Agenda - Economic Development Authority - 01/25/2018

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Northstar Corridor Draw Area multi -family building permits averaged 11.1 percent market share of total building permits from 1991 to 1998. Multi -family market share increased to an average of 23.1 percent from 1999 to 2006, and continued to increase to an average of 25.4 percent in the 2007 to 2011 period. This demonstrates that the Northstar Corridor Draw Area has become more attractive for multi -family development. Northstar station cities attracted more multi -family development than other communities within the Northstar Corridor Draw Area. Station cities captured over 75 percent of the Northstar Corridor Draw Area new multi -family units built between 1991 and 1998. From 1999 to 2006, Northstar station cities share of new multi -family units increased to an average of 80.8 percent as multi -family development increased in Northstar station cities. Since 2007, multi -family housing has decreased as a result of the recession. Multi -family housing increased in the other draw area cities which may reflect availability of development sites. Ramsey experienced sporadic multi -family development prior to 2002. In 1998, Ramsey added 105 multi -family units, capturing two-thirds of Northstar cities multi -family development. Between 2002 and 2007, Ramsey added over 1,300 multi -family housing units, of which 87.2 percent were in the condo/townhouse/duplex category. The average annual multi -family market share for this time period was 41.2 percent. Since 2007, multi -family development in Ramsey has decreased significantly with 18 units built in 2008 and no additional units added between 2009 and 2011. Year-to-date building permits indicate 238 multi -family units under construction in 2012. Household Formation The dramatic decline in housing construction has many causes. It is becoming apparent that household formation has recently departed significantly from past trends. This appears to have been a major contributor to the sharp decline in residential construction following 2006 in the Metropolitan Area and nationally. The decline in household formation is a national trend and was documented in a recent analysis published by the Cleveland Federal Reserve Bank. This report found that annual household formation in the United States fell from an average of 1.5 million households in the 1997 to 2007 period to 500,000 per year in 2010, a level that is one-third of the annual households formed in the previous 10 years. The great recession reduced the formation of households by two-thirds. The shortfall in household formation was estimated at 2.6 million households. The decline in households was not uniform across all age cohorts. Nationally, households age 18 to 34 accounted for 25.6 million households or 21.6 percent of total households in 2011. This group, however, accounted for 1.9 million or 73 percent of the shortfall in household formation. The recession had a dramatic impact on the economic prospects for the 18 to 34 age cohort as unemployment increased and job openings evaporated as a result of the recession and the sluggish recovery that has created few jobs. The recession caused adult children to move home, singles to double -up, and homeowners to take in renters reducing the rate of household formation. 4-19