04-09-2018 Council Work Session Packet

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Mr. Eric Zweber December 19, 2017 WSB & Associates, Inc. Page 13 Household Income Distribution Income data is useful in that it can reflect wage trends and helps assess living conditions and reveal demand for different types of services. This data also helps determine demand for differ- ent types of owned and rented housing based on the size of the market at specific cost levels. In general, housing costs of up to 30 percent of income are considered affordable by the Depart- ment of Housing and Urban Development (HUD). Household income data also helps ascertain demand for different types of retail services. People with lower incomes are likely to seek out discount retailers and spend a higher proportion of their income on necessities like grocery items. Retail services and goods such as dining and home furnishings will experience higher spending from more moderate -income households while upper income households will also shop for specialty apparel, recreation and sporting goods, and luxury items. The next three tables present data on household income by age of householder in 2017 and 2022 for Navarre, Orono, and Hennepin County. The data is estimated by ESRI and adjusted by Maxfield Research and Consulting, LLC to reflect the most current local household estimates and projections. The following are key points. • In 2017, the median household income for Navarre is estimated to be $91,744. This value is lower than the estimate for Orono ($136,259), but significantly higher than that of Hennepin County ($68,497). However, the median income for Navarre is expected to increase by 15.5% to $105,955 by 2022. • As households age through the lifecycle, their household income tends to peak in their late 40s and early 50s. This trend is evident in the Market Area as the age 45 to 54 co- hort has the highest estimated income at $189,487 in Orono. • Rental housing often targets younger renter households. The median household income in Orono is $63,804 for the under -25 age group and $102,544 for the 25 to 34 age group. Households earning the median income for these age groups could afford monthly housing costs estimated at $1,595 and $2,564, respectively. • Households in the 35 to 44 age group that may delay buying a home could afford a $3,879 monthly rent, based on the median household income of $155,158. • The median sale price for new construction multifamily housing units (twinhomes and detached townhomes) in Orono is approximately $677,00 (based on recently sold and active listings). Assuming that a potential home buyer has good credit and makes a 20% down payment, a household would need to have a minimum annual income of roughly $166,000 to be income -qualified for a new construction multifamily unit purchased at the median price in Orono. MAXFIELD RESEARCH AND CONSULTING, LLC