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Housing Market Analysis and Demand
Estimates
In 2002, Maxfield Research Inc. of Minneapolis, MN, conducted a
comprehensive housing needs (for-sale and rental) analysis for Anoka
County. The study quantified the demand for various types of housing
that will be needed during this decade to meet the needs of existing
and future residents, and to assess the competitiveness of Anoka
County as compared to other counties in the Metro Area in attracting
new residents.
Download the complete
report (Adobe Acrobat format, 1922 Kb)
Below on this page, read the Key Market Findings and
Recommendations of the Maxfield
Research report.
Key Market Findings
- Anoka County experienced substantial population and household
growth during the 1990s as development continued to push northward
across the County. The largest recipients of household growth
during the 1990s were Coon Rapids, Ramsey, Andover, Blaine, and
Lino Lakes. All of these communities had an ample supply of
buildable land within the Metropolitan Urban Service Area (MUSA)
boundary. Beyond these communities to the north, the County is
largely urban-rural with zoning restrictions that limit
residential development to primarily large-lot single-family
homes.
- The current MUSA boundary constrains the ability to develop
higher housing densities in most of the County. The greatest
amount of housing development is occurring in areas with available
land serviced by municipal sewer and water (Blaine, Lino Lakes,
Andover and Ramsey). Very little multifamily housing will be built
in communities in the northern portion of the County, which is not
serviced by municipal sewer and water.
- Land outside the MUSA is being consumed at a rapid pace by the
development of housing at lower densities. For example, with an
average single-family lot size of 2.5 acres (a typical lot size in
the townships), the amount of land to develop 100 homes would be
about 300 acres (including land for streets), compared to about 33
acres for an average single-family lot size of 12,000 square feet.
Thus, the more rural submarkets are consuming land at a pace
similar to the more urban submarkets that are adding a much
greater amount of housing.
- In addition to the lack of municipal sewer and water, poor
access to the Metro Area’s freeway network also constrains
development in much of the northern half of the County. While
buyers of single-family homes are willing to locate in somewhat
out-of-the-way areas, major employers and multifamily housing
typically seek locations along major freeways that have good
access and visibility to the surrounding area. Such high visible
locations are limited to the fringes of the southern and eastern
portions of the County which are intersected by I-694, I-35W,
I-35E, Highway 610, and Highway 10. Without major improvements to
Central Avenue (from Highway 610 through East Bethel) or a new
freeway through the northern half of the County that would connect
to the existing freeway network, development there will be limited
primarily to single-family homes whose residents commute to jobs
elsewhere in the area.
- In the more fully-developed submarkets, such as Southern Leg
and Anoka - Coon Rapids, redevelopment is becoming increasingly
important to sustain growth and satisfy housing needs. Because of
the high density needed for redevelopment to be feasible, most new
housing in these submarkets will be multifamily. Along with
redevelopment, we believe that there is a strong opportunity to
build housing near the planned North Star Commuter Rail stations
(or transit oriented development). The planned North Star Commuter
Rail line would connect St. Cloud to Downtown Minneapolis and
would have stations in Ramsey, Anoka, Coon Rapids, and Fridley.
Sites in close proximity to these transit stations are ideal for
multifamily housing – whose residents have a higher propensity to
utilize public transportation.
- During this decade, we project that housing demand will
continue to be strong, although demographic trends indicate that
the rates of population and household growth will decline slightly
as the baby boom generation ages into its older adult years. By
2010, the bulk of the echo boom generation (children of baby
boomers) will have entered their early-20s, increasing the demand
for rental housing and entry-level housing, both of which are
already strong. However, rising land and construction costs within
Anoka County and across the entire Metro Area make it difficult to
provide sufficient affordable and entry-level housing to fully
support this group. Housing construction will likely continue to
be dominated by move-up homes marketed toward older adults.
