Loading...
HomeMy WebLinkAboutFinal Report of Residential Market Potential March 2018 An Analysis of Residential Market Potential Study Area A The City of South Bend St. Joseph County, Indiana March, 2018 Conducted by On Behalf of ZIMMERMAN/VOLK ASSOCIATES, INC. THE CITY OF SOUTH BEND P.O. Box 4907 227 West Jefferson Boulevard Clinton, New Jersey 08809 South Bend, Indiana 46601 ZIMMERMAN/VOLK ASSOCIATES, INC. Post Office Box 4907 Clinton, New Jersey 08809 908 735-6336 info@ZVA.cc • www.ZVA.cc Residential Market Analysis Across the Urban-to-Rural Transect Study Contents An Analysis of Residential Market Potential: Study Area A 1 Executive Summary 1 Introduction 5 Annual Market Potential for the City of South Bend 6 Annual Market Potential for Study Area A 8 Target Market Analysis 12 The Market Context 16 Optimum Market Position: Study Area A 20 Proposed Rent and Price Ranges: Study Area A 31 Market Capture: Study Area A 32 Study Area A Building and Unit Types 34 Supporting Tables 37 Table 1: Annual Market Potential For New And Existing Housing Units Table 2: Annual Market Potential By Lifestage And Income Level Table 3: Summary Of Selected Rental Properties Table 4: Summary Of For-Sale Multi-Family and Single-Family Detached Listings Table 5: Summary Of Single-Family Listings: New Construction Priced Under $300,000 Table 6: Target Groups For New Multi-Family For Rent Table 7: Target Groups For New Multi-Family For Sale Table 8: Target Groups For New Single-Family Attached For Sale Table 9: Target Groups For New Urban Single-Family Detached For Sale Table 10: Optimum Market Position Affordable/Workforce and Market-Rate Dwelling Units Mixed-Income Development Assumptions and Limitations Copyright o ZIMMERMAN/VOLK ASSOCIATES, INC. Post Office Box 4907 Clinton, New Jersey 08809 908 735-6336 info@ZVA.cc • www.ZVA.cc Residential Market Analysis Across the Urban-to-Rural Transect AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 EXECUTIVE SUMMARY This study has determined that, from the market perspective, between 56 and 70 new mixed-income rental and for-sale dwelling units could be developed and absorbed within Study Area A each year over the next five years. The housing mix of 56 to 70 units would include 39 to 46 new rental units, five to six new condominiums, five to seven new duplexes/triplexes/rowhouses/townhouses, and seven to 11 new tiny houses/cottages/urban houses. For the purposes of this analysis, Study Area A encompasses Census Tracts 6, 19, and 20, including all of the Near Northwest Neighborhood and most of the Near Westside Neighborhood. This study examines affordability based on the following general income groupings: • Households with incomes below 30 percent AMI (the majority of these households typically qualify only for public housing or older existing units); • Households with incomes between 30 and 60 percent of AMI (these households typically qualify for low-income housing tax credit units, existing affordable rental housing, or heavily subsidized ownership housing); • Households with incomes between 60 and 80 percent of AMI (these households typically qualify for new workforce or affordable rental housing or subsidized ownership housing); • Households with incomes between 80 and 100 percent AMI (these households typically qualify for existing market-rate rentals or new workforce or affordable for-sale housing); and • Households with incomes above 100 percent AMI (these households generally have sufficient incomes to rent or purchase market-rate housing). AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 2 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. A total of 880 households represent the annual potential market for new and existing housing units in Study Area A and have been segmented by income, based on the St. Joseph County, IN area median family income (AMI), which, for fiscal year 2017 is $61,500 for a family of four. The combined tenure and housing type preferences and financial capabilities of the 880 target households are shown on the following table. Tenure/Housing Type Propensities by Income Average Annual Market Potential For New and Existing Housing Units Study Area A City of South Bend, St. Joseph County, Indiana . . . . . . . . . HOUSEHOLDS . . . . . . . . HOUSING TYPE NUMBER PERCENT Multi-family for-rent < 30% AMI 114 13.0% 30% to 60% AMI 60 6.8% 60% to 80% AMI 94 10.7% 80% to 100% AMI 48 5.5% > 100% AMI 184 20.9% Total multi-family for-rent 500 56.9% Multi-family for-sale < 30% AMI 9 1.0% 30% to 60% AMI 6 0.7% 60% to 80% AMI 11 1.3% 80% to 100% AMI 9 1.0% > 100% AMI 25 2.8% Total multi-family for-sale 60 6.8% Single-family attached for-sale < 30% AMI 17 1.9% 30% to 60% AMI 14 1.6% 60% to 80% AMI 27 3.1% 80% to 100% AMI 18 2.0% > 100% AMI 44 5.0% Total single-family attached for-sale 120 13.6% Single-family detached for-sale < 30% AMI 45 5.1% 30% to 60% AMI 12 1.4% 60% to 80% AMI 31 3.5% 80% to 100% AMI 7 0.8% > 100% AMI 105 11.9% Total single-family detached for-sale 200 22.7% Grand total 880 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. Summarizing the incomes and financial capabilities of the 880 target households that represent the annual potential market for new and renovated housing units in Study Area A, 21 percent (185 AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 3 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. households) have incomes at 30 percent or less than the AMI; 10.5 percent (92 households) have incomes between 30 and 60 percent AMI; 18.5 percent (163 households) have incomes between 60 and 80 percent AMI; 9.3 percent (82 households) have incomes between 80 and 100 percent AMI; and 40.7 percent (358 households) have incomes above 100 percent AMI. —OPTIMUM MARKET POSITION— The 39 to 46 new mixed-income rental rowhouses and lofts and apartments in mansion buildings that could be absorbed each year include the following: • 20 to 24 studio, one- and two-bedroom lofts ranging in size between 400 (microlofts) and 900 square feet, with proposed base rents ranging between $450 and $1,100 per month ($1.13 to $1.22 per square foot). • 19 to 22 studio, one-, two-, and three-bedroom apartments ranging in size between 450 and 1,200 square feet, with proposed base rents ranging between $750 and $1,800 ($1.50 to $1.67 per square foot). • Absorption has been forecast at a 10 to 12 percent capture of the annual potential multi-family for-rent market. The five to six new mixed-income mansion condominiums that could be absorbed each year include the following: • One- and two-bedroom condominiums ranging in size between 700 and 1,100 square feet, with proposed base prices ranging between $75,000 and $165,000 ($107 to $150 per square foot). • Absorption has been forecast at a 10 to 12 percent capture of the annual potential multi-family for-sale market. The five to seven new mixed-income for-sale duplexes, triplexes, rowhouses, and townhouses that could be absorbed each year include the following: • 3 to 4 one- and two-bedroom triplexes and rowhouses ranging in size between 800 and 1,000 square feet, with proposed base prices ranging between $85,000 and $160,000 ($106 to $160 per square foot). AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 4 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • 2 to 3 two- and three-bedroom duplexes and townhouses ranging in size between 1,250 and 1,300 square feet, with proposed base prices ranging between $145,000 and $210,000 ($116 to $162 per square foot). • Absorption has been forecast at a five to 7.5 percent capture of the annual potential single-family attached for-sale market. The seven to 11 new mixed-income for-sale tiny houses, cottages, and urban single-family detached houses that could be absorbed each year include the following: • 3 to 5 one- and two-bedroom tiny houses and cottages ranging in size between 350 (tiny houses) and 950 square feet, with proposed base prices ranging between $50,000 and $145,000 ($143 to $153 per square foot). • 4 to 6 two-, three-, and four-bedroom urban houses ranging in size between 1,150 and 1,500 square feet, with proposed base prices ranging between $170,000 and $250,000 ($148 to $167 per square foot). • Absorption is forecast at a five to 7.5 percent capture of the annual potential single- family detached for-sale market. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 5 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. INTRODUCTION The purpose of this study is to determine the depth and breadth of the potential market for new and renovated mixed-income dwelling units within Study Area A, City of South Bend, Indiana and includes determination of the target households, the appropriate residential mix corresponding to the housing preferences and financial capabilities of the target households, and the optimum market position for new and renovated rental and for-sale housing units within the Study Area. For the purposes of this analysis, Study Area A encompasses Census Tracts 6, 19, and 20, including all of the Near Northwest Neighborhood and most of the Near Westside Neighborhood. The extent and characteristics of the potential market for new and existing housing units within Study Area A were identified using Zimmerman/Volk Associates’ proprietary target market methodology. In contrast to conventional supply/demand analysis—which is limited to supply-side dynamics and baseline demographic projections—target market analysis establishes the market potential for new and existing housing based on the housing preferences and socio-economic characteristics of households in the relevant draw areas. The target market methodology is particularly effective in defining housing potential because it encompasses not only basic demographic characteristics, such as income qualification and age, but also less-frequently analyzed attributes such as mobility rates, lifestage, lifestyle patterns, and household compatibility issues (see METHODOLOGY, provided together with migration and detailed target market tables in a separate document). In brief, this study determined: • Where the potential renters and buyers of new and existing housing units in the City of South Bend and Study Area A are likely to move from (the draw areas); • How many households have the potential to move within and to the city and the Study Area each year if appropriate housing units were to be made available (depth and breadth of the market); • Who the households are that represent the potential market for new units in the Study Area (the target