family of three. Features: attached garage, W/D in unit, dishwasher,
pantry, patio, mini-blinds, storage in-unit, playground, basketball hoop,
gazebo. Tenant pays heat/electric. Profile: mostly young working families
with kids. 22 tax credit units. Waiting list of 20 households.
0
32 - 3BR
$765
1,338
family of three. Tenant pays heat/electric; Features: attached garage, W/D
in unit, dishwasher, pantry, patio, mini-blinds, storage in-unit, playground.
Tenant pays heat/electric. Profile: All families. 28 tax credit units. 4
Section 8 units. Waiting list of 30 names at Willow Run II.
12
0
5 - 2BR
1 - 2BR
6 - 3BR
1,320
1,355
1,510
family of three. Features: attached garage with auto opener included,
playground in courtyard, central air, washers and dryers in units, walk-in
closets, patio. Resident pays for gas, electric, phone, cable. Profile: mostly
middle-aged, some families, some seniors.
1997
24
0
24 - 3BR
$805
1,200
family of three. Features: attached garage, W/D in-unit, dishwasher, patio,
mini-blinds, storage in-unit, playground, basketball hoop, gazebo. Tenant
pays heat/electric. Profile: working families with 2-4 children, some singleparent families. All tax credit units. Waiting list of 15 households.
1993
71
5
3 - 1BR
50 - 2BR
18 - 3BR
$560
$625 - $650
$780
623
702 - 870
1,175
3-bldg. Sec. 42 (tax credit) project with 60 tax credit units. Target income:
60% AMI - $36,840 for family of three. Features: detached garage is
$40/mo., wall-unit A/C, coin-op laundry on each floor, dishwasher,
balcony/patio, walk-in closets, $25 storage lockers on each floor, miniblinds, playground/picnic area. Resident pays electric. Profile: mix of
ages and household sizes.
163
5
Totals
3.1%
$500
$500 (Handicap)
$611
Unit Mix =
3 - 1BR
56 - 2BR
104 - 3BR
51
•
Along with income limits for residents, the properties have maximum rents that are based on
a percentage of median income – usually 40% to 60% of median income. With these limits,
rents at the affordable properties range from $560 for the one-bedroom, $500 to $650 for
two-bedroom units, and $611 to $805 for three-bedroom units. These rents are similar to
many of the market rate properties, and there is likely some market overlap.
•
The LIHTC program was established in 1986 – thus all of these buildings were developed
since then, with the oldest being Woodbridge (opened in 1993). The remaining properties
were all built within the last fifteen years and have many of the more modern amenities that
few other rental properties in the County have such as attached garages, automatic garage
door openers, washers and dryers in the units, central air, dishwashers, and playgrounds.
Affordable General Occupancy Rental Housing
Willow Run I Townhomes
Willow Run II Townhomes
Cedar Run Townhomes
Woodbridge Apartments
Subsidized
•
All of the subsidized properties are HUD Section 8 or Rural Development (formerly FmHA)
properties, requiring rent of 30% of a resident’s adjusted gross income (AGI). Five of the
properties are subsidized through Rural Development, while four of the properties receive
subsidies through HUD Section 8. All properties were built prior to 1990, with Heather
Court being the most recently built subsidized property (1989).
52
•
The nine properties offer a total of 258 subsidized rental units in the County. Ten vacancies
were reported by building managers, translating to a vacancy rate of 3.9%. Typically, subsidized rental properties should be able to maintain vacancy rates of 3% or less in most housing markets. Half of the vacancies were found at Ellendale Square, which is currently exempt from tenant income restrictions due to its high vacancies, in the City of Ellendale. The
eight properties in Owatonna had a total of five vacancies out of 242 units, for a vacancy rate
of 2.1%, indicating demand for subsidized housing.
•
About 44% of the units at the surveyed apartments are two-bedroom units (113 units), 28%
are three-bedrooms (73 units) and 26% are one-bedrooms (52 units). There are also six units
that have four bedrooms (2%). There were no efficiency or studio units identified in the subsidized properties.
•
Although exact figures were unavailable, interviews with the property managers indicated
that a sizable majority of the residents at properties subsidized through Rural Development
are receiving some sort of rental assistance. This enables them to pay 30% of their income
for rent, even if 30% of their income is below the basic rent. Without rental assistance, very
low income residents would be required to pay the basic, regardless if it was greater than
30% of their income. The fact that most households in Rural Development properties receive
rental assistance is an indication that most of these households have an annual income of
about $18,000 or less (a household earning $18,000 paying 30% of their income for rent
would pay a rent of $450 – about the average basic rent at Rural Development properties).
•
Unit and common area amenities are limited at the subsidized properties. Features and
amenities found at most subsidized developments include playground/picnic areas, balcony/patios, walk-in showers, and storage space. One property features detached garages
renting for $35 per month, with the remaining offering only off-street parking for their residents.
53
TABLE 25
SUBSIDIZED GENERAL-OCCUPANCY RENTAL HOUSING
March 2010
Year
Built
Total
Units
Vacant
Rent Range
Unit Size
Comments
Heather Court
635-639 Hilltop
Owatonna
1989
36
0
24 - 2BR
12 - 3BR
30% of AGI
748
902
2-story Rural Development project. Features: off-street parking, coin-op laundry,
basketball court, some walk-in showers. Tenant pays electricity. Minimum and maximum
rents range from $465 to $635 for 2 BRs and $496 to $677 for 3 BRs.
North Court T.H.
1512 St. Paul Road
Owatonna
1989
29
0
1988
16
1
1BR
2BR
3BR
4BR
1BR
2BR
30% of AGI
Cedardale North
324 Cedardale Dr.
Owatonna
Cedardale West
325 Cedardale Drive
Owatonna
2
18
7
2
10
6
624
864
1,008
1,168
624
768
1985
16
0
14 - 1BR
2 - 2BR
30% of AGI
624
768
Rural Development tax-credit project. Features: off-street parking, some walk-in showers,
balcony/patio, & coin-op laundry room. Tenant pays heat & electric. Min. and max. rents
range from $477 to $666 for 1BR's, $500 to $696 for 2BR's, $525 to $741 for 3BR's, &
$550 to $766 for 4BR's.
Rural Development building. Min. and max. rents range from $420 to $581 for 1BR's and
$455 to $616 for 2BR's. Features: off-street parking & some walk-in showers. Tenant
pays electric.
Rural Development building. Features: off-street parking, some walk-in showers, & coinop laundry. Rent includes all utilities except electricity.Min. and max. rents range from
$425 to $585 for 1BR's and $460 to $610 for 2BR's.
Cedardale T.H.
315 22nd Street SE
Owatonna
1980
30
0
20 - 2BR
10 - 3BR
30% of AGI
869
954
Park View Heights
429 St. Paul Place
Owatonna
1979
48
0
8 - 2BR
36 - 3BR
4 - 4BR
30% of AGI
911
1,035
1,283
Lincoln Square Apts.
433 16th Street NE
Owatonna
1975
55
4
26 - 1BR
25 - 2BR
4 - 3BR
30% of AGI
625
825
1,125
Ivanhoe Town Houses
615/625 Linn Avenue
Owatonna
Ellendale Square
7th St. & 2nd Ave.