- Over the past decade, the housing needs of move-up buyers in
Anoka County and across the Metro Area has largely been met by the
substantial development of upper-end homes. However, construction
of entry-level for-sale homes and rental housing in growing
suburbs has not adequately fulfilled demand from lower- and
moderate-income households. Without increased development of
moderate priced homes and rental housing in Anoka County, there is
the possibility that many persons who are potential new residents
will seek more affordable for-sale housing located in counties
further north and west of Anoka County, or in the case of rental
housing, to the central cities. While builders are likely to
continue satisfying the market for upper-end for-sale homes, the
County may need to provide assistance to build an adequate number
of entry-level for-sale homes and rental housing to satisfy
demand.
- We foresee the greatest gap in demand arising within the
rental housing spectrum. The scarcity of high-density sites, sites
that are not proximate to goods and services, and a lack of strong
public transportation in many submarkets will create difficulties
in building product to serve renters. This is a difficulty that
Anoka County shares with the other Twin Cities counties. Without
new rental housing, younger households and other lower- and
moderate income households will seek opportunities elsewhere, most
likely closer the core of the Metro Area, where there is a greater
supply of affordable rental housing. It is important to provide
rental housing to meet the needs of employees in lower paying or
entry-level positions.
- We believe that new market rate rental housing in Anoka County
would have to achieve monthly rents of roughly $900 for
one-bedroom units and $1,100 for two-bedroom units for a project
to be feasible without subsidy or assistance. This is much higher
than the average rent (as of March 2002) of $698 for one-bedroom
and $833 for two-bedroom units in the County. Apartment developers
shied away from Anoka County in the 1990s, in part because they
did not believe they could achieve the rents necessary to support
new market rate projects, whereas they could in other parts of the
Metro Area where overall incomes are higher.
- We did not identify any vacancies among the 1,330 subsidized
rental units in the County that provide housing for low income
households. In addition, there is a waiting list of 1,607
applicants from Anoka County for the Housing Choice Voucher
program (as of August 2002, there were 1,564 Vouchers being used
in Anoka County). Housing Choice Vouchers are a tenant-based
subsidy funded by the Department of Housing and Urban Development
(HUD) in which lower income households are issued a voucher that
the household can take to a market rate rental unit and pay 30% of
their adjusted gross income for rent and utilities, with HUD
paying the remainder of the rent to the landlord. The lack of
vacancies in the subsidized rental projects and the long waiting
list for the Voucher program indicates strong demand for
additional subsidized rental units in the County.
- Entry-level for-sale housing is a significant need within the
Metro Area and is one that is rapidly becoming more difficult to
provide. Rising land and construction costs are pricing new
housing out of reach of many young households. In addition,
turnover of entry-level housing is not sufficient enough to
accommodate the demand from moderate income households. For
various reasons, some higher income households choose to remain in
moderate priced homes versus moving up into higher priced housing
that they can afford. The resulting supply of existing entry-level
homes on the market being less than demand has caused the prices
of these homes to escalate rapidly, pricing some modest homes out
of the reach of potential entry-level home buyers. Combining
minimal entry-level home construction with low turnover of
existing entry-level homes has reduced the availability of these
homes in the marketplace.
- We project the senior population (ages 65 and over) in Anoka
County to grow by 57% during this decade. Additional housing will
be needed to enable existing senior households who have lived in
Anoka County for many years to remain in their communities. In
addition, the increasing older adult base in Anoka County will
result in increased senior housing demand from the parents of
these older adult children desiring housing near their offspring.
- Demand exists for a variety of housing product types within
each Submarket. However, each submarket is not likely to develop
sufficient housing to meet the needs of all market segments, due
to land use restrictions, funding allocations and other
considerations (proximity to goods and services, transportation,
etc.). Although it is important to encourage a variety of housing
products within each submarket, some needs may go unmet and/or
need to be satisfied elsewhere.
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Recommendations
- There needs to be a focus on enhancing the housing mix and
product types in the developing areas of the County. The vast
majority of the housing built in these areas during the past
decade, and currently, was move-up single-family homes.
Demographic and market trends in the County and Metro Area point
to a growing demand this decade from younger households (for
entry-level for-sale homes and for rental housing), older adults
(for multifamily owner products, including townhomes, detached
villas, twinhomes, and condominiums), and for seniors for
age-restricted housing. The demand for these other types of
housing needs to be met or the County is ultimately going to lose
some potential households to surrounding areas because of the lack
of housing choices. We also believe that the County can support
more executive homes for very high income households if a high
amenity subdivision with covenants on the size, materials, and
features of homes is created.
