fha multifamily underwriting training “how to avoid a hud market rejection” robert lefenfeld...
TRANSCRIPT
FHA Multifamily Underwriting Training“How to Avoid a HUD Market Rejection”
Robert LefenfeldManaging PrincipalReal Property Research Group, Inc.
Southeast Mortgage Advisory CouncilHilton Head, South CarolinaMay 29th 2013
Market Study Criteria
National Council of Housing Market Analysts (NCHMA)WWW.Housingonline.org
MAP Guidelines
Market Study Objectives
Role of Market Analyst and Appraiser in the MAP Process
• Market Analyst evaluates balance of supply and demand for rental housing
• Appraiser is responsible for income (rent) and (operating) expenses.
• Based on Supply/Demand and income/expenses, Market Analyst is responsible for Absorption.
7.5.A “The purpose of the market study is to assure that there is enough sustainable demand for additional units without adversely impacting the existing supply, so as to maintain a balanced overall market”
Market Study Objectives
Elements of Market Analysis
Market Study Objectives
Components of Market Study:
• Site Analysis and Market Area
• Economic Context
• Demographic Context
• Supply Context
• Findings and Conclusions:
• Balance of Supply and Demand
• Affordability
• Product Positioning in terms of offering and pricing
Site Analysis Questions?
What is setting of site?
What is characteristics of general area?
What are transportation linkages?
What improvements are anticipated in area?
How is the area served by amenities?
Schools?
Perceptions of Crime
Considerations for non-residential land uses?
7.5.C.4 Project location in terms of neighborhood and any other locational considerations.
Site and Market Area
Conducting a Site Analysis
• Is the site suitable for development as rental housing?
• Surrounding land uses compatible with housing?
• Neighborhood adequately served by facilities and services?
• Is it accessible by car and public transportation?
• Planned changes in the area that may compromise its suitability in the future?
Site and Market Area
Amenity Analysis should cover:
Convenience Shopping
Comparison Shopping
Recreation
Entertainment
Medical
Mass Transit
Schools
Library
Public Transportation (Bus, subway)
Establishment Type Address DistanceShell Gas & Convenience 6100 Tidewater Dr. Adjacent
Food Lion Supermarket 3530 Tidewater Dr. 0.5 mi. S
Rite Aid Pharmacy 3600 Tidewater Dr. 0.5 mi. S
Family Dollar Discount Retail 2010 Cromwell Dr. 0.5 mi. S
Lakewood Park Recreation 1612 Willow Wood Dr. 0.7 mi. SW
Lafayette Branch Public Library Library 1610 Cromwell Dr. 0.7 mi. SW
Lafayette-Winona Middle School Public Education 1701 Alsace Ave. 0.8 mi. S
Willard Model Elementary School Public Education 1511 Willow Wood Dr. 0.8 mi. SW
U.S. Post Office Government 1112 Green St. 1.2 mi. E
Family Dollar Discount Retail 6130 Chesapeake Blvd. 1.3 mi. E
Norfolk Fire-Rescue Station #11 Emergency Services 3127 Verdun Ave. 1.4 mi. SE
Wal-Mart Supercenter General Retail 7530 Tidewater Dr. 1.5 mi. NSouthern Shopping Center (Food Lion, Dollar Tree, Ruby Tuesday) General Retail
SW Corner Tidewater Dr. & Little Creek Rd. 1.5 mi. N
Norfolk Fire-Rescue Station #14 Emergency Services 1460 Norview Ave. 1.8 mi. EBon Secours Depaul Medical Center Hospital 150 Kingsley Ln. 2.2 mi. W
Norfolk Police Third Patrol Division Emergency Services 975 Goff St. 2.6 mi. S
Maury High School Public Education 322 Shirley Ave. 3.4 mi. SW
Norfolk State University Higher Education 700 Park Ave. 3.5 mi. S
Old Dominion University Higher Education Hampton Blvd. @ 43rd St. 3.5 mi. SW
Harris Teeter Supermarket 1300 Colonial Ave. 3.5 mi. SW
Constant Convocation Center Entertainment 4320 Hampton Blvd. 3.5 mi. SW
Harrison Opera House Entertainment 160 W. Virginia Beach Blvd. 3.7 mi. SW
Scope Arena Entertainment 201 E. Brambleton Ave. 3.8 mi. SW
Chrysler Hall Entertainment 215 St. Paul's Blvd. 3.9 mi. SW
Harbor Park Entertainment 150 Park Ave. 4.1 mi. SMacArthur Center (Nordstrom, Dillards, Regal Cinemas)
Comparison Retail, Entertainment 300 Montincello Ave. 4.2 mi. SW
Wells Theatre Entertainment 254 Granby St. 4.3 mi. SWGallery at Military Circle (Macy's, Sears, JC Penney, Cinemark)
Comparison Retail, Entertainment 880 N. Military Hwy. 5.0 mi. SE
Site and Market Area
Future Improvements
Transportation - State Consolidated Transportation Programs
Other Improvements – County/City Capital Improvement Budget
Proposed public transportation service
Important to understand how community is developing; Impact on Household Growth.
Site and Market Area
A housing market area is the contiguous area within which households compete for available housing, and
within which your project will compete for qualified renters.
7.5.D Housing Market Area is the geographic area in which units with similar characteristics are in equal competition
Market Area
Site and Market Area
Impact of Market Area Definition
Population and Household Counts
General Demographics
Demand Analysis
Supply Analysis
Competitive Stock
Attainable Rents
Site and Market Area
Factors used to define a market area:
Location of Competitive Properties Accessibility Natural Boundaries Housing Product Characteristics Market Perceptions Commuting Patterns Target Market Jurisdictional Boundaries Local Agency Service Boundaries Non-geographic Factors Data availability
Site and Market Area
Is this a good market area?
