Agenda - Council - 08/27/2019 - Laserfiche WebLink

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HOUSING DEMAND ANALYSIS household growth, which in -turn relates to reduced housing demand. Additionally, low income growth results in fewer move -up buyers which results in diminished housing turnover across all income brackets. Consumer Choice/Preferences A variety of factors contribute to consumer choice and preferences. Many times a change in family status is the primary factor for a change in housing type (i.e. growing families, empty - nest families, etc.). However, housing demand is also generated from the turnover of existing households who decide to move for a range of reasons. Some households may want to move - up, downsize, change their tenure status (i.e. owner to renter or vice versa), or simply move to a new location. Supply (Existing Housing Stock) The stock of existing housing plays a crucial component in the demand for new housing. There are a variety of unique household types and styles, not all of which are desirable to today's con- sumers. The age of the housing stock is an important component for housing demand, as com- munities with aging housing stocks have higher demand for remodeling services, replacement new construction, or new home construction as the current inventory does not provide the supply that consumers seek. Ramsey and suburbs like it have an older housing that results in higher demand for remodeling services and infill redevelopment. Pent-up demand may also exist if supply is unavailable as householders postpone a move until new housing product becomes available. Housing Finance Household income is the fundamental measure that dictates what a householder can afford to pay for housing costs. According to the U.S. Department of Housing and Urban Development (HUD), the definition of affordability is for a household to pay no more than 30% of its annual income on housing (including utilities). Families who pay more than 30% of their income for housing (either rent or mortgage) are considered cost burdened and may have difficulty afford- ing necessities such as food, clothing, transportation and medical care. After the Great Recession lenders "tightened the belts" on mortgage lending and it was difficult for many buyers to obtain financing. The ability of buyers to obtain mortgage financing has re- cently lightened as lenders have eased restrictions that had been in place since the recession. However, lenders are still requiring substantially higher credit scores and equity than last dec- ade. MAXFIELD RESEARCH AND CONSULTING 125