markets); AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 6 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • What their housing preferences are in aggregate (rental or ownership, multi-family or single- family); • What their range of affordability is by housing type (income qualifications); • What their current housing alternatives are (rental and for-sale residential development in the city); • What the target markets are currently able to pay to rent or purchase new dwelling units in Study Area A (affordable and market-rate base rents and prices); and • How quickly the new units will lease or sell (absorption forecasts). AVERAGE ANNUAL MARKET POTENTIAL FOR THE CITY OF SOUTH BEND Analysis of migration, mobility, socio-economic and lifestyle characteristics of households currently living within defined draw areas is integral to the determination of the depth and breadth of the potential market for new and existing housing units within the City of South Bend and the Study Area. The extent and characteristics of the potential market for new residential units within the City of South Bend and the Study Area have been examined through detailed analysis of households living within the relevant draw areas. These draw areas were determined through analysis of migration and mobility data, with additional supporting data drawn from the 2016 American Community Survey for the City of South Bend and St. Joseph County, and incorporating information obtained from real estate brokers, sales and leasing agents and other knowledgeable sources, as well as from field investigation. Where are the potential renters and buyers of new and existing housing units in the City of South Bend likely to move from? Analysis of the most recent St. Joseph County migration and mobility data available from the Internal Revenue Service—from 2010 through 2014—shows that the number of households moving into the county into peaked at 5,280 households in 2012, then fell to 3,855 households by 2014. (See Appendix One, Table 1.) Elkhart County, Indiana, directly to the east, consistently accounts for approximately 16 to 18 percent of household migration into St. Joseph County. Berrien County, Michigan, due north of St. Joseph County, represents between approximately six and seven percent of St. Joseph County migration, followed by Cook County, Illinois—at between four and 5.5 AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 7 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. percent—and Marshall County, Indiana—at four to five percent. All other counties accounted individually for less than four percent of household migration into St. Joseph County. Over the study period, annual out-migration from St. Joseph County reached a recent peak in 2011, with 5,675 out-migrating households, then falling each year thereafter to reach just over 4,000 households by 2014. Approximately 13 to 16 percent of out-migrating St. Joseph County households have moved to Elkhart County, representing 640 to 855 St. Joseph County movers over the study period. Net migration—the difference between households moving into the county and those moving out— showed household losses over the entire study period, with the smallest loss—155 households— occurring in 2014, at the end of the study period, and the largest loss—650 households—in 2010, at the beginning of the study period. Based on the migration and mobility data, then, the draw areas for the City of South Bend and the Study Area have been delineated as follows (see also METHODOLOGY): • The local draw area, covering households living within the South Bend city limits. • The county draw area, covering households living elsewhere in St. Joseph County. • The regional draw area, covering households with the potential to move to the City of South Bend from Elkhart, Berrien, Cook, and Marshall Counties. • The national draw area, covering households with the potential to move to the City of South Bend from all other U.S. counties. As derived from the updated migration and mobility analyses, then, the draw area distribution of all households with the potential to move within or to the City of South Bend each year over the next five years is therefore as follows (see also Appendix One, Table 8): Average Annual Market Potential by Draw Area City of South Bend, St. Joseph County, Indiana City of South Bend: 51.9% Balance of St. Joseph County: 23.3% Regional Draw Area (Elkhart, Berrien, Cook, and Marshall Counties): 8.1% Balance of the U.S.: 16.7% Total: 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 8 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. How many households have the potential to move within and to the city each year? As determined by the target market methodology, which accounts for household mobility within the City of South Bend, as well as migration and mobility patterns for households currently living in all other counties, an annual average of 7,565 households represent the potential market for new and existing housing units within the city each year over the next five years. Approximately 48 percent of the target households will be moving to the city from outside the South Bend city limits. AVERAGE ANNUAL MARKET POTENTIAL FOR STUDY AREA A Where are the potential renters and buyers of new and