Housing needs assessment

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HOUSING NEEDS ASSESSMENT


DOWNTOWN LEE’S SUMMIT, MISSOURI
October 2015

HOUSING NEEDS ASSESSMENT

DOWNTOWN LEE’S SUMMIT, MISSOURI
October 2015

Prepared for:

Lee’s Summit Economic Development Council

218 SE Main Street

Lee’s Summit, MO 64063
Prepared by:

Canyon Research Southwest, Inc.

475 Ellicott Street #301

Buffalo, NY 14203


PR# 14-04-01


October 30, 2015


Rick McDowell, President and CEO

Lee’s Summit Economic Development Council

218 SE Main Street

Lee’s Summit, MO 64063
Re: Housing Needs Assessment

Downtown Lee’s Summit, Missouri


Mr. McDowell;
To assist the Lee’s Summit Economic Development Council in evaluating the potential of downtown Lee’s Summit to support the construction of new housing inventory Canyon Research Southwest, Inc. has prepared the attached Housing Needs Assessment.

The report provides an economic and demographic analysis of the downtown market, identification of the downtown’s housing stock characteristics (both for-sale and rental) and short-term housing demand projections. The study also includes a housing questionnaire that was prepared with the assistance of the Downtown Lee’s Summit Main Street Inc. for the purpose of gauging the interest and composition of housing in downtown Lee’s Summit. Based on the study findings housing demand forecasts were quantified for downtown Lee’s Summit and housing market opportunities identified, including appropriate market segmentation and housing product types.

Upon review of the report, should any questions arise or additional information requested, contact me directly at (716) 551-0655.
Respectfully submitted,
CANYON RESEARCH SOUTHWEST, INC.

Eric S. Lander, Principal



T A B L E O F C O N T E N T S

Page #
SUMMARY OF MAJOR FINDINGS iii
INTRODUCTION 1

Study Objective and Organization 1


DEMOGRAPHIC ANALYSIS 2

Population and Household Growth Trends 3

Population Age Distribution Trends 6

Educational Attainment 7

Household Income 8

Conclusions 9


HOUSING STOCK CHARACTERISTICS 11

Housing Stock Inventory and Occupancies 11

Age of Housing Stock 12

Housing Stock by Structure Type 13

Residential Permitting Trends 15

Conclusions 17

FOR-SALE HOUSING MARKET ANALYSIS 18

Detached Single Family Home Subdivisions 18

Detached Housing Sale Trends 19

Attached Housing Sales Trends 21

Current Supply of For-Sale Housing on the Market 23

Conclusions 24

RENTAL HOUSING MARKET ANALYSIS 26

Downtown Lee’s Summit Rental Market 26



  • Market-Rate Apartments 28

  • Income-Based Apartments 28

  • Senior Housing 31

  • Planned Development 31

Conclusions 32
FORECAST HOUSING DEMAND 34

Demographic Profile and Housing Demand 34

Housing Demand Calculations 35

T A B L E O F C O N T E N T S (Continued)
Page #
DOWNTOWN HOUSING QUESTIONNAIRE 41
STUDY CONCLUSIONS 50


  • Housing Demand Forecasts 50

  • Housing Market Opportunities 50



ADDENDA 52

Exhibit A: Downtown Housing Questionnaire 53


Exhibit B: Canyon Research Southwest, Inc. Client Roster 55
Exhibit C: Resume of Eric S. Lander 58

Principal of Canyon Research Southwest, Inc.



SUMMARY OF MAJOR FINDINGS

Canyon Research Southwest, Inc. has prepared a Housing Needs Assessment that evaluates downtown Lee’s Summit’s for-sale and rental housing markets, quantifies near-term housing demand and identifies housing market opportunities to capture and support new housing construction. The report’s major findings are summarized in the text below.


Demographic Overview

The City of Lee’s Summit is an affluent suburban community located in the southeast quadrant of the Kansas City MSA. A community’s population size, growth, household types, age composition, educational attainment and income levels influence the demand for housing.


A community’s population growth patterns play a significant role in the demand for housing and supportable property values. Over the past four decades the City of Lee’s Summit experienced steady population gains, increasing by 218 percent from 28,742 residents in 1970 to 91,364 residents by 2010. A community’s population growth patterns play a significant role in the demand for housing and supportable property values. Over the past four decades the City of Lee’s Summit experienced steady population gains, increasing by 218 percent from 28,742 residents in 1970 to 91,364 residents by 2010. The City of Lee’s Summit 2014 Development Report forecasts the City’s population to reach 99,699 residents by 2020. This steady population growth will fuel continued expansion of the new housing market.

