Housing Needs And Preferences

Implications for the Multi-family Development Community

2014 Multi-family Housing Conference New Hampshire Housing Finance Authority

2002

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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

The Family Home

Conceptual Housing Progression

New Family Buys or Kids Off to College Permanent Affordable Housing Kids Get Jobs Assisted Living Nursing Home

NH Transportation Perspective

The Family Home Drive Yourself Don’t want to Drive Yourself Very Far or Permanent Affordable Housing Can’t Drive Yourself Assisted Living Don’t want to Drive Yourself (There’s a MiniBus) Not Going Anywhere Nursing Home

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

The Family Home

What’s More Likely

Kids Off to College and or

The Family Home

What’s More Likely

Delaying Homeownership New Family Buys Remain in the Rental Market Longer or

TX SC VA NC

The Family Home

What’s More Likely

“What I would really like to do is stay in my

Age-In-Place

current residence as long as possible.” AARP Survey Aging Renters Permanent Affordable Housing Remain in the Rental Market Longer Assisted Living Nursing Home

What’s More Likely

Aging Renters

Services

Age-In-Place

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Personal Services Visiting Nurse Rehab Therapy Counseling Accessibility

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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

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Production Need

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Based On: Population and Job Projections

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By County

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By Tenure

Housing Need

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Based on Housing Cost Burden

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Mainly Rental Costs

Housing Needs In New Hampshire

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Economic Environment Perceived Market Changes Demographic Changes

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How Housing is Perceived

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Younger Households

Likely Impact of an Aging Population Production and Housing Need

Housing Needs In New Hampshire

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New Hampshire Center for Public Policy Studies – Dennis Delay Applied Economic Research – Russ Thibeault Added Focus Groups

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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 Perspectives Part 3 - The Evolving Environment and Housing's Future

Housing Needs and Preferences

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

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

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

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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

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.

The recent trend is away from ownership and toward rental housing

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 result is an increase in the number of renter households

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.

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

As a result, the median rent continues to increase 16% 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 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Owner Renter $66,840 $34,120 2005 $74,183 17% $35,693 2010 6% $78,025 $36,322 2012

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

Renter households are on average a younger demographic

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 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.

Recent increase in renter households not limited to one age group

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.

The recent increase in renter households is expected to continue

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

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

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.

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 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% .1

to 4 ye .5

ar s to 9 ye .1

0 t ar s o 1 4 ye .1

5 t ar s o 1 7 ye .1

8 t ar s o 1 9 ye .2

0 t ar s o 2 4 ye .2

5 t ar s o 2 9 ye .3

0 t ar s o 3 4 ye .3

5 t ar s o 3 9 ye .4

0 t ar s o 4 4 ye .4

5 t ar s o 4 9 ye .5

0 t ar s o 5 4 ye .5

5 t ar s o 5 9 ye .6

0 t ar s o 6 1 ye .6

2 t ar s o 6 4 ye .6

5 t ar s o 6 9 ye .7

0 t ar s o 7 4 ye .7

5 t ar s o 7 9 ye .8

0 t ar s o 8 4 ye ar .8

s 5+ ye ars

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 Senior Households With At Least One Disability % of Senior Households Households

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

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

Needs for Aging in Place: • • • • • • • • • 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

Housing Production Estimate 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.

And the near future production needs varies dramatically by County

Demand for nursing home and assisted living capacity will rise sharply 12 000 10 000 8 000 6 000 4 000 2 000 0 Living Arrangements of NH Senior Population 5 800 3 700 7 000 4 400 11 300 7 400 Assisted Living Long Term Care 2000 2010 2025

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?

Millennial Generation Delaying Ownership Slow Economic Growth, High Student Debt, Hesitancy About Ownership, Delayed HH Formation, Tighter Underwriting, Competition for Small Units from Owners Down-Sizing Former Owners Competing for Rentals Some Down-Sizing to Rental, Foreclosures Rental Market Demand Aging-In-Place Need for Services and Rehab or Newer Affordable Units

Implications for the Multi-family Development Community

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Opportunity , 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) Rental Market Demand continue to be difficult to construct workforce housing units.

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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 – [email protected]

Dan Smith, Director of Housing Research – [email protected]