Plainview Housing Study Overview Presented to: Plainview Economic Development Authority Presented by: Matt Mullins | Maxfield Research Inc.

May 12, 2015

Maxfield Research Inc. is a full-service real estate advisory company providing strategic value to our private and public sector client’s real estate activities.

Overview 30 years experience

Diverse client base

Multi-Industry Capable

residential commercial public + private sectors

Who we are

OBJECTIVE Provide custom comprehensive housing study

APPROACH Identify current & future housing needs for residents in Plainview and provide framework for meeting housing needs

PROJECT DELIVERABLES • Short and long-term housing needs • Recommendations guiding future housing development • Tools/policies to implement the plan

KEY DATES • Data collection: 4th Quarter 2014 and 1st Quarter 2015 • Draft: February 2015 • Presentation: May 12, 2015 • Final: TBD

Project Scope

End User Benefits • Guide policy making decisions • Assist the Comprehensive Planning process • Assists area banks and lending-institutions to streamline the

financial component • Solicit interest from builders/developers and help streamline the

process • Help raise funding for housing and community development

programs • Better define the relationship between housing and economic

development • Create framework for accommodating future growth • Help deliver strategic housing priorities

Demographics

Employment

Household Characteristics

Rental Market Analysis

Senior Housing Market Analysis

Housing Affordability

For-Sale Market Analysis

Development Pipeline Housing Programs

Housing Demand Analysis

Challenges & Opportunities

Recommendations

Housing Study Components

Deep-dive into Property Types

• Single-family • Multifamily

• Affordable • Subsidized • Market rate

• Subsidized/affordable • Active adult • Congregate • Assisted living • Memory care • Skilled Nursing

GO Rental Housing

Senior Housing

For-Sale

Residential Lot Supply

Market Area

Defined as: • Plainview • 7 Townships • 2 Cities

Market Area will

account for about 75%+ of Demand

Steady growth through 2020

Plainview last decade Population +150 (+4.7%) Households +121 (+10.5%)

Market Area last decade Population +276 (+3.7%) Households +252 (+9.5%)

Historic Findings

Projections (2010-2020)

Stronger growth projected over the current decade

Plainview Population +200 (+6.0%) Households +132 (+10.3%) Market Area Population +390 (+5.0%) Households +329 (+11.3%)

3,190 3,340 3,540

4,314 4,440 4,630

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

2000 2010 2020

Popu

latio

n

Year

Population Trends

Remainder of PMAPlainview

1,157 1,278 1,410

1,4971,628

1,825

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2000 2010 2020

Hous

ehol

ds

Year

Household Trends

Remainder of PMAPlainview

Younger adults & younger seniors driving growth Population (2014-2020):

• 35-44 projected to have largest growth (+57%) of total population

• Strong growth in school-aged children

Growth in specific older age cohorts: • 55-64 projected to grow by 47 (15%) • 65-74 projected to increase by 44 (21%)

Household size is decreasing: 2000: 2.76 | 2010: 2.61 | 2020: 2.51

82% Home ownership rate (2010)

• 83% Remainder of Market Area • 82% Plainview • 73% Minnesota

9.4%

-4.7%

-5.3%

24.6%

-11.3%

13.5%

19.0%

-6.6%

-1.8%

-15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Under 18

18 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65 to 74

75 to 84

85+

Pct. Change

Plainview Age Distribution2014 to 2020

Age

Gro

up

Household Income Median Income (2014):

• $52,797 – Plainview • $60,227 – Market Area • $60,500 – Olmsted Cty. • $58,634 - Minnesota

Highest earners between 45-54 age cohort (2014) • $66,234 – Plainview • $76,397 - Market Area

2014 Median income (Plainview)

• Non-seniors: $58,865 • Seniors: $44,222

2012 Income disparity by tenure (Plainview):

• $56,574 (owner) vs. $25,495 (renter)