Over the past decade the composition of households in Lee’s Summit shifted slightly with single female and non-family households comprising larger market shares. The number of female householder families with no husband present rose from 2,345 in 2000 to 3,754 by 2010. Married-couple family households decreased from 62.1 percent of all households in 2000 to 58.3 percent by 2010. Married-couple families with children under 18 years old also declined from 32.9 percent in 2000 to 27.9 percent by 2010. The percentage of householders living alone rose just slightly from 2000 to 2010. These shifts in the types of households in Lee’s Summit have likely had an impact on the composition of housing demand and new home construction.

The age composition of a community’s population plays a role in the demand for housing. Housing demand, needs and expenditures change as individuals grow older. From 2012 to 2017 the population of college age adults 20 to 24 years (-7.0%) and ages 45 to 54 years (-5.3%) in Lee’s Summit are projected to decline while the senior population ages 65+ years is projected to increase by 14.3 percent.
Education levels figure into a community’s socio-economic status. Because income increases with advancing educational attainment, communities with high education levels generally support higher levels of homeownership and housing values. Lee’s Summit residents on average are more educated than the norms for both Missouri and the United States. Approximately 50.4 percent of Lee’s Summit residents 25 years and over have attained associate, bachelors or advanced degrees. By comparison, 32.7 percent of Missouri residents and 39.1 percent of U.S. residents possess an associate, bachelors or advanced degree. The City’s well above average educational levels yield higher attainable incomes, housing values and homeownership levels.
Recent and near-term demographic trends for Lee’s Summit residents suggest a continued need for affordable housing and strong growth in the need for move-up and luxury housing. The growth in the number of young adults aged 25 to 34 years will fuel the need for attached rental and entry-level owner-occupied housing. The growing number of empty nesters will fuel downsizing and residents 65+ will generate heightened demand for independent and assisted living.

Overall, the City of Lee’s Summit supports a young, educated and affluent population. The demographics of the Downtown Market Area population vary substantially from the citywide norm. The Downtown Market Area has more householders living alone than married couple family households with children. The Downtown Market Area population is on average considerably younger than that of Lee’s Summit with a higher percentage of college aged residents 20 to 24 years and young adults (25 to 34 years) as well as lower a percentage of empty nesters aged 45 to 64 years. Education attainment levels and household income levels for the Downtown Market Area are much lower than that for the remainder of the City. Downtown’s differing demographic composition creates housing needs much different than that of the balance of Lee’s Summit.


Housing Stock Characteristics
Supportable residential housing values and the mix of housing are a function of resident income levels. Generally, as income rises higher home ownership levels and housing costs are supported. Just 11.5 percent of households in Lee’s Summit earned less than $25,000 annually. These households tend to be perpetual renters. Meanwhile, an estimated 51.1 percent of households earned $75,000 or more, fueling strong demand for move-up and luxury housing.
Recent and near-term demographic trends for Lee’s Summit residents suggest a continued need for affordable housing and a strong growth in the need for move-up and luxury housing. The growth in the number of young adults aged 25 to 34 years will fuel the need for attached rental and entry-level owner-occupied housing. The growing number of empty nesters will fuel downsizing and residents 65+ will generate heightened demand for independent and assisted living. By offering a pedestrian-friendly, mixed-use urban environment with a range of housing product and pricing the Downtown Market Area can capitalize on future population growth and demographic shifts forecast for Lee’s Summit.

The Downtown Market Area supports a much more diverse mix of housing than that of Lee’s Summit with a larger emphasis on higher density multi-family housing. The 2009-2013 American Community Survey published by the U.S. Census Bureau reported the Downtown Market Area housing stock at 4,115 dwelling units. Single family housing accounts for just 50.6 percent of the Downtown Market Area housing stock, compared to 73.5 percent for Lee’s Summit. Multi-family housing with 5+ dwelling units account for 19.0 percent of the Downtown Market Area housing stocked compared to just 9.9 percent for Lee’s Summit.

The Downtown Market Area also supports an older housing stock than Lee’s Summit as a whole. The 2009-2013 American Community Survey reported that nearly 80 percent of the Downtown Market Area’s existing inventory was built prior to 1980 with just 2.6 percent built since 2000. Given recent population growth trends the Lee’s Summit housing stock is much newer with 52.4 percent of the housing stock built since 1990.

The 2009-2013 American Community Survey reported that 3,632 dwelling units in the Downtown Market Area were occupied, equating to an occupancy rate of 88.3 percent. Renter-occupied housing accounted for 55.2 percent of the total inventory of occupied housing units (compared to just 24.2 percent for Lee’s Summit) with owner-occupied housing accounting for the remaining 44.8 percent.


