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Due to waiting lists, study recommends more rental units in Detroit Lakes

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And the survey says…

  • Expect more households of those aged 55 and above and fewer of ages 54 and younger.
  • There are plenty of buildable lots up for sale.
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  • Foreclosures have not been a huge deal in Becker County compared to the state average.
  • The unemployment rate spiked in Becker County after the great recession, but has since dropped. It was at 5 percent in July, lower than the state unemployment rate of 5.2 percent.
  • The annual average wage in Becker County is $33,488
  • There is a high demand for rental units in town; subsidized rentals have waiting lists of hundreds of people.
  • Community Partners Research, Inc., out of Lake Elmo, Minn., completed a housing study for Detroit Lakes, and it’s filled with many conclusions to help city officials more forward with any housing questions they may have now and in the future.

    Older households

    To get better, truer demographics for the study, the company included the residents of Detroit Township and Lake View Township. The report states that Detroit Lakes has seen substantial growth over the years, but much of that is due to annexation of parts of these townships.

    Between 2000 and 2010, the two townships increased 850 people and 499 households. The city of Detroit Lakes added 1,221 people and 545 households, but that includes annexation.

    Projections show that Detroit Lakes and the surrounding area will continue to grow between now and 2020. The study conservatively suggests that the townships will grow about 50-55 households in that time period.

    Because of the baby boomer generation retiring and moving to the area, the age projections for 2010-2015, the study finds that “overall the area should experience a decreasing number of households age 54 and younger, and an increasing number of households age 55 and older.”

    Housing inventory

    From January 2000 to December 2012, there were more than 740 building permits granted in Detroit Lakes, most of which were single family houses.

    “Although the construction of single family units was significantly greater than the number of multifamily units, tenure patterns did not reflect this same trend,” the study says.

    Between 2000 and 2010, the rental rate in Detroit Lakes increased while home ownership decreased.

    There are several reasons that trend happened in Detroit Lakes. Many housing units are used for seasonal purposes, the study says, and census reports are based on permanent residency, so those owning properties in this area do not report their residences as permanent.

    “The 2010 Census counted nearly 1,200 seasonal-recreational residences in the Greater Detroit Lakes area,” the study says, which includes the two townships.

    There are plenty of buildable residential lots up for grabs in Detroit Lakes. Most are single family lots, and the city needs to make some zoning changes for multifamily construction, the study suggests.

    “Detroit Lakes has experienced some issues with home foreclosures and bank-owned sales, but this has not been a major problem for the area,” the study states.

    Distressed sales in 2012 equaled 15 homes, half the level reached in 2010 and 2011.

    Becker County has a relatively low rate of foreclosure, ranking 63rd lowest among Minnesota’s 87 counties in 2012.

    In 2012, the midpoint sale price for existing homes in Detroit Lakes was $151,350. The number has increased over the last seven years.

    DL is place to rent

    At the 2010 Census, the rental rate in Detroit Lakes was 39.5 percent, well above the state average. In 2013, the rental housing inventory is estimated at 1,650 to 1,700 units in the city.

    There have also been no new multifamily buildings since 2010.

    Demand is high in the city for rental units, and most report less than 1 percent vacancy rate.

    “There was evidence of strong demand for this type of housing, with many property owners-managers indicating that any available units could be filled by word-of-mouth, and that advertising was not required.”

    Federally subsidized housing units, most of which are geared toward seniors or disabled renters, have no vacancies. Instead, most buildings are on a waiting list.

    That goes for the Housing Choice Voucher Program as well.

    In 2013, about 140 households were using this form of subsidized housing payment. And as of May, the Detroit Lakes HRA program has 350 names on a waiting list for the program.

    Employment trends

    The county reports significant growth in available labor force throughout the county over the last 13 years.

    “When comparing 2012 to 2000, the available resident labor force increased by 2,314 people, or 14.8 percent.”

    About half of that growth happened in just a couple years, from 2008 to 2012.

    The employed workforce has also increased, but at a lower rate, therefore, the unemployment rate increased from 4.9 percent in 2000 to 5.8 percent in 2012.

    “However, the unemployment rate in 2012 was well below the recent peak of 8.9 percent reached in 2009.”

    The highest paying sectors were construction, public administration, manufacturing and financial activities, which were above $40,000.

    “The average annual wage in Detroit Lakes for all industry in 2012 was $33,488.”

    Recommendations

    Community Partners Research found that Detroit Lakes is in need of 155-175 rental units to fill the growing demand.

    For subsidized income rental units, the study recommends “that at least 24 additional units should be added, oriented to families.

    “This recommendation is limited due to the lack of resources available to construct ‘deep subsidy’ rental housing.”

    While there is a substantial need for rental units, the study found that there is still a demand for homeownership as well. It predicts a need for 25 to 27 units per year for residential households.

    Most of the net growth for housing will come from those ranging in age from 55 to 74, who tend to be homeowners instead of renters.

    “The forecasts used in this study expect between 60 percent and 70 percent of the demand to be in a moderate to higher price range.”

    Follow Pippi Mayfield on Twitter at @PippiMayfield.

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