Ellendale
1973
12
0
8 - 2BR
4 - 3BR
30% of AGI
782
905
Section 8 building. Features: off-street parking; W/D hook-ups in unit, & utility room.
Rent includes all utilities.
1983
16
5
14 - 1BR
2 - 2BR
30% of AGI
600
700
2-story Rural Development project. Features: coin-op laundry on each floor, emergency
pull-cord system, A/C wall sleeve, community room w/kitchen; Profile: mix in ages with
some seniors. Converted from senior to General Occupancy in Nov. 2005. Tenant pays
electricity. Minimum and maximum rents range from $400 to $471 for 1BR's and $480 to
$501 for 2BR's. Currently has exemption from income limits.
258
10
3.9%
Totals
Unit Mix
-
30% of AGI
Section 8 and tax credit project. Features: window-unit A/C must be provided by
resident; some 2BR units have patios; W/D hook-ups in-unit; storage space available;
detached garages $35/mo.; playground/picnic area; beauty shop, no pets allowed. Resident
pays heat and electric. Max rents are $641 & $709 for 2BR's & 3BR's, respectively.
Waiting list of 17 names for 2BR, 22 names for 3BR.
2-story Section 8 project. Features: off-street parking, some walk-in showers,
balcony/patio, W/D hook-ups in-unit. Tenant pays heath and electricity. Max rents are
$655/2BR, $741/3BR, $832/4BR. Utility allowance: $75/2BR, $98/3BR, $137/4BR.
Mostly families with head of household under 50. Waiting list of 60-80 names (2-3
years)
Five 3-story buildings. Forty-four units are Section 236, eleven are Section 8. Features:
wall-unit A/C, diswasher, disposal, microwave, mini-blinds, playground/picnic area w/
BBQ. Profile: wide mix, singles, families, few seniors. Wait list for Section 8 and 236
units. Currently offering 1st mo. rent free w/1-year lease. Minimum and maximum rents
range from $564 to $612 for 1 BRs, $705 to $765 for 2 BRs, and $856 to $929 for 3 BRs.
54
Subsidized General Occupancy Rental
Heather Court Apartments
North Court Townhouses
Cedardale North
Cedardale West
Cedardale Place Townhomes
Parkview Heights
Lincoln Square Apartments
Ivanhoe Town Houses
55
Housing Choice Voucher Program
In addition to subsidized apartments, Steele County also has a “tenant-based” subsidy called
Housing Choice Vouchers to help lower income households find affordable housing. The tenantbased subsidy is funded by the Department of Housing and Urban Development’s (HUD), and is
managed by the Owatonna Housing and Redevelopment Authority (HRA). Under the Housing
Choice Voucher program (formerly Section 8 Certificates and Vouchers), qualified households
are issued a voucher that the household can take to an apartment that has rent levels allowable
under HUD guidelines. The household then pays 30% of their adjusted gross income for rent
and utilities, and the Federal government pays the remainder of the rent to the landlord. Applicants in Steele County may be eligible for the program if their income is below the current limits
shown in the figure below, which are set by HUD on an annual basis.
FIGURE 2
Income Limits
Steele County
Housing Choice Voucher Program
Family
Size
Very
Low-Income
1 Person
2 People
3 People
4 People
5 People
6 People
7 People
8 People
$23,850
$27,300
$30,700
$34,100
$36,850
$39,550
$42,300
$45,000
Source: Owatonna HRA
To be eligible for the Housing Voucher program, rental units must have rent levels allowable
under HUD guidelines – or below the “Payment Standard,” which is the same as Fair Market
Rents in Steele County. In Steele County, the Payment Standard is $550 for one-bedroom units,
$701 for two-bedroom units, $882 for three-bedroom units, and $1,050 for four-bedroom units.
Currently, there are 100 vouchers issued. Because the majority of these households have very
low incomes, very few could afford rental housing in Owatonna without the assistance of the
Voucher program. Demand for the program is high, as there are about 760 names on a waiting
list, including about 350 names who meet preference criteria (e.g., currently are housing cost
burdened, victims of domestic violence, and homeless). With current low turnover, it is about a
three year wait to receive a voucher.
56
General Occupancy Rental Properties in Owatonna
Pending Rental Developments in the PMA
There are currently no pending general occupancy rental housing developments in Steele County.
57
Rental Market Interview Summary
Interviews with area rental property managers, real estate agents, private owners, and other
persons familiar with the rental market in Owatonna were conducted to solicit their impressions
of the rental housing market in the community. The following are some key points from these
interviews:
•
Many of the property managers expressed that the current market rate rental housing market
is very soft. The current overall market rate vacancy rate of 5.5%, is slightly above market
equilibrium of 5%, but does not indicate a market as poor as property managers at even successful properties described. The large number of buildings with vacancy rates over 5%, despite only accounting for 28% of the total general occupancy rental units, may be fueling the
worse than justified perception of the market. The chart below shows that smaller, older
apartments have vacancy rates above the market equilibrium. Also, most apartments increased rent very modestly since 2006 and in some cases they had to reduce rents for larger
units. Managers may be responding to the inability to increase rent as much as they would
have liked.
Vacancy Rate by Apartment Type
Type
Market Rate - Post 2000
Market Rate - Pre 2000
Affordable
Subsidized
Duplex and Triplex
Avg. Yr. Built
2003
1970
1998
1982
-
Tot. Units
96
360
163
258
90
Tot. Vac.
3
22
5
10
4
Vac. Rate
3.1%
6.1%
3.1%
3.9%
4.4%
•
Managers indicated that they have higher than usual numbers of resident not paying rent ontime or at all. Within six months evictions will probably increase dramatically, leading to
higher vacancies than currently exist.
•
No major renovations that added amenities occurred since the last study with the exception of
the Lincoln Square Apartments. Some apartments completed minor maintenance such as
painting.
•
Much of Owatonna’s rental housing stock is composed of medium-size (12 to 18 units)
structures targeted at the low- to moderate-income market. Many of these smaller buildings
were built prior to 1985, and do not feature a variety of contemporary amenities.
Single-Family Rental Housing
We interviewed two owners of rented single-family homes and duplexes up to six-plex buildings
in Owatonna in order to help gauge the market among smaller buildings. The following are
some key findings from our interviews.
•
The owners we interviewed owned a total of 150 units in a variety of buildings scattered
throughout the City of Owatonna, including 90 units in buildings with six or fewer units. As
58
of March 2010, we found a total of four vacant units out of the 90 units in smaller buildings,
for a vacancy rate of 4.4%. There were triple the number of vacancies during the winter, but
spring is typically a period of high leasing activity.
•
Rents at the smaller building generally range from about $400 to $475 per month for onebedroom units, $500 to $600 per month for two-bedroom units, and $600 to $700 for threebedroom units. Rents have been reduced for some tenants who are struggling financially in
order to retain them as tenants versus advertising for new tenants.
•
While the overall vacancy rate is relatively low, the reduction in rent for some tenants
combined with some tenants who have simply been unable to pay rent has led to increased
“economic vacancies,” or a reduction in income generated by the rental properties despite
being close to fully occupied.
•
Overall, turnover has been low during the past couple of years because of the poor economy.