Renters are much less likely to occupy detached single family homes accounting for just 17.4 percent of all occupied rental units. Attached multi-family housing accounts for 68.5 percent of the Downtown Market Area’s inventory of renter-occupied housing. Properties with 10+ rental units are the most popular for renters accounting for 24.0 percent of all renter-occupied units. Properties with two dwelling units account for 22.8 percent of all renter-occupied units.

The Downtown Market Area is comprised of two Census Tracts with Census Tract 137.03 located east of the Missouri Pacific Railroad line and Census Tract 180 to the west. Census Tract 137.03 maintains a total of 2,501 housing units with Census Tract 180 supporting 1,614 housing units. These two Census Tracts support distinctively difference housing stocks. Detached single family homes account for 43.2 percent of the total housing stock within the eastern portion of the Downtown Market Area (Census Tract 137.03) while multi-family housing accounts for 45.5 percent. By comparison, the housing stock within the western portion of the Downtown Market Area is dominated by detached single family homes accounting for 62.1 percent of the total inventory, with attached multi-family housing accounting for 24.7 percent. Furthermore, rental housing accounts for 64.4 percent of the occupied housing stock in Census Tract 137.03, but only 39.8 percent in Census Tract 180.

The Downtown Market Area supports a mature housing market with very little vacant land available for future new home construction. From 2004 to 2013 just 44 residential dwelling units were permitted for construction. The mix of new residential construction included 18 multi-family dwelling units, 14 duplex units and 12 single family homes.
For-Sale Housing Market
Lee’s Summit’s Downtown Market Area is a mature housing market with just six detached single family homes constructed since 2002. The City of Lee’s Summit 2014 Development Report identified ten single family subdivisions within the Downtown Market Area totaling 550 platted lots. Seven of the subdivisions achieved build-out over a decade ago. At the close of 2014 the platted lot inventory within the three remaining subdivisions totaled 37 lots. From 2010 to 2014 only two homes were permitted for construction, suggesting the subdivisions with remaining lots are currently inactive.
Despite high levels of new home construction in Lee’s Summit since 2000, the Downtown Market Area remains a popular place to live with for-sale housing in steady demand. From 2009 to 2013 the Multiple Listing Service (“MLS”) reported a total of 475 detached single family homes and 49 attached housing units sold within the Downtown Market Area.

Detached single family home sales velocity from 2009 through 2011 ranged from 83 to 94 sales annually. During 2012, home sales increased by 15.9 percent to 102 homes sold. Despite rising mortgage rates, during 2013 home sales continued to improve, up 5.9 percent to 108 sales for the year. Total home sale proceeds reached a high of $10.4 million during 2013.

The MLS reported the average sales price for detached single family homes in the Downtown Market Area at $99,994 during 2009. Through 2011, due to a continued weak economy and declining home sales velocity the average sale price declined by 11.7 percent to $88,314. Over the past two years as housing demand has accelerated the average sales price rose to $89,057 in 2012 and $96,520 during 2013.
A healthy for-sale housing market generally garners a sale price of 95 percent or better of the listing price. Over the past five years the Downtown Market Area supported an average sales price in excess of 95 percent of the average list price. As market conditions have improved the average sales price reached a high in 2013 of 96.3 percent of the average list price.
From 2009 to 2013, three bedroom homes accounted for over two-thirds of the detached single family homes sold within the Downtown Market Area. Two bedroom homes captured 24 percent of all home sales over the 5-year period.
From 2009 through 2013, attached housing units accounted for 9.4 percent of all for-sale housing sold in the Downtown Market Area. Annual sales velocity for attached housing mirrored that for detached housing with sales peaking in 2010 at 15 dwelling units sold. After declining to a low of four sales during 2011, sales of attached housing improved to eight units in 2012 and nine units in 2013.
At the peak of attached housing sales velocity within the Downtown Market Area the average days on the market was just 75 days in 2009 to 56 days in 2010. During 2011 when just four attached housing units sold the average time on the market ballooned to 192 days. As demand strengthened the average days on the market moderated to 83 days in 2012 and 93 days in 2013, indicative of a healthy supply and demand balance.

No new single family subdivisions in the Downtown Market Area have obtained final plat approval. Future single family subdivision development will likely require the assemblage of several under-utilized properties. The 18-unit Vogue Condos, built at 3rd and Douglas Streets in the heart of downtown, is currently inactive after the sale of just 3 or 4 units. No other attached for-sale housing is approved for development within the Downtown Market Area.




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