Projected increase by 2020: • +10.9% to $58,558 (Plainview) • +14.7% to $69,060 (Market Area)

51

224

249 235 205

148

176

54

227

314

222

239

177

177

$22,733

$54,333$63,380

$66,234$58,321

$43,407

$28,525

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

0

100

200

300

400

Under 25 25 - 34 35 - 44 45 - 54 55 - 64 65 - 74 75+

Inco

me

Hous

ehol

ds

Age of Householder

Growth and Income Trends by Age of HouseholderPlainview: 2014 & 2020

2014 2020 2014 Median Income

Employment Wabasha County: historically slightly

lower unemployment rate than MN.

Key Wabasha Co. Industry Sector Jobs:

Manufacturing: 25%

Trade, Transportation, & Utilities: 20%

Plainview is a job exporter

Plainview is an exporter of workers • 30% of Plainview residents

work in Plainview • 37% commute to Rochester • -322 net outflow

Avg. weekly wages • Plainview: $627 • Wabasha County: $636 • Olmsted County: $1,023 • Minnesota: $964

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

00' 01' 02' 03' 04' 05' 06' 07' 08' 09' 10' 11' 12' 13' 14'

Une

mpl

oym

ent R

ate

Year

Annual Average Resident Unemployment RateWabasha County, Rochester MSA and Minnesota

2000 to 2014

Wabasha County

Rochester MSA

Minnesota

Slowdown in housing starts since recession…

208 housing units constructed in Plainview (2000-2013) • Avg. 15 units/year • 2008-2013: 5 units/year • 90+% of total permits for single-family

homes

American Community Survey (2012) Housing stock (Plainview):

• 25% built prior to 1940 • 15% built in the 1990s • 14% built in the 2000s

Single Family Detached: 82% of all

owner-occupied housing structures 71% of Plainview owners have

mortgage

New Construction Activity

0

10

20

30

40

50

60

Uni

ts

Year

New Construction (Units)City of Plainview, 2000-2013

Multifamily

Single-family

Few rental market properties in Plainview

Market Rate Smaller rental complexes

(8 units or under) Rent range:

• 2BR: $550 to $600 Est. price per sq. ft. $0.65

Olmsted Cty: $0.97

Subsidized/ Affordable 52 units | 3 projects 0% vacancy rate 14 vouchers in Plainview---

administered by SEMMHRA

5% Vacancy = Market Equilibrium

Eastwood Apartments

American Community Survey (2012) Single-family rentals |28% of all

renter units in Plainview Single-family + duplexes | 39% of

all renter-units in Plainview Mobile homes account for 16% of

all renter units in Plainview

Housing Cost Burden % lower than state averages

Rental:

35% of Plainview renters are cost burdened

• 49% Wabasha Co. | 49% Minnesota

47% of renter HHDS > $35k are cost burdened

• 68% Wabasha Co. | 77% Minnesota

Owners:

23% of owners are cost burdened

• 23% Wabasha Co. | 25% Minnesota

50% of owners HHDS > $50k are cost burdened

• 45% Wabasha Co. | 52% Minnesota

Cost Burden: more than 30% of gross income allocated to housing

Low senior vacancy rates

Market Rate 18 units congregate 18 units assisted living All units located at Greenwood Prairie Place

Subsidized/disabled 40 units | 0% vac. rate Rents based on income

5%-7% Vacancy = Market Equilibrium

Market Area Overall 76 units | 3 projects 0% vacancy rate

Plainview Senior Housing

Greenwood Prairie Place

Home pricing improving and near last decade’s peak

Median sales price: • Peaked in 2005: $142,382 • Resales peaked in ‘05: 70 • +41%: 2000 to 2014 • PSF: $72 (2014)

Resales Overall Market activity improving Low inventory New construction market slow in