Site and Market Area
How about this market area?
Site and Market Area
Does this seem reasonable?
Site and Market Area
Secondary Market Areas
Less relevant to rental than retail
Secondary source of buyers/renters
Typically assumed as bonus demand over and above demand derived by Primary Market Area
Often a comparison geography to the Primary Market Area
Site and Market Area
At Place Employment Trends
Labor Force and Unemployment Rates
Major Employers – Contractions or Expansions
Commuting Patterns
7.5.E.1 A discussion of current economic conditions and employment characteristics
Economic ContextEnvironment in which project will be operating
Larger than the market area
Jurisdictions with functional integration
Metropolitan Areas
Counties
Cities
Economic ContextDefine the Local Economy
Unemployment Rates
Annual Unemployment 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q2Labor Force 430,406 430,706 436,622 439,252 439,469 445,698 451,401 448,242 453,877 457,150 462,138 464,524 464,882Employment 414,532 412,503 415,302 418,515 419,705 425,796 432,913 432,234 434,094 423,623 426,518 432,133 433,435Unemployment 15,874 18,203 21,320 20,737 19,764 19,902 18,488 16,008 19,783 33,527 35,620 32,391 31,447
Unemployment RatePrince George's County 3.7% 4.2% 4.9% 4.7% 4.5% 4.5% 4.1% 3.6% 4.4% 7.3% 7.7% 7.0% 6.8%
Maryland 3.6% 4.1% 4.5% 4.5% 4.3% 4.1% 3.8% 3.4% 4.3% 7.4% 7.8% 7.0% 6.9%United States 4.0% 4.7% 5.8% 6.0% 5.5% 5.1% 4.6% 4.6% 5.8% 9.3% 9.6% 8.8% 8.3%
Source: U.S. Department of Labor, Bureau of Labor Statistics
Labor ForceEmployment
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q2
Prince George's County Maryland United States
Une
mpl
oym
ent
Economic Context
At Place Employment
Quarterly Census of Employment and Wages (QCEW)
Data is from the employer reporting of employees covered under the unemployment insurance program.
It counts only filled jobs, whether full or part-time, temporary or permanent, by place of work.
Individuals holding more than one job are counted for each job.
Major exclusions from UI coverage include self-employed workers, most agricultural workers on small farms, all members of the Armed Forces, elected officials in most states, most employees of railroads, some domestic workers, most student workers at schools, and employees of certain small nonprofit organizations.
Economic Context
Change In At Place Employment
8701,259
1,594
-266
23
3,026
-2,424
-4,903
-529
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
-6,000
-4,000
-2,000
0
2,000
4,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Change in At Place Employment
Annual Change in Prince George's County At Place EmploymentUnited States Annual Employment Growth Rate
Ann
ual C
hang
e in
At P
lace
Em
ploy
men
t
% A
nnual Grow
th
Economic Context
At-Place Employment by Sector
29.0%
0.1%
8.3%
2.7%
19.0%
1.9%
4.0%
12.8%
9.9%
9.2%
3.1%
16.4%
1.5%
4.2%
9.0%
19.2%
2.1%
5.7%
13.4%
14.7%
10.3%
3.4%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
Government
Nat Resources-Mining
Construction
Manufacturing
Trade-Trans-Utilities
Information
Financial Activities
Professional-Business
Education Health
Leisure-Hospitality
Other
Employment by Sector 2011
United States
Prince George's County
Economic Context
Long Term Change in Employment by Sector
1.5%
-4.6%
-1.8%
-4.3%
-1.3%
-2.6%
-1.2%
-0.5%
1.7%
2.7%
-1.7%
0.4%
1.1%
-1.9%
-3.2%
-0.3%
-2.9%
-0.3%
0.6%
2.5%
1.1%
0.5%
-5.0% -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0%
Government
Nat Resources-Mining
Construction
Manufacturing
Trade-Trans-Utilities
Information
Financial Activities
Professional-Business
Education Health
Leisure-Hospitality
Other
Annualized Employment Change by Sector, 2001-2011
United States
Prince George's County
Economic Context
Short Term Change in Employment by Sector
3.5%
-31.0%
-25.1%
-21.7%
-8.8%
2.7%
-12.8%
-13.3%
6.6%
9.7%
-8.7%
-0.5%
3.5%
-27.7%
-15.4%
-5.8%
-11.7%
-9.0%
-3.2%
9.1%
-0.3%
-0.7%
-35.0% -30.0% -25.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0%
Government
Nat Resources-Mining
Construction
Manufacturing
Trade-Trans-Utilities
Information
Financial Activities
Professional-Business
Education Health
Leisure-Hospitality
Other
Employment Change by Sector, 2007-2011
United States
Prince George's County
Economic Context
Economic Forecast
Major Employers Location; Size of Workforce; Prospects for future growth or reduction
Economic Expansions Any planned expansions in the Market; i.e., BRAC, New Plants. Is household growth increasing demand for services
Economic Disruptions Major Layoffs or Closing; Vulnerable Sectors of Economy
Wage Trends Are wages increasing or decreasing?
0 1
miles
2
SITE
Fulton County
NCR Corp.Emory Eastside Med. Center
EMS Technologies
Intercept Group
Atlanta Journal
Primerica Financial
Scientific-Atlanta
US Postal Service
Location of Major Employers
Economic Context
Demographic Context
Overall Trends
Projection Process
Demographic Analysis
Demographic Context
7.5.E.2 A thorough discussion of past and anticipated future trends in the demographic character of the housing market.
