Housing Trends Presented by: Matt Mullins February 20, 2020 - - PowerPoint PPT Presentation

Housing Trends

Presented by: Matt Mullins February 20, 2020

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Demographic Update

Baby Boomers & For Sale Market Aging In Place Twin Cities Outlook

Big Picture: MN is Aging; Especially Rural MN

2019 ▪ 5.7 million ▪ Millennials overtaking Boomers ▪ 16% pop. 65+ ▪ Metro: 48% of MN 65+ 2040 ▪ 6.1 million ▪ 21% pop. 65+ ▪ Metro: 75% of MN 65+

7.1% 9.8% 23.0% 25.7% 22.4% 20.6% 25.0% 21.8% 22.4% 22.1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Metro Area Non-Metro MN

Gen Z Gen Y Gen X Boomers Silent Gen.

Metro vs. Non-Metro Population Distribution: 2019

7 - 22 23 - 38 39 - 54 55 - 73 73+ 2019 Age

Outstate MN Aging Faster than Metro Area…For Now

Millennials Have Recently Overtaken Boomers

50,000 100,000 150,000 200,000 250,000 0-4 5-9 10-14 15-19 20-24 25 - 29 30 - 34 35 - 39 40 - 44 45 - 49 50 - 54 55 - 59 60 - 64 65 - 69 70 - 74 75 - 79 80 - 84 85+

Age Distribution 2019: Twin Cities vs. Remainder of MN

Non-Metro MN Twin Cities Metro

Source: ESRI, Inc.

!

492,000+ New Seniors (2020 to 2040)

Twin Cities 65+ Population +98% by 2040!

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1980 1990 2000 2010 2015 2020 2025 2030 2040

• Pctd. 65+

65+ Pop Year

Metro Area 65+ Population

Metro Area Seniors Pass Non-Metro in 2020

100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000 1980 1990 2000 2010 2015 2020 2025 2030 2040

65+ Population Year

65+ Population: Metro vs. Non-Metro

Non-Metro Twin Cities

18% Growth Rate Projected Through 2040

20,000 40,000 60,000 80,000 100,000 120,000 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040

Historic & Projected Population: Brooklyn Park

Strong growth in 65+ population in Brooklyn Park

3.1%

• 0.5%

1.7% 12.9%

• 0.4%
• 5.6%

15.1% 28.9%

• 10.0%
• 5.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% Under 20 20 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65 to 74 75+

Age Group

Projected Population Growth by Age Group: Brooklyn Park 2019 - 2024

Incomes Peak for Millennials/Gen X

$36,210 $66,867 $90,916 $90,037 $80,923 $58,915 $41,109 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Under 25 25-34 35-44 45-54 55-64 65 -74 75+

2019 Med. Income

• No. of Households

Age of Householder

Growth & Income Trends by Age of Householder: Brooklyn Park

2019 2024 2019 Median Income

Homeownership Rates Peak for Boomers

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% 15 - 24 25 - 34 35 - 44 45 - 54 55 - 64 65 - 74 75 - 84 85 +

Age Group

H/O Rate by Age: Brooklyn Park, 2010 & 2017

2010 2017

Baby Boomers & For Sale Market

Aging In Place Twin Cities Outlook Demographic Update

Older Adult Housing Continuum

Age Targeted vs. Age-Restricted

Age-Targeted Age-Restricted Age Restriction None - but caters to older adults Typically 55+ Price Points More expensive, larger homes More price sensitive Age of Buyers Early empty nesters Propensity increases with age Lifestyle More independence More Social interaction Visitor Policy More flexibility for all ages More restrictive visitor policies

➢ 10,000 baby boomers turn 65 every day in the US until 2030 ➢ Healthier, savvier than previous generations ➢ Highest spending power (70% of disposable income in US) | 71% of all net worth in the U.S. ➢ 50%+ of baby boomers support their adult children ➢ 65% of boomers plan to work past age 65 ➢ 45% of boomers have no retirement savings ➢ Boomers and seniors carrying more debt: 40% of 65+ population carry a mortgage ➢ 45% of boomers purchased their 1st home between 25-34 (37% Millennials today) ➢ Boomers 80% Home ownership rate | 20% of the new construction market ➢ Accumulated substantial home equity | $6.3 Trillion!