Existing residents in the rental properties are unable or reluctant to purchase housing because
of their job uncertainty, despite the incentives available through the American Recovery and
Reinvestment Act of 2009’s Homebuyer Tax Credit.
•
The rental market is soft as it takes longer to fill vacant units than in the past. Because there
is a smaller supply of good renter prospects, some landlords are accepting higher-risk tenants
than they would during better times to fill vacant units.
•
It was mentioned that the smaller complexes seem to be easier to rent than the larger complexes.
59
SENIOR HOUSING ANALYSIS
Senior Housing Defined
The term “senior housing” refers to any housing development that is restricted to people age 55
or older. Today, senior housing includes an entire spectrum of housing alternatives, which
occasionally overlap, thus making the differences somewhat ambiguous. However, the level of
support services offered best distinguishes them. Maxfield Research Inc. classifies senior
housing properties into four categories based on the level of support services offered:
Adult/Few Services; where few, if any, support services are provided and rents tend to be modest
as a result;
Congregate; optional services where support services such as meals and light housekeeping are
available for an additional fee or service-intensive where support services such as meals and light
housekeeping are included in the monthly rents;
Assisted Living; where two or three daily meals as well as basic support services such as transportation, housekeeping and/or linen changes are included in the fees. Personal care services
such as assistance with bathing, grooming and dressing is included in the fees or is available
either for an additional fee or included in the rents.
Memory Care; where more rigorous and service-intensive personal care is required for people
with dementia and Alzheimer’s disease. Typically, support services and meal plans are similar
to those found at assisted living facilities, but the heightened levels of personalized care demand
more staffing and higher rental fees.
These four senior housing products tend to share several characteristics. First, they usually offer
individual living apartments with living areas, bathrooms, and kitchens or kitchenettes. Second,
they generally have an emergency response system with pull-cords or pendants to promote
security. Third, they often have a community room and other common space to encourage
socialization. Finally, they are age-restricted and offer conveniences desired by seniors, although assisted living developments sometimes serve non-elderly people with special health
considerations.
The four senior housing products offered today form a continuum of care from a low level to a
fairly intensive one; often the service offerings at one type overlap with those at another. In
general, however, adult/few services developments tend to attract younger, more independent
seniors, while assisted living and memory care developments tend to attract older, frailer seniors.
60
CONTINUUM OF HOUSING AND SERVICES FOR SENIORS
Single-Family
Home
Townhome or
Congregate Apartments w/
Nursing
Assisted Living
Apartment
Optional Services
Facilities
Age-Restricted Independent Apartments,
Congregate Apartments
Memory Care
Townhomes, Condominiums, or
w/ Intensive Services
Units
Cooperatives
Fully Independent
Lifestyle
Fully or Highly
Dependent on Care
Senior Housing Products
Senior Housing in the Primary Market Area
As of March 2010, Maxfield Research identified 19 senior housing properties in the PMA.
These properties contain a total of 767 units. Six of the properties are subsidized, while the
remaining 13 are market rate.
Table 26 provides information on market rate properties and Table 27 provides information on
subsidized properties. Information in both tables includes year built, number of units, unit mix,
number of vacant units, rents, and general comments about each property. Photographs follow
each section and a map of the properties follows the final photographs.
The following are key points from our survey of the PMA’s senior housing supply.
Market Rate Senior Properties
Maxfield Research Inc. identified 13 existing market rate, senior properties in Steele County.
These properties contain 540 rental units, and represent all four previously defined levels of care
on the senior housing continuum displayed in Figure 2. The properties are listed in Table 26 by
the type of service they provide. The following are key findings from each level of care:
Adult/Few Services
•
There are three adult/few service facilities with a total of 123 units. Two of the properties,
Morehouse Place and Realife Cooperative, are owner-occupied cooperatives for active older
adults. Under the cooperative model, residents buy a share of the corporation that owns the
building and then leases their unit from the corporation for a monthly fee. The remaining
property, Southway Manor, is a senior rental property that offers few services. There are currently no vacancies at any of the developments.
•
Realife Cooperative requires an entrance fee of $21,046 to $25,898 for its one-bedroom units
and $30,522 to $32,120 for the two-bedroom units. Morehouse Place requires an entrance
61
fee of $25,200 to $25,898 for its one-bedroom units and $28,136 to $47,425 for its twobedroom units.
•
Amenities in the market rate units are significantly greater than in their subsidized counterparts. All three developments offer covered parking, patios, and community rooms. Morehouse Place and Realife Cooperative also offer gardening areas, libraries, and other recreational spaces. Morehouse Place and Southway Manor have washers and dryers in the units.
•
The average age of residents was similar at each development, with the average age being 78
at Morehouse Place, 75 at Southway Manor, and 80 at Realife Cooperative.
Congregate
•
We identified four properties for a total of 166 units in Owatonna. As March 2010, there
were no vacancies at any property. There were also no vacancies at the time of the previous
study in February 2006. Sixty-one units have been added since the previous study in February 2006 with the opening of Countryside, so the continued lack of vacancy indicates high
demand for congregate housing.
•
In April or May of 2010 Heather Haus will convert from a congregate development to an
assisted living facility, removing 20 units of the congregate senior housing stock. Accordingly, unmet demand for congregate housing will increase.
•
Countryside is a catered living facility built in 2006 that can provide assisted living services
for additional fees as residents age and their needs increase. One meal per day, weekly
housekeeping, activities, and transportation are included in the base congregate living fee.
Monthly rent for a basic one-bedroom unit is $1,730, for a one-bedroom with a den is $1,895,
and for a two bedroom ranges from $1,945 to $2,025. Currently about 60% of the residents
receive only a congregate level of care, while the other 40% receive assisted living care.
•
The Brooks is a 50-unit congregate facility built in 2000. Monthly rents range from $1,745
to $2,025 for one-bedroom units and $2,185 for two-bedroom units. This property is more
service-intensive and includes some personal care assistance, which is reflected in the higher
monthly rents. They have seven detached garages available for $50 per month, as well as a
beauty/barber shop, exercise room, and community dining room. It is important to note that
like Countryside, The Brooks is a congregate/assisted living hybrid. While the base service
package would classify the property as a congregate property, residents can also receive assisted living care should they require such services.
Assisted Living
•
There are five assisted living facilities in Owatonna, with a total of 158 units. Three of the
five facilities, representing 117 units, or 74% of the total, were built since the last study in
February 2006. Because need drives demand for assisted living more than economic trends,
development of assisted living has continued despite the recession.
62
TABLE 26
MARKET RATE SENIOR HOUSING
March 2010
Year
Built
No. of
Units
No.
Vacant
Morehouse Place
353 Lemond Rd.
Owatonna
1998
46
0
Southway Manor
2260 Hartle Avenue
Owatonna
1997
Realife Cooperative
235 22nd St. SW
Owatonna
1988
Project Name/City
No.