Baby Boom Generation
0.0
5.0
10.0
15.0
20.0
25.0
30.019
20
1924
1928
1932
1936
1940
1944
1948
1952
1956
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
2004
2008
Births per 1000 pop
U.S. Census Bureau
Demographic Context
Trends in U.S. Rentership Rate
Demographic Context
30.0%
31.0%
32.0%
33.0%
34.0%
35.0%
36.0%
37.0%
38.0%
39.0%
40.0%19
6819
6919
7019
7119
7219
7319
7419
7519
7619
7719
7819
7919
8019
8119
8219
8319
8419
8519
8619
8719
8819
8919
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
0720
0820
0920
1020
1120
12Q
120
12Q
220
12Q
220
12 Q
320
12Q
420
13Q
1
Annual Average Rental rate
200431% Renters
2013Q135% Renters
196836.2% Renters
198034.43% Renters
Source: U.S. Census Bureau
Predictions, Forecasts, Prophecy
• A PREDICTION is a foretelling of what one believes will happen.
• A PROPHECY is a PREDICTION under the influence of divine guidance.
• A FORECAST is an analytical relationship based on assumptions and political decisions that will influence the future growth of an area or region.
Demographic Context
Demographic Context
Influences and Assumptions that Guide Projection Process
Births and Deaths – Natural Increase
Migration – Internal and External
National Shift to Service Economy – Pre Great Recession
Natural Shift to ?? Economy – Post Recession – Only Meds, Eds and Feds??
Older Labor Force – Semi Retirement
Effect of Baby Boom, Semi-Retirement; Growing Number of Senior Citizans
Baby Bust, Echo Boom - Decline in Household Size
Business Relocations and Deaths
Local Govt. Development Policy - Federal and State Economic Policy
Local Govt. Development Patterns
Demographic Context
Projection Sources
Projections
Metropolitan Planning Organizations www.narc.org National vendors (Nielsen, ESRI)
Local Governments
State Data Centers
U.S. Census Bureau
C-40 report
2010 Census
American Community Survey
Demographic Context
Population and Household Trends
Demographic Context
Cabarrus County Harrisburg Market AreaTotal Change Annual Change Total Change Annual Change
Population Count # % # % Count # % # %2000 131,063 42,6432010 178,011 46,948 35.8% 4,695 3.1% 73,064 30,421 71.3% 3,042 5.5%2012 184,397 6,386 3.6% 3,193 1.8% 76,004 2,940 4.0% 1,470 2.0%2015 194,347 9,950 5.4% 3,317 1.8% 80,498 4,494 5.9% 1,498 1.9%
Total Change Annual Change Total Change Annual ChangeHouseholds Count # % # % Count # % # %
2000 49,519 15,0902010 65,666 16,147 32.6% 1,615 2.9% 26,297 11,207 74.3% 1,121 5.7%2012 68,180 2,514 3.8% 1,257 1.9% 27,428 1,131 4.3% 566 2.1%2015 71,754 3,574 5.2% 1,191 1.7% 29,051 1,623 5.9% 541 1.9%
Source: 2000 Census; 2010 Census; Esri; and Real Property Research Group, Inc.
1,615
1,257 1,1911,121
566 541
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2000-2010 2010-2012 2012-2015
Cabarrus County Harrisburg Market AreaAnnual Change in Number of Households, 2000 to 2015
Demographic Characteristics
Family type and proportion of one-person households
Owner / Renter Distribution
Age Distribution of Population
Permanent Renters
Income Distribution by Tenure (Owners vs. Renters)
Demographic Context
• Housing Stock
• Analysis of Rental Supply Inventory Characteristics
Rent and Vacancy Trends
Construction and Absorption Levels
• Pipeline
Competitive Context
7.5.F Market study must include a comprehensive description of the current conditions of the rent market
Competitive ContextIs rental market tight or soft?
Evaluate stabilized vacancy rate and total vacancy rate
Are concessions being offered? Why?
Is the market overbuilt at one price position?
Are some projects poorly positioned in the market (i.e. overreaching in rents)?
Has there been a downturn in employment?