existing housing units in Study Area A likely to move from? The target market methodology identifies those households with a preference for living in downtown, in-town, and walkable neighborhoods. After discounting for those segments of the city’s annual potential market that typically choose suburban and/or rural locations, the distribution of draw area market potential for new and existing dwelling units within Study Area A would be as follows (see also Appendix One, Table 9): Average Annual Market Potential by Draw Area Study Area A City of South Bend, St. Joseph County, Indiana City of South Bend: 64.8% Balance of St. Joseph County: 18.2% Regional Draw Area (Elkhart, Berrien, Cook, and Marshall Counties): 4.5% Balance of the U.S.: 12.5% Total: 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 9 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. How many households have the potential to move to Study Area A each year over the next five years? Based on the analysis, which accounts for household mobility within the City of South Bend and the balance of St. Joseph County, as well as migration and mobility patterns for households currently living in all other cities and counties across the country, an annual average of 880 younger singles and couples, traditional and non-traditional families, and empty nesters and retirees of all incomes represent the potential market for new and existing housing units within the Study Area each year over the next five years. What are their housing preferences in aggregate? The housing preferences of the draw area households—derived from their tenure (rental/ownership) choices and broad financial capacities—are outlined on the following table (see Table 1 following the text): Average Annual Potential Market for New and Existing Housing Units Study Area A City of South Bend, St. Joseph County, Indiana NUMBER OF PERCENT HOUSING TYPE HOUSEHOLDS OF TOTAL Multi-family for-rent 500 56.9% (lofts/apartments, leaseholder) Multi-family for-sale 60 6.8% (lofts/apartments, condo/co-op ownership) Single-family attached for-sale 120 13.6% (townhouses/live-work, fee-simple/ condominium ownership) Single-family detached for-sale 200 22.7% (houses, fee-simple ownership) Total 880 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. Nationally, market propensities for higher-density urban housing continues to grow. Approximately 57 percent of the 880 target households comprise the market for rental dwelling units; an increasing percentage are renters by choice; many, however, would prefer to own but cannot afford the type of housing they want in neighborhoods where they would consider living. Younger people in particular AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 10 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. are challenged by the burden of significant education debt as well as lack of an adequate down payment. The remaining 43 percent of the market would choose some form of ownership housing (nearly 17 percentage points below the current estimated homeownership rate in the city of approximately 60 percent). Just under 53 percent of the annual potential ownership market would prefer single-family detached units—which currently represent an estimated 73 percent of the existing housing stock in South Bend. The remaining 47 percent of the ownership market would choose for-sale single-family attached (duplexes/townhouses/live-work units) or multi-family units (condominium/co-operative units). What is their range of affordability by housing type? The 880 households that represent the annual potential market for new and existing housing units in Study Area A have also been segmented by income, based on the St. Joseph County, IN area median family income (AMI), which, for fiscal year 2017 is $61,500 for a family of four. This study examines affordability based on the following general income groupings: • Households with incomes below 30 percent AMI (the majority of these households typically qualify only for public housing or older existing units); • Households with incomes between 30 and 60 percent of AMI (these households typically qualify for low-income housing tax credit units, existing affordable rental housing, or heavily subsidized ownership housing); • Households with incomes between 60 and 80 percent of AMI (these households typically qualify for new workforce or affordable rental housing or subsidized ownership housing); • Households with incomes between 80 and 100 percent AMI (these households typically qualify for existing market-rate rentals or new workforce or affordable for-sale housing); and • Households with incomes above 100 percent AMI (these households generally have sufficient incomes to rent or purchase market-rate housing). The combined tenure and housing type preferences and financial capabilities of the 880 target households are shown on the table on the following page. (See again Table 1.) AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 11 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. Tenure/Housing Type Propensities by Income Average Annual Market Potential For New and Existing Housing Units Study Area A City of South Bend, St. Joseph County, Indiana . . . . . . . . . HOUSEHOLDS . . . . . . . . HOUSING TYPE NUMBER PERCENT