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CHALLENGES AND OPPORTUNITIES <br />According to the Harvard's Joint Center for Housing Studies (JCHS) unsubsidized rentals ac- <br />count for more than 75% of the affordable housing stock in the United States. It is esti- <br />mated that over one-third of the naturally occurring affordable housing stock is composed <br />of smaller multifamily buildings from 5 to 49 units. Within the Twin Cities Metro Area, it is <br />estimated that about 60% of the rental stock is unsubsidized rentals affordable to house- <br />holds at or below 50% AMI. <br />300 <br />250 <br />200 <br />100 <br />50 <br />0 <br />0 <br />Naturally Occurring Affordable by AMI <br />111R <br />1 <br />30% 50% 60% <br />276 <br />0 0 <br />80% 100% 120% <br />Because the unsubsidized housing market is unregulated and is fluid, there is the chance <br />some affordable market rate units could be lost. New construction costs for apartments in <br />Ramsey will likely exceed $180,000 per unit; whereas an older Class B or Class C rental <br />building may be acquired for under $100,000 per unit. Therefore, it is typically more eco- <br />nomical to rehabilitate an existing property than build a new one. Because of the high cost <br />of new construction, we recommend the City monitor and maintain the unsubsidized rental <br />market as an effort to maintain the affordable housing product type. <br />• Retail Leakage. Although outside the scope of the Comprehensive Housing Study, Maxfield <br />Research and Consulting analyzed the retail demand potential in Ramsey. Although the <br />rule of thumb in the real estate industry is "retail follows rooftops," Ramsey is currently un- <br />der retailed given the number of households and consumer expenditures. The chart below <br />shows the retail leakage — the gap between the retail supply and demand. A positive value <br />represents "leakage" of retail opportunity to stores outside of Ramsey. A negative value <br />represents a "surplus," where more customers are coming into the area for retail goods and <br />services than there are households in the area. <br />As illustrated in the to chart, most retail categories of retail in Ramsey show a leakage of ex- <br />penditures being transacted outside of Ramsey. An increase of retail goods and services will <br />enhance the desirable of Ramsey and will further enhance housing demand. <br />MAXFIELD RESEARCH AND CONSULTING 159 <br />