Baby Boomers (56-74) - 75 Million Strong!

Boomers 21% of Population | 32% of Sales

Boomers & Seniors: 39% of All Home Purchases

37% 24% 32% 7%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Millennials Gen X Boomers Silent Generation

Percent of Home Sales: 2019

Source: NAR Home Buyer & Seller

3/4’s of Older Adults Still Buying SF Home

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 54 to 63 64 to 72 73 to 93

Type of Home Purchased by Age: 2019

Detached SF Home TH/Rowhouse Apt./Condo 5+ units Duplex/Apt./Condo 2-4 units Other

Source: NAR Home Buyer & Seller

Older Adults/Seniors Still Desire Square Footage

0% 5% 10% 15% 20% 25% 30% 35% <1,000 sq. ft. 1,001 to 1,500

• sq. ft.

1,501 to 2,000

• sq. ft.

2,001 to 2,500

• sq. ft.

2,501 to 3,000

• sq. ft.

3,001 to 3,500

• sq. ft.

Older Adult Buyers Home Size Preference

54 to 63 64 to 72 73 to 93

Source: NAR Home Buyer & Seller

Older Adults Moving Further Away

Source: NAR Home Buyer & Seller

15 10 10 11 20 30 30 5 10 15 20 25 30 35 All Buyers 28 & younger 29 to 38 39 to 53 54 to 63 64 to 72 73 to 93

Median Miles Age

Distance between Home Purchased & Previous Residence

Market for One-Level Living Product

Single-level Living Products in Demand from Boomers:

✓ Rambler single-family homes ✓ Detached Townhomes & Twinhomes, villas, etc. ✓ Condominiums ✓ Single-level and walk-out lower level townhomes ✓ Cooperatives ✓ Active Adult Rentals ✓ General-Occupancy Rentals ✓ Retirement Communities

What about Condos?

✓ Condo market soft since recession ✓ MN State Statute 515 (“MCIOA”) modified in 2017 to ease construction defects language…but still difficult ✓ Most development in DT Mpls. or wealthier suburbs (Wayzata, Edina, Minnetonka, etc.) ✓ Strong demand; but developers focusing on apartment sector due to risk ✓ Most new product $500k+ | $400+ PSF

Age Restricted For-Sale Communities

Bellwether Del Webb (Pulte Homes)

▪ Age-restricted Villa Development ▪ Build-out 400 Homes…potential for future phases ▪ Base Pricing: $320k to $450k; w/upgrades up to $600k ▪ Avg. $227/PSF ▪ Floor Plans from 1,222-1,953 sq. ft. ▪ Strong Absorption ▪ Amenities: clubhouse, indoor and

• utdoor pool, fitness center, bocce

ball, pickle ball, multi-purpose rooms, community room, commercial kitchen, walking paths, social clubs, lifestyle director

Margaritaville

Desired Home Features for Older Adult Home Buyers

✓ Proximity to family and grandkids ✓ Desire smaller, lower-maintenance....yet higher-quality than their current home ✓ Prefer single-family detached product; but many will consider attached products ✓ 90% consider a 1-story; but 1/3rd would still consider a two-story ✓ Prefer master bedroom and laundry room on main floor ✓ No-Step entry preferred, wider doorways & hallways, lever-style handles ✓ Abundant storage | Guest bedroom/hobby space ✓ Adequate lighting with sensors or timers, home automation, security, smart technology

Aging In Place Twin Cities Outlook Demographic Update

Baby Boomers & For Sale Market

Aging in Place

➢ Only 3.5% of all U.S. homes are Considered Accessible ➢ AARP Home Preference Study (2018):

