Nearly every community Redevelopment Resources has interacted with over the past handful of years talks about the housing market. Demand for single-family homes is high due to low interest rates and attractive to first-time buyers. That is, if they can find an available home an avoid a bidding war. Some communities need housing at the executive level, some at the other end of the spectrum. Some have a serious need for housing for seasonal workers, even amid a pandemic. Most need housing for the middle of the pack, the workforce.
Housing has now become an economic development issue (in addition to being a community development issue). So who should pay for the housing study? Should the developer (private sector) pay for it? Or should the municipality/development authority/EDO pay for it?
The Private Sector Housing Market Study
Oftentimes, lending institutions require a developer to have a current market study completed. Housing Market Assessments are also required when tax credits are being used as a part of the funding. For specific developments, the developer will have to supply the study. However, that study is the property of the developer and will only analyze what the developer requests it to analyze. If the developer presents their housing study to request an incentive, the municipality may not to completely trust the results. However, reasonable support for an incentive exists if the results of the developer’s housing study are consistent with local beliefs.
The Public Sector
There are a host of reasons for the public sector to own their own housing market study. The municipality which commissions a housing market assessment will understand the demand and supply issues. Municipal staff will be able to address those issues through planning, zoning, developer attraction and creation of incentives programs. A housing study serves as a marketing tool for a community focused on meeting the housing needs of the community.
Furthermore, include vulnerable populations within the assessment. Understanding housing issues for each of these populations enables Social service organizations to address meeting their specific needs. Vulnerable populations include the homeless, disabled, victims of domestic abuse, etc.
A colleague pointed out their municipality updates its housing assessment every two years so they can:
- understand the market and
- compare requests for incentives against realities in the market
A developer’s bank will likely require them to provide a current and tailored study for the proposed project. However, a community-owned market study is a great marketing tool, attracting developers to the projects needed by the community’s residents.
Finally, a current housing market study enables local stakeholders in the community to provide valuable insight to housing market challenges. The public and private sector can then help interested parties understand where focus should be placed to address such challenges.
If your community finds itself in a similar circumstance, have you quantified the need? Have you qualified the need? Are employers stating that they can’t hire the right people or enough people because of a shortage of housing? Are local realtors stating they cannot meet housing demand with low inventories and record low “days on the market” statistics? Redevelopment Resources offers housing market studies and assessments for the private sector and the public sector. Our perspective with significant experience in both economic development and community development pairs well with our real estate experience. We’ve developed unique and specific recommendations, custom designed for our clients’ specific needs. Let us help you with your housing development challenges.