Housing Needs And Preferences

Implications for the Multi-family Development Community

2014 Multi-family Housing ConferenceNew Hampshire Housing Finance Authority

2002

• George W. Bush - President• ‘N Sync, Enrique Iglesias, LeAnn Rimes Topped

the Charts• Microsoft X-Box, Sharp 50”HD Plasma TV, XM

and Sirius Radio Available in Cars• Housing Market

– New Construction = Large SF Homes• Median PP = $260K and on its way to $312K in ’06• 6,400 SF permits and 2,000 MF permits

Kids Off to College

The Family Home Down Sizing

or

Conceptual Housing Progression

Kids Get Jobs

Assisted Living

Nursing Home

Permanent Affordable Housing

New Family Buys

The Family Home Down Sizing

or

NH Transportation Perspective

Assisted Living

Nursing Home

Permanent Affordable Housing

Drive Yourself Don’t want to Drive Yourself Very Far

Don’t want to Drive Yourself (There’s a MiniBus)

Can’t Drive Yourself

Not Going Anywhere

2012

• Barack Obama - President• Katy Perry, Justin Timberlake, Pink, and Miley

Cyrus Topped the Charts• Tablets, LED HD TV’s, E-Cigarettes and Google

Glass working with Ray Ban Design• Housing Market

– New Construction• Median PP = $300K• 2,100 SF permits and 680 MF permits

Kids Off to College

The Family Home

What’s More Likely

and

or

The Family Home

What’s More Likely

NC

VA

SC

TX

“Down Sizing”

or

New Family Buys

Remain in the Rental Market Longer

Delaying Homeownership

The Family Home

What’s More Likely “What I would really like to do is stay in my

current residence as long as possible.”AARP Survey

Assisted Living

Age-In-Place

Nursing Home

Aging Renters

Permanent Affordable Housing

Remain in the Rental Market Longer

What’s More Likely

Age-In-PlaceAging RentersServices

Personal Services•Visiting Nurse•Rehab Therapy •Counseling

Accessibility Modifications•Bathrooms•Stairways•Kitchens•Entrances

But…

Over than 30% of the rental stock is more than 70 Years Old

Older renters will be better served in newer units.

Housing Needs In New Hampshire

• Production Need – Based On: Population and Job Projections

• By County • By Tenure

• Housing Need– Based on Housing Cost Burden

• Mainly Rental Costs

Housing Needs In New Hampshire

• Economic Environment• Perceived Market Changes• Demographic Changes

• How Housing is Perceived– Younger Households

• Likely Impact of an Aging Population• Production and Housing Need

Housing Needs In New Hampshire

New Hampshire Center for Public Policy Studies – Dennis DelayApplied Economic Research – Russ Thibeault

• Added Focus Groups– Homebuilders– Mortgage bankers and brokers– Realtors– Regional Planning Commissions – Senior Housing Experts – Workforce Housing– Young Professionals

Part 1 - Big Houses, Small Households: Perceptions, Preferences and Assessment Part 2 - Senior Housing PerspectivesPart 3 - The Evolving Environment and Housing's Future

New Hampshire’s population growth is slowing down, with fewer new migrants

Job growth is slow and job quality is poor Recent trend away from ownership and towards rental housing

Young home buyers are challenged by slower economic growth, stricter lending standards and high student debt

The high rate of foreclosures forced more than 20,000 households out of ownership since the beginning of the recession

Renter households are on average younger and move more often

Housing Needs and Preferences

What the Study Found – NH’s Housing Environment is Changing

Going forward, elders will be an larger share of owners and renters

Seniors want to age in place With increasing age comes a higher proportion of households

with a disability The rental housing stock is on average older and new production

has not kept pace There is a mismatch between household size and the current

housing stock Affordability, especially for low income renter households is a

problem. Dichotomy of NH growth means different regions have different

problems

Housing Needs and Preferences

What the Study Found – NH’s Housing Environment is Changing

New Hampshire's population growth has slowed, with fewer new migrants

The past 6 years has seen the slowest population growth in more than 30 years.

New Hampshire Job Growth Has Also Slowed

Annual job growth in New Hampshire has been less than 1% each year since the end of the recession.

And , the Quality of New Hampshire Employment Has Changed

Average annual employment in Manufacturing declined by 35% between 2000 and 2013, while employment in Education and Health Services increased by 28% and Leisure and Hospitality increased by 11%.

The large number of foreclosures continues to put pressure on the rental housing market

Since 2008 there have been over 21,000 foreclosed properties in New Hampshire. Many of these households must seek housing in the rental market.

In 2005, after more than a decade of economic growth the home ownership rate in New Hampshire reached a peak of 73%, with renter households making up the remaining 27%. Since then the ownership rate has declined slightly, shifting growth to renter households. But, overall growth in households has been limited.

The recent trend is away from ownership and toward rental housing

The shift in renter households in New Hampshire has been significant in recent years, increasing by nearly 13% since 2005, after declining by 5% between 2000 and 2005.