Rental Summary
Competitive ContextMap Year Year Structure Total Vacant Vacancy Avg 1 BR Avg 2 BR
# Community Built Rehab Type Units Units Rate Rent (1) Rent (1) Incentive/WaitlistTier I Communities
1 Residence at Waterstone 2002 Garden 255 10 3.9% $1,648 $1,964 None.2 The Courts of Avalon 1999 Garden 258 0 0.0% $1,556 $1,891 None
3 Brookside Commons 2003 Mid Rise 174 8 4.6% $1,8091st month free with 13-
mo lease4 Greenwich Place 2006 Mix 332 20 6.0% $1,327 $1,805 $500 off for 2BR TH5 Groveton Green 2013 Mid Rise 72 24 33.3% $1,364 $1,706 $500 gift card
7 Cascades Overlook 1995 Mix 441 44 10.0% $1,281 $1,6112 mo free on 13 mo
midrise lease8 Apartments of Owings Park 2002 Garden/TH 174 8 4.6% $1,172 $1,579 None9 View at Mill Run ## 2011 Mid Rise 375 62 16.5% $1,285 $1,555 2 months free
10 Riverstone at Owings Mills 2003 Garden 324 6 1.9% $1,193 $1,508 Daily Pricing11 Park of Winterset 1999 Garden 176 5 2.8% $1,404 $1,431 None12 The Gardens of Annen Woods 1986 Garden 132 8 6.1% $1,260 $1,391 None13 Pleasant Ridge 1990 Mid Rise 78 0 0.0% $1,355 None14 Gates of Owings Mills ## 1998 Garden 125 4 3.2% $1,205 $1,339 None19 Owings Run Apartments 1993 2012 Garden 504 26 5.2% $1,255 $1,220 None20 Lakeside Mill 1989 Garden 192 6 3.1% $965 $1,167 None
Total/Avg. 1999 2012 3,612 231 $1,301 $1,555Reported & Stabilized Total/Avg. 3,165 145 4.6%
Tier II Communities
21 Allyson Gardens II 1990 2000 Garden 196 9 4.6% $950 $1,156 None23 Watermill Apartments 1965 Garden 284 1 0.4% $950 $1,088 None24 Painter's Mill 1974 2007 Garden 260 3 1.2% $894 $1,076 None25 Morningside Heights 1962 1980 Garden/TH 1050 54 5.1% $873 $1,014 None26 Allyson Gardens 1968 Garden 200 10 4.6% $829 $975 None27 The Village of Chartleytowne 1975 Garden/TH 692 60 8.7% $938 $926 None28 Preserve at Owings Crossing 1962 Garden 800 79 9.9% $800 $901 None29 Garrison Forest 1973 2007 Garden/TH 500 18 3.6% $779 $870 None
Total/Avg. 1971 1999 3,982 234 $877 $1,001
Total/Avg. 1989 2001 7,594 465 $1,139 $1,362Reported & Stabilized Total/Avg. 7,147 379 5.3%
Communities in Intial Lease-Up.## HUD Insured(1) Rent is contract rent, and not adjusted for utilities or incentives
Detailed Rental Information
Competitive Context
Total One Bedroom Units Two Bedroom Units Three Bedroom Units
Community Units Units Rent(1) SF Rent/SF Units Rent(1) SF Rent/SF Units Rent(1) SF Rent/SF
Tier I Plus CommunitiesResidence at Waterstone (2) 255 75 $1,558 1,031 $1.51 141 $1,874 1,555 $1.22 60 $2,238 1,619 $1.38The Courts of Avalon (2) 258 86 $1,457 958 $1.52 129 $1,792 1,244 $1.46 43 $2,175 1,395 $1.56Greenwich Place 332 60 $1,272 893 $1.42 230 $1,739 1,320 $1.33 42 $2,136 1,573 $1.36Groveton Green 72 88 $1,322 889 $1.49 104 $1,622 1,127 $1.46 22 $1,977 1,417 $1.40Brookside Commons (2) 184 136 $1,595 1,794 $0.90 32 $1,674 1,794 $0.93Excalibur (2) 147 $1,559 1,336 $1.18 $1,764 1,407 $1.25
Total/Average 1248 $1,402 943 $1.49 $1,697 1,396 $1.22 $1,994 1,534 $1.30Unit Distribution 1248 309 740 199
% of Total 100% 24.8% 59.3% 15.9%
Tier II CommunitiesAllyson Gardens II 196 61 $935 800 $1.17 135 $1,136 992 $1.17Morningside Heights 1050 $873 685 $1.27 $1,014 907 $1.14 $1,337 1,155 $1.16Painter's Mill 260 40 $852 895 $0.95 103 $1,006 1,223 $0.84 13 $1,177 1,483 $0.79Richmar Apartments 459 $785 612 $1.28 $994 966 $1.05 8 $1,225 940 $1.30The Village of Chartleytowne 692 $890 805 $1.11 $955 1,029 $0.95 $1,095 1,334 $0.82Watermill Apartments 284 91 $830 750 $1.11 100 $938 800 $1.20 88 $1,103 1,264 $0.87Allyson Gardens 200 57 $805 770 $1.05 71 $923 832 $1.13 54 $1,200 1,024 $1.17Preserve at Owings Crossing 800 386 $810 660 $1.23 250 $911 873 $1.07 150 $1,200 1,160 $1.03Garrison Forest 500 30 $733 476 $1.54 414 $825 700 $1.21 50 $1,100 1,000 $1.10
Total/Average 4,441 $835 717 $1.16 $967 925 $1.05 $1,180 1170 $1.01Unit Distribution 2,246 665 1,073 363
% of Total 50.6% 29.6% 47.8% 16.2%
Total/Average 5,689 $1,009 787 $1.28 $1,259 1113 $1.13 $1,529 1326 $1.15Unit Distribution 3,349 974 1,813 562
% of Total 58.9% 29.1% 54.1% 16.8%
(1) Rent is adjusted to include only Trash and incentives(2) Rent is adjusted for garage parking by floorplan or community (-$60 for garage space or -$90 for unit garage).
Rental Price Position
$300 $500 $700 $900 $1,100 $1,300 $1,500 $1,700 $1,900
Subject (30% AMI)
Subject (40% AMI)
Garrison Forest
Subject (50% AMI)
The Gates of Owings …
Butler Ridge
Preserve at Owings …
Watermill Apartments
Bright Meadows
Allyson Gardens
Painter's Mill
Subject (60% AMI)
The Village of …
Richmar Apartments
Allyson Gardens II
Morningside Heights
The Gates of Owings …
Apartments of …
Summit at Owings …
Pleasant Ridge
Greenwich Place
The Towns at Harvest …
Figure 5Range of Net 1, 2, and 3 Bedroom Rents
Reisterstown Road Market Area
1-2 Bedroom 2-3 Bedroom
Source: Real Property Research Group, Inc. January 2010
Rent
Competitive Context
Net Rent and Size
Archstone Wheaton Station
Ridgewood
Village Square
Westerly Park
The Warwick
Privacy World @ Glenmont
Kensington House
Westchester West
The Cameron
Portico @ Silver Spring Metro
1200 East West
The Veridian
Lenox Park
The Bennington
Georgian
Gramax Towers
Summit Hills
Alexander House
SubjectRPRG Proposed
600
650
700
750
800
850
900
$900 $1,100 $1,300 $1,500 $1,700 $1,900 $2,100
One Bedroom Rent by Unit Size
Wheaton Communities
Silver Spring Communities
Subject-Current
RPRG Proposed
Squa
re F
eet
Net Rent
Competitive Context
Market Analysis should comment on
reasonableness of rent.Not necessary to do rent
grid.
