What is a Housing Needs Assessment and How Do You Use It?

Puzzle HousePurpose and Users

A comprehensive Housing Needs Assessment typically involves compilation and evaluation of specific demographic data, economic characteristics and trends, current housing inventory and characteristics, government policies and incentives, and the adequacy and availability of selected community services, as well as collecting the input of area stakeholders and residents. The assessment concludes with quantifying the number of housing units needed in the market by tenure (rentals vs. for-sale), price point, bedroom type and market segment (e.g. families, seniors, disabled, young professionals, etc.). The assessment also typically provides recommendations on how to achieve certain housing goals and will provide recommendations on potential housing policy initiatives that would benefit the local housing market. In instances where a community has available land that could be used to develop new housing or the adaptive reuse of existing structures, site-specific analysis can also be included as part of an overall Housing Needs Assessment. An analysis can even be conducted on submarkets or select neighborhoods within the subject community. In short, a Housing Needs Assessment can be customized to meet the specific needs of a community.

The users and beneficiaries of a Housing Needs Assessment are broad. Typically, a Housing Needs Assessment is used by local governments to identify housing issues and solutions that can be used to make strategic decisions related to the housing market and is often used as a basis for future housing and policy decisions and/or to secure financing for various housing programs and projects. Additionally, the assessment is used by local entities (government, economic development, chamber of commerce, etc.) to attract and encourage residential development activity and investment. Such assessments can also be used by social services organizations to understand housing issues specific to their interests and allow them to focus on ways to meet the needs of certain special needs populations (e.g. homeless, disabled, etc.). These assessments are also used by private developers and non-profit entities to identify areas of development potential so that they can strategically develop the types of housing most needed in the community. Finally, the assessment will enable local leaders and residents of the community to provide valuable insight as to the housing challenges they see in the market and help interested parties understand where focus should be placed on addressing such challenges. As such, a Housing Needs Assessment provides the information and tools for a variety of entities to make data-driven decisions about the area’s housing needs.


Components

The components (scope of work) of a Housing Needs Assessment can vary greatly. However, the most basic assessment should include the following:

Identification of the Study Area(s): The foundation of the analysis is the establishment of the Primary Study Area (PSA). The PSA is the geographic area from which demographic and economic factors influence housing needs. Typically, this includes the subject city, county or region for which the Housing Needs Assessment was requested. At times, secondary study areas (SSAs) are established that consist of a broader geographic area, such as a county or region that has influence on a PSA.

Evaluation of Demographics & Economics: A socio-economic profile should be created for the PSA and any SSAs established. The profiles provide in-depth details about the market areas, including population and household characteristics, development characteristics, economic characteristics, current housing stock, and the housing market conditions. Information should include current year information, as well as projections. Sources used include: U.S. Census, ESRI, HISTA, local auditor/assessor, interviews with city officials and other experts, and in-house and “on the ground” field research.

Evaluation of Community Services: An overview of services available to residents, including, but not limited to, parking alternatives, public transit, shopping, medical, public safety and recreational facilities. These identified services will be evaluated to determine how they affect potential demand for housing.

Housing Stock Inventory (Supply):
-This section of the assessment should include:Housing stock characteristics that are analyzed and displayed for the study areas (based on U.S. Census data and ACS data). These characteristics include, but are not limited to, housing tenure (renter vs. owner), age of housing, general housing condition, housing values, rent levels, etc.
-Inventory of rental housing supply that includes multifamily rental housing properties in the study areas, including government-subsidized and affordable Tax Credit properties, as well as market-rate properties.
-Inventory of for-sale housing supply that includes data for the subject market from sources such as Multiple Listing Services, Realtor.com, and the local tax assessor. Data should be collected and analyzed for both historical sales (typically from 2010 to current) and available for-sale housing alternatives. This will provide valuable information such as sales trends, including pricing, and the product that is currently available for purchase.
-Identification of projects in the development pipeline and residential foreclosures.

Stakeholder Interviews: The goal of these interviews is to obtain local insight from area stakeholders regarding current housing conditions and trends, to identify anticipated housing needs, and to determine if there are barriers that exist that may limit residential development in the market. Stakeholders will be asked for input on what housing products or markets should be a priority for the area. This insight is used in conjunction with quantitative data to assess market issues.

Housing Gap Analysis (Demand Estimates): Based on the existing housing stock within the study area and both current and projected demographics, a housing gap analysis will be completed for the PSA and possibly the larger SSA. The gap analysis will determine whether a deficit or surplus of housing units exists for households at various income bands for rental and for-sale housing. The demand analysis will consider existing current household estimates, as well as household growth projections by income and tenure. The rental demand calculations should also consider cost-burdened households and those living in substandard housing. The for-sale demand calculations will take into consideration household growth and the need for replacement housing (older, substandard housing).

The analysis should include housing gap estimates for each target market by identifying net gain, decline and demand of market-rate and income-restricted housing utilizing various levels of income stratifications. These may include income levels that correspond to various federal and state financing programs that would allow users of the report to understand if there are housing finance programs that may be utilized to help support the development of housing.

Conclusions/Recommendations: The conclusions typically summarize the depth of the market for additional housing within the PSA. Specific conclusions may include recommendations for the types of housing development that should be pursued and supported, as well as types of housing that will be needed in the short, medium and long term (projected five years ahead, or longer), recommendations as to the types of programs that the local government should consider expanding or providing for the development/redevelopment of necessary housing and recommended priorities for funding of projects.