Plainview

43 4244

57

47

70

6065

53

4348 49 53

40

47

0

10

20

30

40

50

60

70

80

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

$200,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Resa

les

Sale

s Pr

ice

Year

Plainview Housing Resales - 2000 to 2014

Resales Median Sold Price Average Sold Price

Supply Side Active Listings (October 2014)

20 listings in Plainview

Median price: $135,200

Average price: $172,975

All single-family listings

Avg. Price Per Sq. Ft. Single-family: $114/PSF

PSF by type: • 1.5-story: $74/PSF • Two-story: $103/PSF

6

5

3

2 2

1

0

1

0

1

2

3

4

5

6

7

Under$100k

$100k to$149.9k

$150k to$199.9k

$200k to$249.9k

$250k to$299.9k

$300k to$399.9k

$400k to$499.9k

$500k+

# of

Lis

tings

List Price

Plainview Active Listings - October 2014

New Construction is stagnant since recession Lot Inventory/Supply 35 vacant lots | 5 subdivisions Most vacant lots platted for townhomes No new lots platted since 2003 Newer subdivisions

Avg. lot cost: $32,600 Home value w/lot: $162k (per

Assessor) Avg. lot size: 0.33 acres

New Construction Market Few housing starts in Plainview Spec too risky in today’s market Lack of quality move-up lots Build-to-suite premium ($150 PSF+) No pending projects in development

pipeline

Demand Overview Household growth & tenure Turnover Income-qualified households Demand by product | Preferences

Demand Driver Examples

• Demographics

• Economy & Job Growth

• Consumer Choice | Preferences

• Turnover/Mobility

• Supply (i.e. Existing Hsg. Stock)

• Replacement need (i.e. functionally /physically obsolete)

• Financing

Demand Assumptions/Methodology Household growth adjusted for local factors (i.e. building permits, etc.)

Demand Summary

Demand for 258 General-Occupancy units through 2025

48

18

17

123

52

0 20 40 60 80 100 120 140

Rental - Market

Rental - Aff

Rental - Subs.

For-Sale - SF

For-Sale - MF

Units

General-Occupancy Demand by Type - Plainview2014 to 2025

Demand for 103 senior housing units in 2019

16

16

11

14

30

16

18

14

11

11

27

14

0 10 20 30 40

Affordable

Memory Care

Assisted Living

Congregate

Adult - Rental

Adult - Owner

Units

Senior Housing Demand by Type - Plainview2014 & 2019

2014 2019

Maintain three- to- five-year lot supply

Demand for 123 new single-

family units after existing lots have been absorbed

Demand for entry-level, move-up, & executive homes

Single-Family Development Recommendations

Entry-level split example

move-up example

Demand for 52 units Potential housing types: Townhomes/row homes Twin homes/duplex Quads Detached townhomes

Multifamily For-Sale Development Recommendations

Standard twin home example

Executive Detached TH example

Demand for 83 units • 48 market rate • 18 affordable • 27 subsidized

Demand for all incomes, HH

types, and product types

Recommend the following types: Market rate rental – both

apartment & townhome style Affordable – townhome style

Rental Housing Recommendations

Townhome rental example

Harvest Ridge Townhomes

Senior Housing Recommendations

Demand for 103 units | Demand across all service-levels

Recommend the following: Active adult rental (30 units) Affordable rental (16 units) Catered Living (22 to 26) Memory care (12 to 24 units)

Plainview Senior Housing

Green Prairie Place

• Steady, yet stronger population and household growth this decade

• Growth in younger adult households and baby boomers; aging boomers will impact alternative housing types

• Household sizes continue to shrink | Household types changing

• Job exporter; 37% of Plainview resident’s commute to Rochester

• Few rental projects in Plainview | low vacancy rates

• For-sale market continued improvement | lack of supply

• New construction market soft since recession | Need for new lots

• Demand for most housing types this decade & beyond

• Low-cost housing market; difficulty cash flowing new development

Key Takeaways…

Matt Mullins Maxfield Research Inc. 612.904.7971 mmullins@maxfieldresearch.com

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