Multi-family for-rent < 30% AMI 114 13.0% 30% to 60% AMI 60 6.8% 60% to 80% AMI 94 10.7% 80% to 100% AMI 48 5.5% > 100% AMI 184 20.9% Total multi-family for-rent 500 56.9% Multi-family for-sale < 30% AMI 9 1.0% 30% to 60% AMI 6 0.7% 60% to 80% AMI 11 1.3% 80% to 100% AMI 9 1.0% > 100% AMI 25 2.8% Total multi-family for-sale 60 6.8% Single-family attached for-sale < 30% AMI 17 1.9% 30% to 60% AMI 14 1.6% 60% to 80% AMI 27 3.1% 80% to 100% AMI 18 2.0% > 100% AMI 44 5.0% Total single-family attached for-sale 120 13.6% Single-family detached for-sale < 30% AMI 45 5.1% 30% to 60% AMI 12 1.4% 60% to 80% AMI 31 3.5% 80% to 100% AMI 7 0.8% > 100% AMI 105 11.9% Total single-family detached for-sale 200 22.7% Grand total 880 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. Summarizing the incomes and financial capabilities of the 880 target households that represent the annual potential market for new and renovated housing units in Study Area A, 21 percent (185 households) have incomes at 30 percent or less than the AMI; 10.5 percent (92 households) have incomes between 30 and 60 percent AMI; 18.5 percent (163 households) have incomes between 60 and 80 percent AMI; 9.3 percent (82 households) have incomes between 80 and 100 percent AMI; and 40.7 percent (358 households) have incomes above 100 percent AMI. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 12 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. TARGET MARKET ANALYSIS Who are the households that represent the potential market for new and renovated units in Study Area A? The aftermath of the housing crash has seen a measurable shift in market preferences from home ownership to rental dwelling units, particularly among younger households, yielding a higher share of consumer preference for multi-family rentals even among relatively affluent consumers than would have been typical a decade ago. At the same time, there has been a significant shift in neighborhood preferences from single-use subdivisions toward mixed-use, walkable neighborhoods. This shift has been driven by the convergence of the preferences of the two largest generations in the history of America: the Baby Boomers (currently estimated at just under 74 million), born between 1946 and 1964, and the estimated nearly 89 million Millennials, who were born from 1977 to 1996 and, in 2010, surpassed the Boomers in population. The convergence of two generations of this size—simultaneously reaching a point when housing in walkable neighborhoods matches their life stage—is unprecedented. In addition to their shared preference for walkable urban living, the Boomers and Millennials are changing housing markets in multiple ways. In contrast to the traditional family (married couples with children) that comprised the typical post-war American household, Boomers and Millennials are households of predominantly singles and couples. As a result, nationally, the home-buying market now contains more than 63 percent one- and two-person households, and the 37 percent of the homebuyers that could be categorized as family households are equally likely to be non- traditional as traditional families. One consequence of this evolution is that mixed-income development is now more likely to succeed than when suburban preferences dominated the housing market. As determined by the target market analysis, the general market segments, by lifestage and housing type, that represent the potential market for new and existing housing units in Study Area A include (see also Table 2 following the text): • Younger singles and childless couples—including students, young hospital- and university- related employees, young professionals, and office, government and retail workers (52.8 percent); AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 13 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • Traditional and non-traditional family households, of which a number are single parents with one or two children, as well as traditional family household heads who are affiliated with one of the hospitals or educational/cultural institutions located in the city, or government employees, service workers, and other private-sector employees, or (31.3 percent); and • Empty nesters and retirees, some with incomes from social security alone, others who also have pensions, savings and investments, and the remainder who are still working (15.9 percent). Many younger singles and couples prefer to live in downtowns and in-town neighborhoods because of the diversity of those neighborhoods, and for the availability of employment, entertainment, and cultural opportunities within walking distance of their residences. Affordability continues to be a challenge for the influx of young people who are just entering the job market and are living on their own for the first time. This challenge has been addressed in other cities in part by the introduction of smaller, less expensive units. Just over 20 percent of the younger singles and couples that comprise the target markets for the Study Area have incomes that fall below 30 percent of AMI. If they are employed, these households, for the most part Twentysomethings, Second-City Strivers and Multi-Ethnic Singles, work in part-time or lower-paying jobs, including entry-level retail, such