Type
14 - 1BR
32 - 2BR
Subtotal
45
0
32
0
3 units for-sale
123
Unit Mix/Sizes/Rents
Monthly Rent
Sizes
Adult/Few-Services
$25,200 - $25,898
$706 - $739
935 - 1,624
$28,136 - $47,425
$806 - $1,234
828 - 856
12 - 1BR
33 - 2BR
770 - 850
975 - 1,100
14 - 1BR
614 - 659
18 - 2BR
817 - 914
0
$690 - $725
$790 - $875
$21,046
$564
$30,522
$726
-
$23,082
$606
$32,120
$855
Comments
^ Cooperative building. Features: underground parking included in fee, some
fireplaces, balcony/patio, W/D in-unit, storage locker in garage, emergency
^ call, craftroom, wood shop, gardening, library, billiard table, car wash,
exercise room, porch, guest suite, & limited activity program. Profile: Avg.
age 78 years, 11 couples. Waiting list of 8 names.
Features: tuck-under garages - $60/mo., detached garages - $50/mo., wallunit A/C, dishwasher, disposal, walk-in closet, balcony/patio, 2/3 of units
have W/D, coin-op laundry also, community room. Profile: Avg. age 75
years.
^ Cooperative project. Features: 20 detached garages are $25/mo. (full), offstreet parking, garden plots, community/activity/dining room, reading
^ alcoves w/books, craft/woodworking room, patio, storage bins, gazebo.
Profile: Avg. age 80 years, 5 couples. They have a small waiting list. They
turnover about 3 units/year.
0.0%
^ Tenants are required to purchase shares of the cooperative for the amount listed.
Countryside
2408 St. Paul Road
Owatonna
2006
61
0
30 - 1BR
11 - 1BR/Den
20 - 2BR
505 - 615
605 - 751
716 - 886
Congregate
$1,730
$1,895
$1,945 - $2,025
Park Place
125 Park Street
Owatonna
2001
35
0
27 - 1BR
8 - 2BR
507 - 605
848
$1,285 - $1,530
$1,799
The Brooks
2480 St. Paul Road
Owatonna
2000
50
0
40
4
2
4
-
1BR (A)
1BR (B)
1BR (C)
2BR (D)
528
644
825
1,000
$1,745
$1,795
$2,055
$2,185
Rent includes one meal/day, weekly housekeeping, activities program,
transportation, social-wellness programs, & staff supervision. Additional
assisted living services available for a fee.
Monthly rent includes noon meal, housekeeping, transportation
arrangements. Other meals, laundry service, and home care services are
available for extra fee. Avg. age is 87.
Base monthly fees include utilities, laundry, housekeeping, one meal
(noon), & activities. Building features dining room, beauty shop, fireplace
room, exercise room, & 7 detached garages. About 30%-40% of residents
have Elderly Waivers.
63
March 2010
Project Name/City
Heather Haus
223 4th St. NW
Blooming Prairie
Year
Built
No. of
Units
No.
Vacant
1995
20
0
16 - 1BR
4 - 2BR
166
0
0.0%
Subtotal
No.
Type
Valleyview of Owatonna
1212 Frontage Rd
Owatonna
2008
60
41
38 - Studio
20 - Suite
2 - 2BR
Traditions of Owatonna
24th Place NW
Owatonna
2006
42
0
38 - 1BR
4 - 2BR
Park Place
125 Park Street
Owatonna
2001
15
0
Alterra Sterling House
334 Cedardale Dr.
Owatonna
1996
20
6
19 - Private
1 - Companion
Whispering Oaks
2408 St. Paul Road
Ellendale
2006
21
0
1 - Studio
10 - 1BR
10 - 2BR
158
47
29.7%
Subtotal
7 - Studio
8 - 1BR
Sizes
Monthly Rent
Congregate (continued)
537 - 607
$780
713
$850
312
468
624
550 - 625
820
Assisted Living
$2,476+
Comments
Currently a congregate facility that will be converting to assisted living in
mid-April to May. Attched to Prairie Manor Care Center. Building
features community & private dining, community lounge w/fireplace,
chapel, common laundry, garden plots, and detached garages. Profile:
avgerage age = 85 years.
Remodeled hotel. Monthly fee includes: 3 meals/day, housekeeping, 24hr
staff, scheduled transportation, & activities. Building features dining room,
chapel, beauty shop, fitness center, indoor pool, malt shop.
$2,485
$2,895
Inlcudes memory care in building. Monthly fee includes: 3 meals/day;
personal care, medication dispensation, health monitoring, housekeeping,
linen, & laundry, emergency call, activity director, 24-hour staff.
452
540
$2,183
$2,296
Base fee includes all meals and snacks; additonal fee for Level 2 personal
care package. Avg. age is 87.
225
300
$2,250
1-story building. Features: Community library/activity/dining room, outdor
patio, chapel services. Monthly fee includes 3 meals/day, personal care,
medication dispensation, health monitoring, housekeeping, & linen/laundry
service. Available to private pay residents only.
400
805
1,035
$1,900
$2,250
$2,575
Base monthly rent includes 3 meals/day, activities, & housekeeping.
Building features beauty shop, fireplace, computer room, fitness room, &
game room.
64
March 2010
Year
Built
No. of
Units
No.
Vacant
Valleyview of Owatonna
1212 Frontage Rd
Owatonna
2008
30
26
30 - Studio
312
$2,476+
Secured area in remodeled hotel with assisted living. Monthly fee includes:
3 meals/day, housekeeping, 24hr staff, scheduled transportation, &
activities.
Traditions of Owatonna
24th Place NW
Owatonna
2006
10
0
10 - Studio
400
$2,985
In building with assisted living. Monthly fee includes: 3 meals/day; personal
care, medication dispensation, health monitoring, housekeeping, linen, &
laundry, emergency call, activity director, 24-hour staff.
Traditions of Owatonna II 2008
24th Place NW
Owatonna
26
0
26 - Studio
450
$2,985
26
(beds)
8
22 - Standard
2 - Dbl Occ.
225
300
$2,860
Adding another 20 units that will open in April or May 2010. Monthly fee
includes: 3 meals/day; personal care, medication dispensation, health
monitoring, housekeeping, linen, & laundry, emergency call, activity
director, 24-hour staff.
1-story building. Features: Community library/activity/dining room, outdor
patio, game room, chapel services. Monthly fee includes 3 meals/day,
personal care, medication dispensation, health monitoring, housekeeping, &
linen/laundry service. Available to private pay residents only.
92
34
Project Name/City
Clare Bridge Cottage
364 Cedardale Dr.
Owatonna
1999
Subtotal
No.
Type
Sizes
Monthly Rent
Memory Care
Comments
37.0%
65
•
Forty-one of the 56 vacancies in the PMA are in Valleyview of Owatonna, the newest facility
opened in 2008. Excluding Valleyview, the vacancy rate for assisted living is 6.1%, which is
slightly below the market equilibrium of 7%.
•
Valleyview Assisted Living was converted from the former Ramada Inn. The property is
located off of Interstate 35 and Highway 14 and includes 90 units - 60 assisted living units
and 30 memory-care units. The property has experienced extremely high vacancies, having
only 19 assisted living residents as of March 2010. According to Valleyview personnel, the
high vacancies are the result of Steele County pulling its Elderly Waiver contract from the
facility. Valleyview was originally planned to have all of the units designated for Elderly
Waivers. As such, the facility is open only to private pay residents at this time. Reinstating
the County contract for Elderly Waivers at Valleyview would likely result in lease-up of
most of the vacant units as the need for these units is demonstrated by the lack of vacancies
in senior buildings that accept Elderly Waivers.