The result is an increase in the number of renter households

But multi-family housing production has not kept pace with demand over the past 20 years

And, New Hampshire’s rental housing stock is aging

We have experienced more than 20 years of below average rental housing production, and now over 30% is more than 70 years old.

The increasing number of renter households keeps vacancy rates low

16% increase

As a result, the median rent continues to increase

Median gross rent has risen about 16% over the past 10 years, and at $1,076 the stateside 2-bedroom median gross rent remains above the $1,000 mark for the eighth year in a row.

But, renter household incomes have not kept pace

NH Median Household Income by Tenure

$66,840

$74,183$78,025

$34,120 $35,693 $36,322

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

2005 2010 2012

OwnerRenter

17%

6%

So the cost burden on renter households has gotten worse

The overpayment problem is not limited to one age group

Overpayment is the most severe for low income renter households

Of New Hampshire’s renter households 23% are 25 to 34 years old and another 20% are 35 to 44 years old.

Renter households are on average a younger demographic

Renter households are far more mobile than owner households

More than 50% of renter households have moved within the past three years, and nearly 90% within the past 13 years.

Between 2005 and 2012 there has been an increase in renter households in each age group between 25 and 74. However, the increases in the age groups over 45 years are mostly attributable to the aging baby boom generation.

Recent increase in renter households not limited to one age group

The recent increase in renter households is expected to continue

Between 2010 and 2025 renter households are projected to increase by nearly 16,000.

Between 2010 and 2025, age 65 and older renter households show the greatest increase; but, they remain a minority of all renter households. This shift is due primarily to existing renter households aging in place.

But the future change will be primarily in the older age groups

Most seniors want to age in place

Source: AARP, 2010

And, most seniors do age in place

Northeast US Annual Mobility by Age, 2012 to 2013

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

.1 to

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.5 to

9 ye

ars

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ars

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7 ye

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4 ye

ars

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9 ye

ars

.30

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4 ye

ars

.35

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9 ye

ars

.40

to 4

4 ye

ars

.45

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9 ye

ars

.50

to 5

4 ye

ars

.55

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9 ye

ars

.60

to 6

1 ye

ars

.62

to 6

4 ye

ars

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9 ye

ars

.70

to 7

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ars

.75

to 7

9 ye

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s

And those older age groups are primarily owners

Ownership predominates for New Hampshire households well into old age. Seventy-seven percent of households 75 to 84 years old are owners, and even for those households 85 years and over the percent of ownership remains above 60%.

A significant roadblock to aging in place is the increase in disabilities as we age

Households% of Senior Households

Vision Difficulty 3,570 8.0%Hearing Difficulty 9,818 22.0%Physical Difficulty 11,380 25.5%Cognitive Difficulty 4,463 10.0%Self-Care Difficulty 3,302 7.4%Independent Living Difficulty 7,006 15.7%

With At Least One Disability 44,626 42.1%

Total Households Age 65+ 106,000 Source: ACS, 2011 Cited in AARP State Housing Profiles, 2011

Senior Households With At Least One Disability

Is the current housing stock designed for, or adaptable to households with significant disabilities?

• Low Maintenance• Smaller, Efficient Units• One Level Living• No Step Entry• Wider Entry and

Bathroom Doors• Adapted Bathrooms

and Kitchens• Higher Electrical

Outlets• Levers, not Knobs• Access to Public

Transportation

Needs for Aging in Place:

If the proportion of owners and renters remains the same, the projected need for rental housing production will be low

Preferences and demographics suggest that there may be more demand for rental housing production than currently projected.

Housing Production Estimate

And the near future production needs varies dramatically by County

Demand for nursing home and assisted living capacity will rise sharply

The more likely result is an increase in demand for in-home health services. Is the current housing stock in locations where these services can be efficiently delivered?

Rental MarketDemand

Slow Economic Growth,

Tighter Underwriting,

High Student Debt,

Delayed HH Formation,Hesitancy About Ownership,

Millennial Generation Delaying OwnershipSome Down-Sizing to Rental,

Competition for Small Units

from Owners Down-Sizing

Former Owners Competing for Rentals

Foreclosures

Aging-In-Place

Need for Services and Rehab or Newer Affordable Units

Implications for the Multi-family

Development Community

Opportunity

Rental MarketDemand

, but…

• As the market responds will we see more resistance at the local level (Following a period of little development pressure)?

• Mission driven developers will find it harder to serve the very low income population. (Lower resources & incomes)

• Unless the economy improves substantially, it will continue to be difficult to construct workforce housing units.

Unknowns…• Second Homes – Retirement or Year-round

occupancy?• HH formation no longer delayed?• Will retirees be replaced with systems or workers?• Will there be a new tech revolution?• Immigration Policy?

www.nhhfa.org

Bill Ray, Managing Director, Policy, Planning & Communications – bray@nhhfa.org

Dan Smith, Director of Housing Research – dsmith@nhhfa.org