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Home My WebLink About02022022 PACAB LAYDOWN - Housing Presentation by Nicole Lawrence220202 PACAB LAYDOWN Housing Issues Affecting Employment in Seward Presented By: Nicole Lawrence of Seward Properties Presented 2/2/2022 to PACAB Nicole Lawrence of Seward Properties Presented 2/2/2022 to PACAB Nicole Lawrence of Seward Properties General Info on Rentals - Most people moving to Seward prefer to rent before buying - To learn the area and the job - Sometimes they have a house elsewhere that they need to sell first - People looking for jobs plan ahead - Details about which rental will be opening is often not known until the month before - This makes planning difficult and then potential employees cannot commit - once people find a good rental they often stay in that unit for a long time - Not much turnover with leases on properties with good rental rates, utilities, and location - Results in a low vacancy rate and little openings for long -terms rentals - A major barrier for renters in Seward is that they have multiple pets - Landlords prefer to rent to people without pets - Sometimes paying a larger deposit will help - Fducating landlnrds that it cnmes down to resnnnsihle net nwnershin/references nn nets Presented 2/2/2022 to PACAB Nicole Lawrence of Seward Properties Length of Rentals in Seward Summer n -7 n, 3 *based off S Properties' n Presented 2/2/2022 to PACAB Nicole Lawrence of Seward Properties Rental 113 Total units under management *based off Seward Properties' managed rentals •Leases renewed •Leases ended Rentals are challenging due to availability more than prices Seward Rental Prices • Rental prices have stayed very close to the same as when we started managing properties 11 years ago. • Utilities account for some of the major cost when renting a house and should always be researched before signing a lease. *based off Seward Properties' rentals only Apartments (generally include utilities - very different layouts, size and amenities) 70% of our rentals are apartments or shared walls Size Monthly Rental Rate % of Rentals (SProp) 1 bed $900 23% 2 bed $1,150 14% 3 bed $1, 300 30% 4 bed $1, 700 1 % Houses (utilities are generally additional and avg extra $150-$500/month depending on size - very different layouts, size and amenities) 30% of our rentals are houses Size Monthly Rental Rate % of Rentals (SProp) 1 bed $1,100 10% 2 bed $1,250 14% 3 bed $1, 500 6% 4 bed $1, 700 1 % 5 bed $1, 800 1 % Presented 2/2/2022 to PACAB Nicole Lawrence of Seward Properties What Can A Renter Afford? - It is recommended to spend 30% of your monthly income on rent - For a 2 bed apt at $1150/month including utilities that would mean you would need to be making -$3,800/month or $46,000/year - For a 3 bed house at $1500/month plus $350/month in utilities that would mean you would need to be making -$6,200/month or $74,000/year - With home prices increasing, mortgages are increasing, and rents will too - Property owners want to cover their mortgages when they are renting out homes - Sales price increase = delayed rental rate increase - Three years from now average long term rental rates might go up 20% - A home renting for $1250/month in 2021 may be renting for $1450/month in 2024 - Tenants in the future possibly paying over 30% of monthly income unless wages rise to meet housing cost needs - Makes it harder for tenants to purchase Presented 2/2/2022 to PACAB Nicole Lawrence of Seward Properties What Can A Buyer Afford? - It is recommended to spend 30% of your monthly income on housing - For a house costing $305,000, with 5% down and 3.5% interest on a 30 year loan... $184 $10- SUM $173(V�i payment - ,756° I'. 1 a 0 Q fl 6�) r $1,295 D 0000/y U - Interest rates affect what a buyer can afford - This only work if interest rates stay low. When they go up, so do mortgages, which then increases the amount of annual income a buyer needs to afford that monthly payment. Seward Residential Average & Median Sales Prices $400,000 $300,000 $200,000 nL LL $100, 000 $0 A Average Sales Price E Median Sales Price M $243,00C$240,006$252,00 $193001212,00C$■_ DO„ $180,006 ' 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 • The residential median sales price in Seward in 2021 was $306,000. This is the first year in history that it has broken $300,000. Presented 2/2/2022 to PACAB Residential Prices in e w a r Nicole Lawrence of Seward Properties �I..I�11r,u° 11K- 45.7% 201 K- WOK 301 K- OK 401 K+ • 52% of homes are now selling for over $300K as compared to 35% 2 years ago • From 2009 - 2019, only 17 houses had sold for over $400K • From 2019-2021, 25 houses sold for over $400K in the past 2 years Seward Residential Rate of Appreciation 30.00% 24.50% 20.00% 10.00% 0.00% -10.00% -5.00% �NI �o .'