•
Sterling House and Clare Bridge Cottage also accept only private pay and as a result have
30% and 31% vacancy rates, respectively. Traditions of Owatonna, Park Place, and Whispering Oaks accept Elderly Waivers and have no vacancy. Therefore, need for assisted living
is high in Owatonna, but much of it comes from lower-income seniors who cannot afford assisted living without assistance.
•
Sterling House and Whispering Oaks include only traditional assisted living units. Valleyview of Owatonna and Traditions of Owatonna also include memory care units, and as already mentioned, Park Place also includes congregate units.
•
All of the developments include in the base fee three meals per day and housekeeping. Each
also has a dining room and activities. Valleyview of Owatonna and Whispering Oaks have
beauty shops and fitness rooms. Amenities are relatively similar because all of the facilities
were built since 1996 as the demand for assisted living grew.
Memory Care
•
There are four memory care facilities with 92 beds in Owatonna. Three, accounting for 66
beds, or 72% of the total beds, opened since the last study in February 2006. As of March
2010, 28 of 36 vacancies in the PMA were in Valleyview. Excluding Valleyview, the vacancy rate was still 12.9%, which is well above the market equilibrium of 7%. Traditions of
Owatonna and Traditions II of Owatonna had no vacancies, while Clare Bridge of Owatonna
had 31% vacancy.
•
All of the facilities offer studio/private rooms, but only Clare Bridge Cottages offers shared
rooms, of which there are only two. Ninety-eight percent of all units in Owatonna are in studio/private rooms.
66
Market Rate Senior Housing
Morehouse Place (Adult - Few Services)
Southway Manor (Adult - Few Services)
Countryside (Congregate/AL)
Park Place (Congregate/AL)
The Brooks (Congregate/AL)
Traditions I (AL/MC)
Traditions II (MC)
Alterra Sterling House (AL)
67
Clare Bridge Cottage (MC)
Valley View (AL/MC)
Subsidized Senior Housing Properties
•
There were a total of 228 units in the County’s five subsidized senior properties. There were
six vacant units among these properties as of March 2010, resulting in a vacancy rate of
3.0%.
•
Four of the subsidized senior properties (Cedardale South, Cedardale Place, Ivanhoe Apartments, and Maple Trails Apartments) are located in Owatonna. These properties have a
combined total of 193 units, or 85% of the County total. Four of the six vacancies were at
Cedardale South. Excluding Cedardale South , the vacancy rate in Steele County was only
1.0%, indicating that the market for subsidized senior housing in Owatonna is strong. The
County’s other two subsidized properties are located in Medford (20 units) and Blooming
Prairie (15 units).
•
Maple Trails Apartments, opened in 2006, is the only subsidized senior housing built in the
last 25 years. Its units are accessible for seniors with disabilities, and it includes a community room.
•
Overall, the unit sizes at the subsidized senior properties are considerably smaller than many
of the previously mentioned general-occupancy rental properties, and smaller than most of
the market rate senior rental properties.
•
A small portion of residents in Cedardale Place are not seniors because the development is
open to low-income individuals with disabilities who are of all ages. As a result, the average
age of residents is 73, slightly younger than most senior housing facilities where the average
age tends to be in the mid-80s.
Subsidized senior housing offers affordable rents to qualified lower income seniors and handicapped/disabled persons. Typically, rents are tied to residents’ incomes with rents based on 30
percent of adjusted gross income (AGI), or a rent that is below the fair market rent. Two Federal
government agencies, the Department of Housing and Urban Development (HUD) and the
United States Department of Agriculture’s Rural Development, provide funding for the vast
majority of subsidized senior housing properties. In Steele County, the HUD Section 8 program
sponsors three of the properties, with the remaining two classified as Rural Development properties.
68
TABLE 27
SUBSIDIZED SENIOR HOUSING
March 2010
Project Name/City
Year
Built
No. of
No.
Units Vacant No.
Type Sizes Monthly Rent
Comments
Maple Trails Apartments
165 24th Place NW
Owatonna
Cedardale South
345 Cedardale Dr.
Owatonna
2006
25
0
25 - 1BR
540
30% of AGI
Section 202 building. Features: Controlled entry, activity room,
community room, laundry facilities. Tenants pay heat & electric.
1984
36
4
35 - 1BR
1 - 2BR
634
832
30% of AGI
Medford Manor
216 SE 1st Street
Medford
Cedardale Place
2211 Hartle Ave.
Owatonna
1982
20
2
20 - 1BR
550
30% of AGI
1980
68
0
67 - 1BR
1 - 2BR
449
554
30% of AGI
Rural Development building. 3-story. Min. rent = $425 for 1BR & $455 for
2BR. Max. rent = $604 for 1BR & $634 for 2BR. Features: off-street
parking, community room, some walk-in closets & showers, coin-op
laundry room, & emergency call system. Rent includes all utilities except
electricity.
Section 8 buildings. Features off-street parking, some walk-in showers,
coin-op laundry, & emergency call system. Rent includes all utilities except
electricity.
Section 8 senior/disabled project. Features: detached garages - $35/mo.;
wall-unit A/C must be supplied by resident; walk-in showers; coin-op
laundry; community room; library; game room; Market rents are $628 &
$712 for 1BR's and 2BR's, respectively. Tenants pay electric. Profile:
Avg. age 73 years, 2 couples. Waiting list of 14 names.
Prairie Villa
455 2nd Street SE
Blooming Prairie
1980
15
0
15 - 1BR
870
30% of AGI
Rural Development project operating under Section 8. Market rents are
$455/mo.; off-street parking; rent includes all utilities except electricity;
community room; some walk-in showers; coin-op laundry; emergency call
system. Avg. age is 83, no couples. Usually turn about 1 unit/year.
Ivanhoe Apts.
220/230 18th St. SW
Owatonna
Totals
1973
64
0
64 - 1BR
416
30% of AGI
Section 8. Two 2-story buildings. Features off-street parking, community
room, some walk-in showers, coin-op laundry, & emergency call system.
Rent includes all utilities.
228
6
2.6%
69
Subsidized Senior Housing
Maple Trail Apartments
Cedardale South
Cedardale Place Apartments
Ivanhoe Apartments
70
Senior Rental Properties in Owatonna
Pending Senior Housing Developments
We identified two senior housing developments currently under consideration in the PMA, both
of which are in Owatonna.
The recently completed Traditions of Owatonna II building that opened in 2008 is currently
constructing a new addition. Slated for occupancy in Spring 2010, the new addition will include
20 memory care units. Furthermore, Traditions is also planning an addition to Traditions of
Owatonna I that would include 20 memory care units and 10 assisted living units.
Countryside recently purchased land adjacent to its current site for a future expansion, but has
not yet determined the number of units, service level, and timing of the expansion.
71
CONCLUSIONS AND RECOMMENDATIONS
Introduction
Previous sections of this study analyzed the existing housing supply and the growth and demographic characteristics of the population and household base in the City of Owatonna and its
PMA (Steele County). This section of the report presents our estimates of housing demand in
Owatonna from 2010 to 2015 and 2015 to 2020.