Pipeline
Other rental projects planned or under construction.
Local building/planning department(s)
Tax Credit Allocations
Regional Surveys
7.5.G The market study must include separate estimates of the number of rental units currently under construction and number in planning during specified forecast period.
Competitive Context
Supply and Demand Key Questions
Oversupply of Pipeline Units? Will the market area need any additional units by the time the
proposed project would be ready for occupancy? Enough income-qualified consumers (Capture Rate)? Potential oversupply of LIHTC units (Penetration Rate)? Need for more affordable units to accommodate growth and
alleviate substandard housing conditions?
7.5.H Demand Estimate and Study
Findings and Conclusions
Net Demand
Demand
Household Growth
Demolitions
% of Renter Households Supply
Pipeline
Subject Balance of Demand and Supply
7.5.H.1 Estimate of demand must be based on a calculation of incremental demand…
Findings and Conclusions
NetDemand
Net DemandProjected Change in Household Base Units
January 2013 Households 40,731January 2016 Households 42,138Net Change in Households 1,406
Add: Units Removed from Housing StockHousing
StockRemoval
RateUnits
Removed2013 Housing Stock 42,650 0.370% 1582014 Housing Stock 43,171 0.370% 1602015 Housing Stock 43,700 0.370% 162
479Net New Demand for Housing Units 1,886Average Percent Renter Households over Analysis Period 65.0%Net New Demand for Renter Units 1,226
Add: Multifamily Competitive Vacancy Inventory Vacant
Stabilized Multifamily Communities 5,673 243Subtotal Stabilized Communities 5,673 243
Communities Under Lease Up 0 0Total Competitive Inventory 5,673 243
Market Vacancy at 5% 284Less: Current Vacant Units -243Vacant Units Required to Reach 5% Market Vacancy 41
Net Demand for New Rental Units 1,266
Planned Additions to the SupplyTotal Units 95% Occupancy
Parc Rock 360 342Avant at Rock Town Center 359 341
Subject - Boulevard at Loger Station 448 426Total New Rental Supply 1167 1,109
Excess Demand for Rental Housing 158
Findings and Conclusions
Components of Inventory Change
A Characteristics C Present in
2007 D 2007 units
present in 2009
E Change in character-
istics
F ‘07 units lost due to conversion
/merger
G ‘07 house or mobile
home moved out
H ‘07 units changed to
nonresidential use
I ‘07 units lost through
demolition or disaster
J ‘07 units badly
damaged or condemned
K ‘07 units lost in other ways
TOTAL Lost to Stock
Total exclude MH Annual
Total Housing Stock 128,203 126,119 - 193 411 288 491 302 400 2,085 1,674 837 0.15% 0.32% 0.22% 0.38% 0.24% 0.31% 1.63% 1.31% 0.65%
Occupancy Occupied units 110,692 100,730 8,880 124 263 125 227 130 212 1,081 818 409
0.11% 0.24% 0.11% 0.21% 0.12% 0.19% 0.98% 0.74% 0.37% Vacant 13,109 5,072 7,299 60 110 91 204 151 122 738 628 314
0.46% 0.84% 0.69% 1.56% 1.15% 0.93% 5.63% 4.79% 2.40% Seasonal 4,402 2,362 1,775 8 38 72 59 21 66 264 226 113
0.18% 0.86% 1.64% 1.34% 0.48% 1.50% 6.00% 5.13% 2.57%Region (All Units)
Northeast 23,505 23,213 - 49 29 61 33 51 69 292 263 132 0.21% 0.12% 0.26% 0.14% 0.22% 0.29% 1.24% 1.12% 0.56%
Midwest 29,602 29,202 - 58 51 34 110 76 71 400 349 175 0.20% 0.17% 0.11% 0.37% 0.26% 0.24% 1.35% 1.18% 0.59%
South 48,881 47,783 - 48 280 156 287 155 171 1,097 817 409 0.10% 0.57% 0.32% 0.59% 0.32% 0.35% 2.24% 1.67% 0.84%
West 26,214 25,920 - 38 50 37 60 20 88 293 243 122 0.14% 0.19% 0.14% 0.23% 0.08% 0.34% 1.12% 0.93% 0.46%
Tenure (Occupied Units) Owner occupied 75,647 68,551 6,642 48 124 57 96 40 90 455 331 166
0.06% 0.16% 0.08% 0.13% 0.05% 0.12% 0.60% 0.44% 0.22% Renter occupied 35,045 27,331 7,086 76 139 68 132 91 122 628 489 245
0.22% 0.40% 0.19% 0.38% 0.26% 0.35% 1.79% 1.40% 0.70%Metro Status
In Central Cities 36,122 35,494 77 48 88 135 139 140 627 579 290 0.21% 0.13% 0.24% 0.37% 0.38% 0.39% 1.74% 1.60% 0.80%
In Suburbs 59,794 59,005 80 182 133 187 80 128 790 608 304 0.13% 0.30% 0.22% 0.31% 0.13% 0.21% 1.32% 1.02% 0.51%
Outside Metro Area 32,287 31,619 35 180 67 169 83 132 666 486 243 0.11% 0.56% 0.21% 0.52% 0.26% 0.41% 2.06% 1.51% 0.75%
Source: American Housing Survey, Components of Inventory Change 2007-2009; Prepared by Ecometrica, Inc. for U.S. Department of Housing & Urban Development Office of Policy Development & Research; May 2011