� \1 �o 0 �o �o`� Yearly Comparison • Avg increase in value was 5% per year from 2012 - 2020 but jumped up 24.5% last year = not sustainable • Rate of appreciation is not sustainable but with limited land/homes and more demand than supply, likely rate of appreciation will go back down to 5% as an average. It is unlikely that homes will go down in value (with current average annual home inventory vs. demand) Seward "Sold" and "Days on Market" Residential Statistics Days on Market 0 Number Sold 200 184- ,1,7,9 150 �154 l�1y28 100 86 /-.... ``~�78 �4 50 44-4j1-- _3+7----"52--____48_ ,3+7- ,,45��34�_4fi 24�� 0 2012 2014 2016 2018 2020 • The total number of homes sold (in red) has stayed pretty steady since 2013. Without additional inventory (new construction), this number will likely remain the same. • The days on market has been decreasing drastically for the past decade. The average home is on the market 44 days but that is accounting for fixer uppers and homes over $600K which might be on the market for a year or more. Homes from $200K-$500K were on the market in Seward in 2021 for an average of 5 days! Presented 2/2/2022 to PACAB Types of Buyers 2019 - 2022 Nicole Lawrence of Seward Properties Second Home/Investment • 75% of the buyers in Seward are people Currently Living in Seward Moved to Seward 17.6% 25.7% living here and using the home as their t primary residence. 568% \ Non Primary Residence Purchasers . • Many 2nd home buyers purchase non- Local Seward financeable properties and fix them up. • Out of state buyers tend to respect City zoning rules. • Of the properties sold over the past 2 years, only 3 have been identified as being purchased with the primary intent of changing the use from primary residence to nightly rentals. Out of State 31.6% 26.3% 42.1 % AK 2nd Home r Demographics of Buyers Buyers under 35 have increased 113% in 5 years. Buyers 35-50 have remained steady. Buyers 50 and over have decreased by 50%. * many are investments Information Based off Seward Properties' Data from 2016, 2019 and 2020 Demographics of US Population/Potential Buyers Total US Population by Generation in 2020 Shore of total population Greatest Gen (92-100 years in 2020): 1% Silent Gen (74-91 years in 2020): 7% —� f Gen-Z (0-20 years in 2020): 26% Baby Boomers (55-73 years in 2020): 21 % Gen-X (39-54years in 2020): 20% / \ Millenials (21-38 years in 2020): 25% Presented 2/2/2022 to PACAB Marl(et Trwith Lain Sewa Nicole Lawrence of Seward Properties Outsl*de City Li*mi*ts 2018 - $50,000/acre 2021 - $100,000/acre • Land is becoming more scarce resulting in extremely high sales prices • Building costs are also high - high costs result in more pressure on limited existing inventory resulting in more offers and higher residential sales prices • These numbers are averages and depend on many variables including location, elevation, ease of utility installs, flood zone, etc. Possible Solutions? Presented 2/2/2022 to PACAB Nicole Lawrence of Seward Properties More Houses/Land & Builders - Support making City land available for developing - Support expanding utilities to make building more affordable - More available housing means less competition for current inventory which would slow the rate of growth of home and land prices - Getting developers who can add consistent & quality housing to the market at a rate to keep up with demand - We have lots that people want to build on but our builders are at capacity and often 6 months to a year out City Enforcement - Consider a cap on the total amount of local nightly rentals to allow for more long-term rentals as many other Cities are doing - Don't allow nightly rentals in areas not zoned for it - Incentivize/Enforcing building to happen sooner on lots inside City limits - especially ones sold by the City More Multi-Plexes - Not low income but quality multi-plexes with different sized apartments - Downtown & walkability are important considerations for tenants' needs/wants - Focus on long-term rental opportunities for year-round employees - If built new, bunkhouses don't usually pencil out even with winter tenants Presented 2/2/2022 to PACAB Nicole Lawrence of Seward Properties �ewev&-C %oro ernes SALES• RENTALS• MANAGEMENT Questions? Presented By: Nicole Lawrence