2005-01-12 Handouts - Laserfiche WebLink

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RESIDENTIAL DEVELOPMENT Metropolitan area residential development has changed dramatically over the past ten years. These changes include: . Increasing levels of homeownersbip stimulated by low interest rates during the past three years. . Low interest rates made higher priced homes more affordable. . Developers responded by producing more entry level housing, both single family and townhomes. . Low interest rates enabled many additional households to qualify for home mortgages. This permitted many former renters to become homeowners. . This shift reduced the demand for rental housing. . Increasing land values reinforced townhome development trends as developers strove to maintain low entry level home prices. . More expensive townhome and multi-family product was constructed in response to lifestyle changes by empty nesters and other households that preferred a maintenance- free lifestyle. These changes resulted in a dramatic increase in the proportion of multi-family housing units constructed in the metropolitan area, Scott County, and Prior Lake. Single Family and Multi-Family Trends Prior Lake began the decade with multi-family buildings representing 4.4 percent of all building permits. Since 1994, multi-family development in Prior Lake has exceeded ten percent in all but two years, increasing to 35.9 percent in 2002. Building permits for the first nine months of2003 in Prior Lake indicate that townhome development represents over two-thirds (67.6 percent) of 2003 building permits. Of the many forces that stimulated the increase in multi-family home production, only interest rates represent a cyclical event. Interest rates are sure to rise in the future. As they do, this will place increasing pressure on developers to maintain affordable monthly payment in each of their market segments. This will most likely result in higher proportions of multi-family development, although higher interest rates may reduce overall residential development. Residential development projections, contained in Table iii, indicate that Prior Lake can add over 12,000 housing units by 2025. This would bring Prior Lake's household count to about 18,700. This represents a trend line projection; and individual years could be above or below the 25 percent market share. Based on the increase in building permit activity in Prior Lake, it is possible that this represents a conservative estimate of household growth. Prior Lake has experienced increased multi-family housing construction over the past few years. In the future, single family is estimated to be about 40 percent of building permits. Townhomes, twinhomes, and other medium density townhomes are estimated at 50 percent and other higher IX