Findings and Conclusions
Southern Maryland2000 2010 Change 2000-2010 2013 2018
Housing Units Number Percent Number Percent Number Percent Number Percent Number PercentOwner Occupied 76,246 78.0% 93,153 77.8% 16,907 77.1% 95,644 77.1% 100,853 76.6%Renter Occupied 21,511 22.0% 26,538 22.2% 5,027 22.9% 28,450 22.9% 30,726 23.4%Total Occupied 97,757 100.0% 119,691 100.0% 21,934 100.0% 124,093 100.0% 131,579 100.0%
Total Vacant 7,803 10,334 9,863 10,457TOTAL UNITS 105,560 130,025 133,956 142,036
Waldorf-La Plata Market Area 2000 2010 Change 2000-2010 2013 2018Housing Units Number Percent Number Percent Number Percent Number Percent Number PercentOwner Occupied 20,759 74.8% 26,396 75.9% 5,637 80.3% 27,232 75.3% 28,950 75.2%Renter Occupied 6,986 25.2% 8,367 24.1% 1,381 19.7% 8,927 24.7% 9,572 24.8%Total Occupied 27,745 100.0% 34,763 100.0% 7,018 100.0% 36,159 100.0% 38,522 100.0%Total Vacant 1,010 2,136 2,093 2,230TOTAL UNITS 28,755 36,899 38,252 40,752Source: U.S. Census of Population and Housing, 2000, 2010; Esri, RPRG
74.8% 75.9% 80.3% 75.3% 75.2%
25.2% 24.1% 19.7% 24.7% 24.8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2010 2000 - 2010New Households
2013 2018
% o
f All
Hou
seho
lds
Renter Occupied
Owner Occupied
Waldorf-La Plata Market Area
Findings and Conclusions
Varied Rentership Rates
Varied Rentership Rates
Chesterfield County2000 2010 Change 2000-2010 2013 2018
Housing Units Number Percent Number Percent Number Percent Number Percent Number PercentOwner Occupied 75,874 80.9% 89,603 77.5% 13,729 62.7% 91,482 76.1% 96,206 75.3%Renter Occupied 17,898 19.1% 26,077 22.5% 8,179 37.3% 28,662 23.9% 31,497 24.7%Total Occupied 93,772 100.0% 115,680 100.0% 21,908 100.0% 120,144 100.0% 127,703 100.0%
Total Vacant 3,935 6,875 6,740 7,164TOTAL UNITS 97,707 122,555 126,883 134,867
Market area 2000 2010 Change 2000-2010 2013 2018Housing Units Number Percent Number Percent Number Percent Number Percent Number PercentOwner Occupied 29,060 84.9% 34,067 79.1% 5,007 56.7% 34,810 77.6% 36,623 76.4%Renter Occupied 5,187 15.1% 9,003 20.9% 3,816 43.3% 10,071 22.4% 11,302 23.6%Total Occupied 34,247 100.0% 43,070 100.0% 8,823 100.0% 44,881 100.0% 47,925 100.0%Total Vacant 1,184 2,268 2,245 2,397TOTAL UNITS 35,431 45,338 47,126 50,323Source: U.S. Census of Population and Housing, 2000, 2010; Esri, RPRG
84.9% 79.1%56.7%
77.6% 76.4%
15.1% 20.9%43.3%
22.4% 23.6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2010 2000 - 2010New Households
2013 2018
% o
f All
Hou
seho
lds
Renter Occupied
Owner Occupied
Market area
Findings and Conclusions
City of Pittsburgh2000 2010 Change 2000-2010 2012 2017
Housing Units Number Percent Number Percent Number Percent Number Percent Number PercentOwner Occupied 74,927 52.1% 64,807 47.6% -10,120 134.5% 62,886 46.1% 62,167 45.1%Renter Occupied 68,812 47.9% 71,410 52.4% 2,598 -34.5% 73,538 53.9% 75,724 54.9%Total Occupied 143,739 100.0% 136,217 100.0% -7,522 100.0% 136,424 100.0% 137,891 100.0%
Total Vacant 19,627 19,948 17,426 17,614TOTAL UNITS 163,366 156,165 153,851 155,505
Uptown Market Area 2000 2010 Change 2000-2010 2012 2017Housing Units Number Percent Number Percent Number Percent Number Percent Number PercentOwner Occupied 4,157 29.1% 3,721 24.2% -436 -40.6% 3,706 23.5% 3,871 23.0%Renter Occupied 10,151 70.9% 11,662 75.8% 1,511 140.6% 12,074 76.5% 12,929 77.0%Total Occupied 14,308 100.0% 15,383 100.0% 1,075 100.0% 15,780 100.0% 16,800 100.0%Total Vacant 2,178 1,879 1,718 1,829TOTAL UNITS 16,486 17,262 17,498 18,629Source: U.S. Census of Population and Housing, 2000, 2010; Esri, RPRG
29.1% 24.2% 23.5% 23.0%
70.9% 75.8%
140.6%
76.5% 77.0%
0%10%20%30%40%50%60%70%80%90%
100%
2000 2010 2000 - 2010New Households
2012 2017
% o
f All
Hou
seho
lds
Renter OccupiedOwner Occupied
Uptown Market AreaActual Rentership Rate in 2000 and 2010 and Projected Rentership Rate for 2012 and 2017
Findings and Conclusions
Varied Rentership Rates
Affordability Capture Rates - Definitions
Capture Rate
“The percentage of age, size, and income qualified renter Households in the Primary Market Area that the property must capture to achieve the Stabilized Level of Occupancy. Funding agencies may require the use of other factors in the calculation of the capture rate.”