• 76% of 50+ would prefer to remain in their current residence
• 77% would like to stay in their community as long as possible
• Proximity to health care, grocery stores, and transportation very important
• 31% would consider building an ADU (i.e. granny flat)
• About one-third of older adult homeowners anticipate home improvement

modifications needed to stay in their home

Requested Modifications

• Installing grab bars
• Walk-in-showers/curb less

shower

• Slip-free flooring
• Widened doorways/pocket

doors

• Eliminating steps/ramp

construction

• Raised toilets
• Adjustable shower heads
• Lever door handles, rocker light

switches

• Varied height cabinets and

countertops

• Smart home technology
• Touchless faucets
• Chair lift
• Motion activated lighting
• Lower wall switches and raised

electrical outlets

Boomers Creating Housing Gridlock?

➢ 55+ owns 53% of all homes in the U.S. ➢ Longer tenure in home: ▪ 70% 10+ years ▪ 47% 20+ years ➢ Senior Turn Over Rate is Slower than Previous Generations ➢ Lack of Inventory for Downsizing ➢ Affordability Concerns ➢ “Wait and See” if Housing Prices Continue to Rise

Lack of For-Sale Product Driving Apartment Sector

1,818 1,311 738 516 568 393 380 262 102 1,727 1,691 1,485 1,696 2,042 591 1,823 1,021 1,061 1,357 304 478 694 1,133 3,803 3,818 3,782 2,445 4,820 5,521 5,674 9,132

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 1990 91 92 93 94 1995 96 97 98 99 00 01 02 03 04 05 06 07 08 09 2010 11 12 13 14 15 16 17 18 19 20 Number of Units

General Occupancy Market Rate Apartment Units Online Twin Cities Metro Area: 1990 to 2020

1990s - 7,815 units 2000s - 13,071 units 2010s - 32,168 units

9-Year Run of Vacancies Under 3%!

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 1990 91 92 93 941995 96 97 98 992000 01 02 03 042005 06 07 08 092010 11 12 13 142015 16 17 18 2019 (3Q) Vacancy Rate Avg Rent Year

Metro Area Apartment Vacancy & Rent Summary 1990 through 3Q2019

• Avg. Rent

Vacancy Rate Equilibrium

Senior Housing Deliveries @ Record Peak

500 1,000 1,500 2,000 2,500 91 92 93 94 1995 96 97 98 99 2000 01 02 03 04 2005 06 07 08 09 2010 11 12 13 14 2015 16 17 18 19 2020

Units Year

Senior Housing Deliveries by Year

Units Built

…More in the Pipeline

100 200 300 400 500 600 700 800 900

AA Aff AA MR Rent AA Own IL AL MC Twin Cities 2019 Deliveries & 2020 Pipeline

2019 Total 2020 UC

Twin Cities Outlook

Demographic Update Baby Boomers & For Sale Market

Aging In Place

Median Home Sales Price @ Peak

$127,000 $265,000 $227,900 $150,000 $282,000 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 2005 06 07 08 09 2010 11 12 13 14 2015 16 17 18 19

Median Sales Price: Brooklyn Park vs. Metro Area

BP Twin Cities

2020 For-Sale Market Metrics Positive

Median Sales Price Housing Starts Home Sales Interest Rates Inventory Distressed Sales Housing Affordability

55+ Outlook

➢ +17% senior household growth rate in Brooklyn Park in next five years ➢ 80% of Brooklyn Park 55+ households are homeowners ➢ ¾’s of households desire to stay in their current home or community ➢ Proximity to amenities important: walkability, restaurants, fitness, shopping, worship, etc. ➢ Strong demand for new construction maintenance-free housing or remodeling current residence ➢ 55+ households accounted for more than 50% of home improvement spending (2019)…projected to rise to 56% ➢ “Aging in Place” perception changes to “Living in Place”

Matt Mullins

Maxfield Research & Consulting LLC 612.904.7971 mmullins@maxfieldresearch.com

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