- To satisfy the strong demand for entry-level homes from
families, we recommend encouraging the development of
single-family neighborhoods with smaller lots (under 11,000 square
feet) and homes priced for the entry-level market (under
$250,000). This is a great need that is going largely unmet in
many communities of the Metro Area, including Anoka County, as
builders focus on the strong demand from move-up buyers.
- Current low rental vacancy rates in the County reduce the
availability of rental product for all market segments,
particularly for those who have lower incomes and/or larger
families. While rental housing at all price levels should be
encouraged, emphasis should be placed on providing rental housing
with moderate rents and without income restrictions.
- There is a strong need for rental housing with moderate rents
to serve both families, young workers and lower income seniors. To
the extent that the County can encourage the development of this
type of housing would assist in providing workers to local
businesses and enhance the economic base of the County and retain
long-standing residents of the area. To satisfy the projected
affordable rental need shown in Table 1, the County may need to
facilitate development through methods other than the Low Income
Housing Tax Credit (LIHTC) program. LIHTC projects have income
restrictions which, combined with the minimum rents, create a
narrow group of households that income qualify for the housing,
thereby leaving much of the affordable housing demand unmet.
- The growing senior population in the County will create the
need for additional senior housing in the County during this
decade. We believe that current planned projects will meet the
need for market rate senior housing in the short-term. However,
there is strong demand for affordable senior housing that is not
being address by planned projects. The development of affordable
senior rental housing should be encouraged in the County.
- While rental housing is needed in all Submarkets, the southern
half of the County is positioned to accommodate most of the new
product this decade. First, because much of the northern half of
the County does not have the infrastructure to support multifamily
housing. Second, the southern portion of the County offers sites
that have close proximity to shopping, employment, services, and
access to the metro freeway system, which most renters prefer. The
communities of Ramsey, Andover, Blaine, and Lino Lakes are in the
best position to provide new rental housing. Not only is
employment growth creating demand in these communities, but they
also have existing infrastructure and available land to support
new development.
- Large-lot developments in the northern half of the County are
consuming the land supply at a rapid rate. We recommend that
communities in the northern half of the County explore the
prospect of limiting current large-lot developments to preserve
land for higher density housing and commercial uses in future
years, or to encourage cluster development to preserve open space
for future generations.
- In addition to demographic and market trends, our housing
demand calculations, are largely based on the availability of
developable land, City policies, and recent development trends
that we project will continue through this decade. We believe that
the County has the ability to exceed these projections if changes
occur in various existing conditions. The most significant would
be expansion of the current MUSA boundary. Ramsey, Andover, Ham
Lake, and Lino Lakes could all boost the amount of housing built
if the MUSA was expanded to encompass a greater amount of
developable land. We also believe that some housing demand would
transfer from northern Anoka County communities to areas within
the expanded MUSA, somewhat reducing the demand in those
communities.
- Improving the capacity and flow of major transportation
arteries within the County would also help boost housing
development, along with commercial development. Limited access to
the Metro freeway network is a factor that reduces the amount of
demand for housing in the County. It is a factor that also reduces
the ability of the County to capture some major employers and
national retailers, many of whom limit their locations to only
those with access and visibility to a major freeway. Slower
commercial growth compared to housing growth could create an
imbalance between jobs and housing, where Anoka County
increasingly could become a “bedroom community,” and residents
would carry a higher proportion of the tax burden.
- Another development trend that will reduce the amount of
housing supportable in the County in the long-term is the
development of low density housing in the northern half of the
County. At the current pace, we estimate that when Andover,
Ramsey, Blaine, and Lino Lakes are fully developed, there will
also be little land remaining in communities to the north to
accommodate new growth. If Anoka County wants to retain a strong
growth rate beyond this decade, tracts of developable land that
can accommodate higher density housing would need to be preserved
for future development.
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page last updated -
05/21/2004
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