Penetration Rate
“The percentage of age and income qualified renter Households in the Primary Market Area that live in all existing and proposed properties (which are competitively priced to the subject) that must be captured to achieve the Stabilized Level of Occupancy.”
7.5.H.3 demand estimate should identify the “effective demand pool with sufficient incomes…
Findings and Conclusions
Interpreting Capture Rates
Income-qualified households
5% Capture Rate (need to get 1 in every 20 eligible households)
33% Capture Rate (need to get 1 in every 3 eligible households)
An acceptable capture rate only indicates sufficient demand to support the proposed number of units at the proposed income levels. It does not include an evaluation of the subject development versus the existing rental stock.
Findings and Conclusions
Key Assumptions and Threshold Measurements
• The appropriate income range for residents to qualify for the project must be established
• Maximum allowable income for the subject project is based on the household income necessary to qualify for the largest unit offered at the site. Real (Tax Credit) or Artificial.
• Minimum income required to live at the property is based on the lowest gross rent (including all utilities) offered at the subject site.
• Accepted ratio of rent to income is 35% for families and 40% for seniors. Sometimes 30% is minimum.
• May vary by state or situation
Findings and Conclusions
Tax Credit Rents and IncomesHUD 2012 Median Household Income
Baltimore-Towson, MD HUD Metro FMR Area $85,600Very Low Income for 4 Person Household $42,800
2012 Computed Area Median Gross Income $85,600
Utility Allowance: Efficiency $01 Bedroom $852 Bedroom $1103 Bedroom $1354 Bedroom $195
LIHTC Household Income Limits by Household Size:Household Size 30% 40% 50% 60% 80% 100% 150%
1 Person $18,000 $24,000 $30,000 $36,000 $48,000 $60,000 $90,0002 Persons $20,550 $27,400 $34,250 $41,100 $54,800 $68,500 $102,7503 Persons $23,130 $30,840 $38,550 $46,260 $61,680 $77,100 $115,6504 Persons $25,680 $34,240 $42,800 $51,360 $68,480 $85,600 $128,4005 Persons $27,750 $37,000 $46,250 $55,500 $74,000 $92,500 $138,7506 Persons $29,790 $39,720 $49,650 $59,580 $79,440 $99,300 $148,9507 Persons $0 $0 $0 $0 $0 $08 Persons $0 $0 $0 $0 $0 $0
Imputed Income Limits by Number of Bedrooms:
Persons Bedrooms 30% 40% 50% 60% 80% 100% 150%1 0 $18,000 $24,000 $30,000 $36,000 $48,000 $60,000 $90,000
1.5 1 $19,275 $25,700 $32,125 $38,550 $51,400 $64,250 $96,3753 2 $23,130 $30,840 $38,550 $46,260 $61,680 $77,100 $115,650
4.5 3 $26,715 $35,620 $44,525 $53,430 $71,240 $89,050 $133,5756 4 $29,790 $39,720 $49,650 $59,580 $79,440 $99,300 $148,950
LIHTC Tenant Rent Limits by Number of Bedrooms:Assumes 1.5 Persons per bedroom
30% 40% 50% 60% 80%Gross Net Gross Net Gross Net Gross Net Gross Net
Efficiency $450 $600 $750 $900 $1,2001 Bedroom $482 $397 $643 $558 $803 $718 $964 $879 $1,285 $1,2002 Bedroom $578 $468 $771 $661 $964 $854 $1,157 $1,047 $1,542 $1,4323 Bedroom $668 $533 $891 $756 $1,113 $978 $1,336 $1,201 $1,781 $1,6464 Bedroom $745 $550 $993 $798 $1,241 $1,046 $1,490 $1,295 $1,986 $1,791
Source: U.S. Department of Housing and Urban Development
# Persons
Assumes 1.5 persons per bedroom
Findings and Conclusions
Affordability @ 35% Rent Burden
One Bedroom Two Bedroom
Base Price MinimumMaximum Base Price MinimumMaximum Number of Units 40 Number of Units 40Net Rent $665 Net Rent $770Gross Rent $755 Gross Rent $900% Income Spent for Shelter 35% % Income Spent for Shelter35%Income Range $25,886 $31,170 Income Range $30,857 $37,440Range of Qualified Hslds 6,041 5,239 Range of Qualified Hslds5,282 4,390# Qualified Households 802 # Qualified Households 892
Unit Total HH Capture Rate 5.0% Unit Total HH Capture Rate 4.5%
Range of Qualified Renters 2,727 2,279 Range of Qualified Renters2,303 1,805# Qualified RenterHouseholds 448 # Qualified RenterHouseholds 498
Unit Renter HH Capture Rate 8.9% Unit Renter HH Capture Rate 8.0%
Gross Capture Rate Total Households 11,732 Total HHNumber of Units Band of Qualified HHs # Qualified HHs
Income $25,886 $37,44060% Units 80 HHs 6,041 4,390 1,651 4.8% Capture Rate
Renter Households 6,437 Renter HHBand of Qualified HHs # Qualified HHs
Income $25,886 $37,44060% Units 80 HHs 2,727 1,805 922 8.7% Capture Rate
60
% U
nit
s
Findings and Conclusions
Affordability @ 30% Rent Burden
One Bedroom Two Bedroom
Base Price MinimumMaximum Base Price MinimumMaximum Number of Units 40 Number of Units 40Net Rent $665 Net Rent $770Gross Rent $755 Gross Rent $900% Income Spent for Shelter 30% % Income Spent for Shelter30%Income Range $30,200 $31,170 Income Range $36,000 $37,440Range of Qualified Hslds 5,371 5,239 Range of Qualified Hslds4,586 4,390# Qualified Households 131 # Qualified Households 196