Optional/Supplemental Services

There are additional research and analysis services that may be deemed to be beneficial to the assessment of the area’s housing needs. These are often separate from standard work elements, as they are often not required or may add to the costs and timing of the report that may exceed the users limitations. These include the following work elements:

Homeless and Special Needs Housing: Because interested stakeholders and other parties may apply for future grants and funding involving special needs, this optional service would evaluate homeless and special needs population and housing data. It would include an evaluation of how and to what extent housing availability has impacted various homeless and special needs households, and an inventory of homeless and special needs housing and demographics as well as stakeholder input from those familiar with these groups. Special needs groups vary in type but typically include the disabled, persons with HIV/AIDS, children aging out of foster care, recently released convicts, farm workers, etc.

Resident Survey: A resident survey would allow for area residents to provide their opinion and insight as to what type of housing development is needed. The survey can be conducted online, or in-person at public venues such as grocery stores, senior centers, etc., or a combination of both online and in-person. The survey can be customized to address the specific challenges a community faces.


Cost Estimates and Timing

The costs estimates and timing of a Housing Needs Assessment will vary based on the scope of work commissioned and the size of the community. Typically, most Housing Needs Assessments are priced between $10,000 and $75,000 and can take between two months to one year. The addition of special analysis or data collection can add significantly to the cost and timing of a report. It is recommended that the scope of work focus on answering core housing issues facing the community.

Patrick Bowen Presents at Nebraska Investment Finance Authority’s Housing Innovation Marketplace

NIFA_Cover_Page

On March 22, 2016, Patrick Bowen presented at the Nebraska Investment Finance Authority’s 2016 Housing Innovation Marketplace. The session was titled “Housing Market Studies” and was moderated by Ms. Casey Cline, Development Director at Travois. Additional panelists included Mr. Timothy M. Keelan, Principal Partner
of HANNA:KEELAN ASSOCIATES, P.C. and Mr. Brian Wilson, MAI, Commercial Real Estate Appraiser with Wilson Valuation LLC.

Mr. Bowen’s presentation involved a review of housing market study components and included an overview of NIFA’s market study guidelines. This presentation is available here and in the Research Center at www.bowennational.com.

Patrick Bowen Presents at the Virginia Housing Credit Conference

On Thursday, October 8, 2015, Patrick Bowen presented at the Virginia Housing Credit Conference, sponsored by the Virginia Housing Coalition and held at The Westin in Richmond, Virginia. Additional panelists included Jaynell Pittman-Shaw, Senior Allocation Officer with the Virginia Housing Development Authority, and Corine Sheridan, Vice President, Director of Origination with Boston Capital. The session was moderated by JD Bondurant, the Assistant Director of Low Income Housing Tax Credit Programs at the Virginia Housing Development Authority.

The title of the session was “Virginia’s Market: What’s Hot, What’s Not” and the purpose was to provide an understanding of where markets in Virginia have been and where they are going. Patrick Bowen provided attendees with an overview of the Tax Credit rental housing market in Virginia, as well as in 10 major cities throughout the state. Information presented included an overview of collected Tax Credit rents and vacancy rates of more than 100 LIHTC projects in the state. According to Mr. Bowen, “Based on our research, there aren’t any weak rental markets among the existing LIHTC supply and several markets have vacancy rates below 2.0%.”. Mr. Bowen added, “There are many low-income housing development opportunities in the state. It’s just a matter of finding the right project to fit the market’s needs.” This presentation is available here and in the Research Center at www.bowennational.com.

Patrick Bowen Presents Downtown Morgantown Retail Analysis

DTMorgantown

On Tuesday, June 30, 2015, Patrick Bowen presented findings from a Downtown Retail Feasibility Study, conducted for Main Street Morgantown in West Virginia. Below is an article written after this presentation.

Study: Parking, safety could be reasons for vacant retail space

Andrew Hesner

TheDPost.com

MORGANTOWN — A feasibility study on downtown Morgantown and the Wharf District shows that of the surveyed 374,586 square feet of retail space, more than 8 percent is vacant.

And although this is slightly lower than the regional and national averages, leasing rates for downtown retail space are “substantially lower than those reported at competitive shopping centers in Morgantown,” according to the study.

The study, presented by Patrick Bowen, owner and founder of Ohio-based Bowen National Research, on Tuesday night, June 30, to the Morgantown City Council Committee of the Whole (COW), attributes the low rates to parking, traffic and safety concerns from stakeholders, and many spaces being in poor condition.

A COW meeting is a non-voting, and discussion-based session with the council.

The more than 200-page report, solicited to Bowen by Main Street Morgantown, assesses current retail market conditions, shopping centers outside downtown and provides recommendations to fix retail problems.

Charlie McEwuen, of Main Street Morgantown, after hearing the presentation, gave the council an update as to what Main Street is doing.

“Bottom line is … according to a lot of the downtown merchants, safety is a very important factor right now, or the perception of safety.”

And although McEwuen said he feels comfortable and safe downtown, he has heard that many do not. And to address that issue, he suggested adding more lighting and addressing “probably the No. 1 topic for all downtown merchants … undesirables. … We have some homeless downtown, but most of the people that are causing concern for our customers, for a lack of better word, I’m going to call them bums — they are just people that hang out downtown and intimidate passersby.”

He recommended adding more police officers on the streets.

The study used demographic data for population, households, and employment came from ESRI, the 2000 and 2010 United States Census, Applied Geographic Solutions, U.S. Department of Commerce, and the American Community Survey, according to the report.