Demographic Profile and Housing Demand
The demographic profile of a community affects housing demand and the types of housing that
are needed. The housing life-cycle stages are:
1. Entry-level householders
• Often prefer to rent basic, inexpensive apartments
• Usually singles or couples without children in their early 20's
• Will often “double-up” with roommates in apartment setting
2. First-time homebuyers and move-up renters
• Often prefer to purchase modestly-priced single-family homes or rent
more upscale apartments
• Usually married or cohabiting couples, in their mid-20's or 30's, some
with children, but most are without children
3. Move-up homebuyers
• Typically prefer to purchase newer, larger, and therefore more expensive single-family homes
• Typically families with children where householders are in their late
30's to 40's
4. Empty-nesters (persons whose children have grown and left home) and nevernesters (persons who never have children)
• Prefer owning but will consider renting their housing
• Some will move to alternative lower-maintenance housing products
• Generally couples in their 50's or 60's
5. Younger independent seniors
• Prefer owning but will consider renting their housing
• Will often move (at least part of the year) to retirement havens in the
Sunbelt and desire to reduce their responsibilities for upkeep and
maintenance
• Generally in their late 60's or 70's
72
6. Older seniors
• May need to move out of their single-family home due to physical
and/or health constraints or a desire to reduce their responsibilities for
upkeep and maintenance
• Generally single females (widows) in their mid-70's or older
The baby boom generation will have the biggest effect on the housing market in Owatonna as
their life cycle continues. Baby boomers are currently ages 46 to 64, and as they age over this
decade, they will increase the population in the age groups 55 to 74. The 55 to 64 and 65 to 74
age groups in Owatonna will see increases of 955 (+34%) and 898 (+57%) people, respectively,
during this decade. Some of these baby boomers will prefer more expensive single-family
homes, while many others who become empty nesters may prefer to downsize or desire maintenance-free alternatives. With the baby busters following in the baby boomers’ wake, the age
group 45 to 54 will decline, somewhat decreasing the overall demand for move-up housing.
Housing Demand Calculations
Demand for additional housing in Owatonna will primarily come from household growth,
although replacement need will also contribute to the need for additional residential development. Pent-up rental demand can also be a source of housing demand. We did not find pent-up
demand in Owatonna, as the rental vacancy rate is above the 5% stabilized rate. Table 28 shows
our calculations of housing demand in Owatonna from 2010 to 2015 and 2015 to 2020.
Table 1 in the Demographic Analysis section shows that Owatonna is projected to add 1,550
households between 2010 and 2020. We also project that Owatonna can capture 20% of growth
in the Remainder of PMA (50 households) by providing sufficient housing choices, for a total
potential growth of up to 1,600 households. Another factor in calculating demand for housing is
an examination of replacement need.
Replacement need is generated from the loss of housing, or the need to replace housing units that
are physically or functionally obsolete (i.e., they no longer meet the needs of the current housing
market). A review of the age of Owatonna’s housing stock from the U.S. Census and the Steele
County Assessor’s Office revealed that there are about 2,000 housing units built prior to 1940.
Based on the Assessor’s condition rating and a windshield survey of the City, we estimate that
about 0.35% of these units should be replaced annually, or about seven units. This would result
in a replacement need for 70 housing units between 2010 and 2020.
The current downturn in the local and national economy combined with a sharp reduction in
home values has led to little demand for new housing in Owatonna for the past couple of years.
Only 19 housing units were added in Owatonna in 2009, down from a peak of 275 in 2004.
Home construction in 2010 is not poised to exceed the 2009 level by a significant margin as the
poor economy continues. Thus, we project that 60% to 65% of the household growth in Owatonna this decade will occur after 2015 (or about new 1,005 units), with the remaining 35% to
40% over the next five years (595 new units). Demand will likely be lowest in 2010 and steadily
increase each successive year as the economy improves and home values begin rising again.
73
Based on demographic and market trends, we believe that 30% to 35% of the housing demand
from household growth and replacement need in Owatonna between 2010 and 2020 (about 190
to 220 between 2010 and 2015 and about 310 to 365 between 2015 and 2020) will be for rental
housing (including senior rental housing). This rental rate is higher than currently exists in
Owatonna because in this decade the leading edge of the baby boom generation will age into
their 70s, at which point many will seek to shed the responsibilities of home ownership. In
addition, as a proportion of the growing senior population seeks to downsize, there will be an
increase in existing single-family homes becoming available, thereby reducing the number of
new single-family homes needed to meet demand. In addition, we believe that there will be
pent-up demand for new rental products when the economy rebounds due to the relative lack of
new market rate units added over the past three decades.
Pent-up rental demand is another source of housing demand. A healthy rental market is expected
to have a vacancy rate of about 5% to allow for sufficient consumer choice and unit turnover.
With pent-up demand (a shortage of units), persons who would normally form their own rental
households instead room with other persons in a housing unit, live with their parents, or live in
housing outside of the area and commute to jobs. In Owatonna, we found that the overall
vacancy rate was 5.5% among the general-occupancy rental supply – indicating no pent-up
demand.
TABLE 28
HOUSING DEMAND SUMMARY
CITY OF OWATONNA
2010 to 2020
2010 to 2015
Household growth*
(plus) Replacement need
(equals) Total housing demand
2015 to 2020
+
=
595
35
630
+
=
1,005
35
1,040
(times) Percent rental demand
(equals) Rental housing demand
x
=
30% to
189 to
35%
221
x
=
30% to
312 to
35%
364
(plus) Pent-up rental demand
(equals) Total rental housing demand
+
=
0 to
189 to
0
221
+
=
0 to
312 to
0
364
(times) Percent owner demand
(equals) Total owner housing demand
x
=
65% to
410 to
70%
441
x
=
65% to
676 to
70%
728
*Includes Owatonna (1,550) plus 20% of growth in Remainder of County (50)
74
For-Sale Housing Needs
Table 28 shows that there is a projected demand for about 410 to 440 additional owner-occupied
housing units in Owatonna between 2010 and 2015. We estimate that about 75% of the demand
for owned housing will be for single-family homes (about 300 to 330 homes), and the remaining
25% for multifamily units (100 to 110), such as townhomes and a senior condominium/cooperative. Demand for multifamily owned housing is primarily generated by empty
nesters seeking to downsize from their existing single-family homes.
Currently, Owatonna has a supply of about 480 platted single-family lots available with sewer
and about 200 platted townhome lots available with sewer. Approved phases to existing subdivisions would add more lots to the supply. With demand for new single-family and townhomes
expected to be low for the next year or more and gradually increasing as the economy improves,
no new single-family or townhome lots will likely be needed until 2013.
From 2015 to 2020, we calculate that another 675 to 730 owner occupied homes will be needed
for Owatonna’s to reach its projected 2020 population and household base of 29,750 people and
11,850 households. This demand equates to the average development of 135 to 146 new owneroccupied homes each year, or a pace similar to earlier last decade.