Unit Total HH Capture Rate 30.5% Unit Total HH Capture Rate 20.4%
Range of Qualified Renters 2,352 2,279 Range of Qualified Renters1,914 1,805# Qualified RenterHouseholds 73 # Qualified RenterHouseholds 109
Unit Renter HH Capture Rate 54.6% Unit Renter HH Capture Rate 36.6%
Gross Capture Rate Total Households 11,732 Total HHNumber of Units Band of Qualified HHs # Qualified HHs
Income $30,200 $37,44060% Units 80 HHs 5,371 4,390 980 8.2% Capture Rate
Income Renter Households 6,437 Renter HHHHs Band of Qualified HHs # Qualified HHs
Income $30,200 $37,44060% Units 80 HHs 2,352 1,805 548 14.6% Capture Rate
60
% U
nit
s
Findings and Conclusions
Affordability @ 120% AMI
One Bedroom Two Bedroom
Base Price MinimumMaximum Base Price MinimumMaximum Number of Units 40 Number of Units 40Net Rent $665 Net Rent $770Gross Rent $755 Gross Rent $900% Income Spent for Shelter 30% % Income Spent for Shelter30%Income Range $30,200 $62,340 Income Range $36,000 $74,880Range of Qualified Hslds 5,371 2,168 Range of Qualified Hslds4,586 1,583# Qualified Households 3,202 # Qualified Households 3,003
Unit Total HH Capture Rate 1.2% Unit Total HH Capture Rate 1.3%
Range of Qualified Renters 2,352 639 Range of Qualified Renters1,914 456# Qualified RenterHouseholds 1,713 # Qualified RenterHouseholds 1,458
Unit Renter HH Capture Rate 2.3% Unit Renter HH Capture Rate 2.7%
Gross Capture Rate Total Households 11,732 Total HHNumber of Units Band of Qualified HHs # Qualified HHs
Income $30,200 $74,880120% Units 80 HHs 5,371 1,583 3,787 2.1% Capture Rate
Income Renter Households 6,437 Renter HHHHs Band of Qualified HHs # Qualified HHs
Income $30,200 $74,880120% Units 80 HHs 2,352 456 1,896 4.2% Capture Rate
12
0%
Un
its
Findings and Conclusions
Capture and Penetration Rate
Capture RatePenetration
RateUnit Type All AllGross Rent $450 $450Income Ratio 35% 35%Minimum Income $15,429 $15,429Maximum Income (2/BR) $34,200 $34,200
Total Qualified RentersExisting Households, 2006 9,189 9,189 X Percent Income Qualified 43.8% 43.8%X Percent Renter 41.5% 41.5%Total Qualified Renters 1,670 1,670
Other LIHTC Units Existing LIHTC Units 0 208 LIHTC Under Construction 0 84 Proposed Units - Subject 0 43 Proposed Units - Other App 69 69Total LIHTC Units 69 404
Total Qualified Renters 1,670 1,670
Total LIHTC Units 69 404
Capture / Penetration Rate 4.1% 24.2%
Findings and Conclusions
Calculating Capture Rates & Demand Analysis
• There are no right or wrong capture rates
• Capture/penetration rates must be considered within context of market
• In rural markets, be conservative; “don’t want to be wrong forever”
• Critical demand for several units does not mean sufficient demand
• Senior markets may consider support from homeowners
Findings and Conclusions
0% 10% 20% 30% 40% 50%0%
2%
4%
6%
8%
10%
12%
14%
Rural Markets Danger Zone
Best Opportunity
Urban Markets
Penetration Rate
Cap
ture
Rate
Interpreting Capture & Penetration Rates
Findings and Conclusions
Other Factors Impacting Demand
• Location—Surrounding land uses may attract or prevent renters from moving to the site
• Proposed Rents—Capture rates estimate the number of households able to pay the proposed rents, not the willingness to do so
• Housing Markets—Rental markets with high vacancy rates may reflect an oversupply of available housing. The overall health of the rental market may impact the ability of a proposed development to reach stabilization despite low capture rates
Findings and Conclusions
Final Conclusions
Findings Evaluation of Site Evaluation of Economic Trends Evaluation of Demographic Trends Evaluation of Competitive Environment
Net Demand
Product Evaluation Unit Distribution Unit Sizes Features and Amenities Price Position (Appraiser does specific grids)
Affordability
Findings and Conclusions
Projected Absorption Levels
Historic Pattern of New Units Absorbed Annually
Performance of Recently Completed Projects
Adjust Estimate to Reflect Market Conditions
Economic and Demographic Forecasts
Units in Pipeline
Occupancy Levels
7.5.H.4 Study should also include an estimate of absorption period needed for the project to reach sustaining occupancy…
Findings and Conclusions
Impact on Existing Market
Will the subject’s success have an adverse impact on the competitive market.
• Penetration Analysis• Clustering of existing product at same
price point.• Introduction of new product at same price
point.
7.5.H.5 the market study must include an assessment of the impact the proposed project would have on existing rental developments
Findings and Conclusions
Questions?
Robert LefenfeldManaging PrincipalReal Property Research Group, [email protected]