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LOC <br />CONSULTING <br />Market Analysis for Downtown Redevelopment <br />City of Centerville Economic Development Authority <br />April 3, 2023 <br />Developers said that, between higher interest <br />rates and higher construction costs, they are <br />having difficulty making new projects work. One <br />developer said that they would need some type of <br />public financing to get projects to work in this <br />environment. <br />For -Sale Housing <br />Demand for single-family homes and townhomes <br />was very strong in 2020 and 2021 but is now <br />starting to show signs of slowing. <br />Realtors interviewed said that the existing resale <br />housing market has slowed down in the last six <br />months as interest rates have increased. But prior <br />to that the housing market was very heated. <br />Realtors said that higher interest rates and <br />economic uncertainty overall has slowed the for - <br />sale home market. Buyers are hesitant to make <br />big decisions. <br />■ Realtors said that inventory remains very low and <br />that has meant that transactions are still <br />happening. But the price increases seen over the <br />last few years are not happening. <br />Buyers of townhomes are often more price <br />sensitive than buyers of single-family homes. <br />Many buyers would prefer to buy a single-family <br />home, so builders of townhomes need to price the <br />units to match demand. <br />Realtors said that buyers of single -level <br />townhomes are often empty nesters. These units <br />do not move as quickly as more affordable multi- <br />level townhomes because the buyers already have <br />an existing home and can take their time to <br />purchase. <br />Condominiums have not been tested in the <br />market as much as townhomes. <br />■ This product type is more specialized, and, other <br />than one project currently being developed in <br />North Oaks and an older project in Forest Lake, <br />has not been developed frequently in the PMA. <br />Rental Housing <br />Even with the large number of new rental units <br />coming into the market, there is still demand for <br />rental housing. <br />Managers and developers said that <br />homeownership has become even more <br />challenging with higher interest rates and that is <br />creating demand for rental. <br />■ Although some developers said that they do not <br />see rents increasing like they have in the last <br />couple of years. <br />New rental projects are still leasing up quickly. <br />■ One building manager at a newly opened project <br />said that her building was almost fully leased at <br />opening. <br />Senior Housing <br />Active adult and independent living occupancies <br />are strong. <br />■ Managers reported low vacancies for these <br />housing types. <br />Assisted living and memory care managers are <br />concerned that there is too much new product. <br />■ Managers are still seeing challenges from the <br />COVID19 pandemic and think that occupancies <br />may continue to be challenged with newer units <br />becoming available. <br />Senior housing property managers said that <br />staffing has become less of a challenge. <br />■ Managers said they are seeing improvement and <br />do not see this as a significant barrier. <br />Page 61 <br />