Rental Housing Needs
Based on the calculations in Table 28, demand exists for an additional 190 to 220 rental units in
Owatonna between 2010 and 2015 and another 310 to 365 between 2015 and 2020. This rental
demand includes senior rental housing, which accounts for a large portion of the rental demand
because of the aging demographics (senior housing demand is discussed in more detail in the
following section). Calculated senior rental demand (120 to 135 units between 2010 and 2015)
is subtracted from total rental demand resulting in general-occupancy rental demand for 70 to 85
units between 2010 and 2015. Between 2015 and 2020, demand for 155 to 180 senior rental
units is subtracted from total demand resulting in demand for 155 to 185 units between 2015 and
2020.
Landlords overwhelmingly state that the local rental market is soft and that no new units are
needed until the local job market improves. Thus, most of the short-term rental demand would
not be needed for about another two years – or likely 2012 at the earliest. Our research found
that there have been only three market rate apartments built in Owatonna in the last 30 years.
Our interviews revealed that there is demand for newer, contemporary units, as the last market
rate apartment built (Gateway Apartments) has performed very well. Thus, we project that there
would be demand from existing residents for a new market rate product. Building a new apartment complex would also free up units in older market rate buildings that have rents affordable
to most lower-income groups. This will help satisfy demand from lower-income renters by
2015.
Our review of the rental housing market during this decade indicates that about 67% of the
demand in Owatonna is for market rate units (47 to 57 units), and about 33% is for affordable
units (23 to 28 units).
75
Senior Housing Demand
Maxfield Research Inc. calculated excess demand in Owatonna for the various senior housing
product types, including adult rental, adult ownership, congregate, assisted living, and memory
care, as well as subsidized senior rental. The calculations of excess demand are based on multiplying the age/income-qualified base for market rate senior housing by appropriate captures rates
for each product type and then subtracting the existing supply. Generally, the age/incomequalified base for market rate senior housing is seniors age 65+ with incomes of $30,000+,
although lower income homeowners also income-qualify and the capture rate is higher for
seniors age 75+ (the primary target market).
Currently, the City of Owatonna has a supply of 123 adult units, 146 congregate units, 137
assisted living units, 92 memory care units, and 193 subsidized senior rental units. When
comparing the calculated total demand to the existing supply, we find that Owatonna has an
adequate supply of assisted living and memory care units to meet the city’s need over the next
five years (especially when the planned expansions to Traditions I and II are completed). We
find demand for an additional 55 to 65 adult ownership units (cooperative, townhomes or condominium), 45 to 50 adult rental units, 50 to 55 congregate units, and 25 to 30 subsidized senior
units to meet the city’s need through 2015. Table 29 below shows the calculated demand for
each product type over the next five years, as well as between 2015 and 2020.
TABLE 29
SENIOR HOUSING DEMAND SUMMARY
CITY OF OWATONNA
2010-2020
2010 to 2015
2015 to 2020
Market Rate
Adult Ownership*
Adult Rental
Congregate
AL
MC
55 - 65
45 - 50
50 - 55
0
0
35
30
55
25
20
Subsidized Rental
25 - 30
25 - 30
175 - 200
190 - 220
Total
-
40
35
60
30
25
* Includes age-restricted townhomes, condominiums, & cooperatives
The demand figures for 2015 to 2020 are derived by first calculating the total number of units
needed in 2020 based on maintaining the penetration rates for each type of senior housing
needed to satisfy current demand. We then subtract the number of units needed in the next five
years, resulting in the demand for 2015 to 2020. In total, we calculate demand for an additional
190 to 220 senior housing units in Owatonna from 2015 to 2020. Overall, the penetration rate of
senior housing in Owatonna to meet demand equates to about one unit for every four seniors age
76
65+. Currently, Owatonna has one unit for every 4.6 seniors (691 units for 3,155 seniors).
Senior properties in Owatonna serve seniors from throughout Steele County, and the penetration
rate needed to meet the County’s demand is about one unit for every six seniors.
Growth of the age 65+ population in Owatonna from 3,155 seniors in 2010 to 4,300 seniors in
2020, or a 36% increase, will generate the additional senior housing demand this decade. Much
of the senior growth will occur as the leading edge of the baby boom generation ages into their
early 70s (the oldest baby boomer will be age 74 in 2020). The primary target market for senior
housing is seniors ages 75 and over, however. Seniors age 75+ are projected to grow at a slower
rate during this decade (+16%, or 250 additional 75+ seniors in Owatonna). Thus, additional
demand for assisted living and memory care housing – the highest levels of care offered – is
projected to be less than for more independent senior products between 2015 and 2020.
Owatonna Recommendations
This section recommends housing development concepts for Owatonna from 2010 to 2015,
based on the demand analysis and interviews with persons knowledgeable about the Owatonna
housing market. Table 30 shows a summary of these development concepts. Detailed recommendations for each housing type are also included.
Single-Family Housing
We recommend maintaining a three-year lot supply, which ensures adequate consumer choice
without excessively prolonging developer carrying costs. If building in 2010, 2011, and 2012
matches the 2008 level of 34 units and no new lots are added to the supply, building of about 100
units will occur in the next three years, leaving 380 lots available in 2013. To meet the remaining need for 200 single-family homes by 2015, 100 lots would be used per year between 2013
and 2015. The current lot supply will therefore be sufficient through 2013, at which point the
City would need to start platting at a rate of about 130 lots per year to keep up with projected
demand through 2020.
The current lot supply will satisfy or exceed the need for entry-level and executive homes, but
may fall slightly short of meeting the need for move-up homes. Based on lot prices, existing
homes in developing subdivisions, and interviews with developers, we estimate that about 20%
of the available lots in Owatonna will be developed as entry-level single-family homes. In 2009,
219 homes sold in Owatonna, and as of March 2010, 218 were listed for sale, so there is about a
one year supply of existing homes for sale in Owatonna, and about 75% of them are listed below
$200,000. Building additional entry-level homes would further saturate the entry-level market,
and given that existing homes can largely satisfy the need for entry-level housing, we do not
recommend additional platting of lots intended for entry-level homes through 2015. At least
20% of available lots will develop with executive homes, but the proportion will likely be higher
because an additional 59% of available lots are in subdivisions planned to include significant
numbers of executive homes. We therefore also do not recommend additional platting of lots
intended for executive homes.
77
The remainder of lots will develop as move-up housing. If developers proceed with their current
plans for platted lots, it is unlikely that the City will meet its 2010 to 2015 need for move-up
housing. Due to tight credit, a weak real estate market, and a sense of economic insecurity, we
believe that a portion of households that would have considered executive housing three years
ago will now instead purchase move-up housing, which would result in some lots currently
intended as executive housing being developed as move-up housing. If this does not occur, we
recommend that the city allow some additional platting for move-up single-family homes.
TABLE 30
RECOMMENDED HOUSING DEVELOPMENT
OWATONNA
2010 to 2015
Purchase Price/
Monthly Rent Range
No. of
Units
Pct. of
Total
Owner-Occupied Housing
Single-Family
Entry-level
Move-up
Executive
Total
Townhomes/Condominiums/Cooperatives*
Entry-level
Upper-end
Total
$150,000 - $200,000
$200,000 - $300,000
$300,000+
15
216
77
310
-
17
231
83
330
5%
70%
25%
100%
$150,000 - $200,000
$200,000+
50 - 55
50 - 55
100 - 110
50%
50%
100%
$725 - $1,000
-
47 - 57
23 - 28
70 - 85
67%
33%
100%
General Occupancy Rental Housing
Market Rate Rental Housing
Affordable/Subsidized Rental Housing
Total
Senior Rental Housing
Subsidized
Adult/Few-Services Rental
Congregate
Total
$850 - $1,000
$1,700 - $2,200
25
45
50
120
-
30
50
55
135
21%
37.5%
41.5%
100%
* Includes senior ownership units (about half of the units could be age-restricted).
For-Sale Multifamily Housing
In Owatonna, the target market for for-sale multifamily housing (twinhomes, townhome, and
condominiums) has been empty-nesters and young seniors who want to own their residence but
78
do not want the responsibility of maintenance. In larger housing markets with high housing
costs, younger households also find purchasing multifamily units to be generally more affordable
than purchasing new single-family homes. This is not the case in Owatonna, and thus, there is
little demand from younger households.
There are currently lots available to support about 200 additional twinhome/townhome units in
Owatonna. With demand projected for 100 to 110 units by 2015, the current supply of lots will
satisfy all need for multifamily owner-occupied housing in Owatonna for the next five years.
Among the demand for multifamily units, we find that about half could be age-restricted housing
in either a townhome or cooperative development. The target market for cooperative housing
partially overlaps both the senior ownership and rental markets. Thus, the development of a
cooperative would reduce townhome demand by no more than half of its units (it may also
slightly reduce senior rental demand).
General-Occupancy Rental Housing
Market Rate
While our analysis of the rental market found that the overall vacancy rate is above the 5%
stabilized rate in Owatonna, we also find that Owatonna has an older rental housing stock as
there have only been two market rate general occupancy apartments built since 2000. The
vacancy rate at the two newest buildings is 3.1%, whereas the vacancy rate at older buildings is
6.1%. Based on our interviews and research, demand exists for newer, contemporary market rate
units.
We recommend developing a general occupancy apartment complex with between 45 and 60
units in the City of Owatonna. While the Gateway Apartment project (built in 2004) has performed well, we recommend waiting to bring a new apartment on-line until the local job market
improves and the building could take advantage of pent-up demand for higher-amenity apartment
units.
To appeal to the target market (young professionals and some seniors), we suggest the proposed
apartment project have a unit mix consisting of approximately 20% to 25% one-bedroom units,
60% to 65% two-bedroom units, and 10% to 20% two-bedroom plus den/three-bedroom units.
For a contemporary building with underground parking similar to Gateway Apartments in a
downtown location, we recommend rents of $800 to $825 for one-bedroom units, $950 to $1,000
for two-bedroom units, and $1,100 to $1,150 for two-bedroom plus den/three-bedroom units.
For a market-rate building with tuck-under or detached garages with more basic finishes, we
recommend rents of $650 to $700 for one-bedroom units, $800 to $850 for two-bedroom units,
and $925 to $975.
Affordable
Existing LIHTC affordable properties are performing very well with three of the four Owatonna
properties being fully occupied with waiting lists. These three properties range in size from 24
to 32 units and feature townhome units. We recommend another similar affordable rental
79
property with 20 to 30 units. To meet the needs of larger families, these properties should
feature mostly three-bedroom units. We recommend waiting to bring this development on-line
until the job market improves.
If a new market rate development is added to Owatonna, several units in older market rate
buildings with rents affordable to lower- and moderate-income households will become available
as existing residents “step-up” into the new market rate apartment. Thus adding more than 30
new affordable units in addition to a new market rate building would begin to adversely impact
older market rate properties.
Senior Housing
Independent
The demand for 175 to 200 senior housing units in Owatonna over the next five years is for
independent housing, including adult rental and ownership units, congregate units, and subsidized rental.
We recommend the development of an adult building with roughly 50 units that would be either
rental or cooperative. Both types of buildings have been successful in Owatonna and our calculations indicate that one building of each type could be supported. However, we recommend that
only one of the two buildings come on-line during a couple year period so that they do not share
their initial marketing periods. Otherwise, the absorption of both could be slowed, especially if
the resale housing market does not improve much from the current situation.
We also find demand for a 50-to 55-unit congregate building. As we understand, CountrySide
purchased an adjacent parcel for a future expansion. If this expansion is congregate, it would
satisfy the demand over the next five years, otherwise there is the potential for a separate congregate facility in Owatonna.
The vacancy rate among subsidized senior buildings is very low, and our demand calculations
indicate there is a need for additional units in Owatonna. Maple Trail Apartments is a 25-unit
subsidized rental building financed through the HUD Section 202 program that opened in
Owatonna in 2006. Maple Trail Apartments has been very well received and is currently fully
occupied. We recommend pursuing a similar building with 25 to 30 units over the next five
years.
Assisted Living and Memory Care
The existing supply of assisted living and memory care units in Owatonna plus planned additions
to Traditions I and II will meet the need for additional assisted living or memory care units in
Owatonna over the next five years. While the overall vacancy rate among assisted living and
memory care facilities in Owatonna is low, much of the current excess demand keeping the
facilities fully occupied is from low income seniors utilizing the Elderly Waiver program to pay
for their services. The 65 available units at Valley View Assisted Living could accommodate the
80
demand from very low incomes seniors with Elderly Waivers in Owatonna over the next five
years, negating the need to add more units to the community.
Housing Rehabilitation Program
As we understand, the City of Owatonna has applied to the Minnesota Department of Employment and Economic Development for a $308,000 grant through the Small Cities Development
Program to rehabilitate 10 owner-occupied and 10 renter-occupied housing units in Owatonna.
HUD funds the program, which offers deferred loans of $8,000 per rental unit and $20,000 per
ownership unit to fund repairs such as new roofing, plumbing, wiring, or windows. Residents of
the units must be low- or moderate-income, with a single person earning no more than $22,600
per year or a family of four earning no more than $32,000 per year.
Based on our analysis of the housing stock in Owatonna and the incomes of residents, the
demand for housing rehabilitation funds far exceeds the supply of funds. Excluding apartment
buildings, 2,412 housing units, or about 30% of Owatonna’s total housing, are rated below
Good/Very Good, the point at which we determined in our windshield survey homes typically
require some exterior repairs. Additionally, 1,320 households that own their homes earn less
than $32,000 per year. If even a small portion of these households lived in homes rated below
Good/Very Good, homes qualifying for the program would greatly exceed 10. In addition,
interviews with landlords indicated significant need for the program among rental properties.
We therefore recommend that the City continue to pursue funds for rehabilitation, even if it
receives the grant it has applied for.
81

Housing Market Analysis and Demand Estimates for Owatonna

Transcription

Similar documents

Cabeala`s Summer Bash Ad

october 07 newsletter.cdr

Tom Lieberman, Captain Gravitone Bill Smith Owatonna Arts Center

Volume 20 No. 5 May 1, 2014

Second Quarter 2016 - Owatonna Edition

THERAPEUTIC RECREATION NEWSLETTER

Surfwood Manor apartments

Owatonna Area Shopper - Southern Minn Media Marketing

Owatonna SeniorPlace