as store clerks, and service occupations, such as waiters and waitresses; many are students. Another 31 percent of the households in this market segment have incomes that fall within the 30- to-60 percent and 60-to-80 percent income bands. These include recent college graduates just beginning their white-collar careers, lower-level medical personnel, and general office workers in the target groups of Small-City Singles and Suburban Strivers as well as those Twentysomethings, Second- City Strivers, and Multi-Ethnic Singles, who have full-time or higher-paying employment. The remaining 49 percent of the younger singles and couples have incomes that are at or above 80 percent of the AMI. These include the target groups of New Bohemians, The VIPs, and Fast-Track Professionals, as well as more affluent households among the Twentysomethings, Small-City Singles, AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 14 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. Suburban Strivers, and Second-City Strivers, who are engaged in mid-level office work; academic and medical affiliates; and artists and artisans. Approximately 57 percent of the younger singles and couples moving to the Study Area would be moving from elsewhere in the city; 22.6 percent would be moving from elsewhere in St. Joseph County; just over five percent would be moving from the regional draw area; and the remaining 15 percent would be moving from elsewhere in the U.S. Family-oriented households represent just over 31 percent of the market for new and renovated housing units within Study Area A. An increasing percentage of family-oriented households are non- traditional families, notably single parents with one to three children. Non-traditional families, which, starting in the 1990s, have become an increasingly larger proportion of all U.S. households, encompass a wide range of family households, from a single mother or father with one or more children, an adult taking care of younger siblings, a grandparent responsible for grandchildren, to same-sex couples with children. In the 1950s, the “traditional family household” comprised more than 65 percent of all American households. That demographic has now fallen to less than 22 percent of all American households (and only approximately 15.9 percent in South Bend). Households with children are now increasingly diverse and in some areas are largely non-traditional families. Forty percent of the family households that are the target markets for the Study Area are potential renters, not homeowners. Just over 24 percent of the family households that comprise the annual potential market for the Study Area have incomes below 30 percent of AMI and are typically spending more than 40 percent of their incomes on housing costs. Many of these households are single-parent families—Single- Parent Families, some of the In-Town Families and New American Strivers—struggling to make ends meet. Another 27 percent of the family-oriented households have incomes that fall within the 30-to-60 and 60-to-80 percent income bands, including Uptown Families and some of the In-Town Families and New American Strivers market groups. A significant number of the heads of household in these family groups are production or blue-collar workers. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 15 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. Just under 49 percent of the traditional and non-traditional families have incomes at or above 80 percent of AMI. These households are, in large part, dual-income households, with medical careers, in academic positions, or middle-management jobs. These households include Unibox Transferees, Button-Down Families, Late-Nest Suburbanites, Fiber-Optic Families, and Full-Nest Suburbanites, many of whom would move into the Study Area to be closer to Downtown. Nearly three-quarters of these family households are already living in the City of South Bend, and just under 11 percent are currently living elsewhere in St. Joseph County. Less than four percent would be moving to the Study Area from the regional draw area, and the remaining 11 percent would be moving from elsewhere in the U.S., particularly Cook County, Illinois and other counties in Indiana. The smallest general market segment, at 15.9 percent of the annual potential market, is comprised of older households (empty nesters and retirees). A significant number of these target households have grown children who have recently moved out of the family home; another large percentage are retired. In this general market segment, just over 17 percent have incomes below 30 percent of AMI—older singles and couples struggling on limited incomes, mostly from social security—nearly all of whom are living in substandard housing, predominantly Second City Seniors. Another 25.7 percent of the older target households have incomes between 30 and 80 percent of the area median. These households include somewhat higher-income Second City Seniors who would like to move to dwelling units that require less upkeep and maintenance expense, and, if given appropriate housing options, would choose to remain in their current neighborhoods. Older households with incomes at or above 80 percent of AMI comprise almost 57 percent of the target empty nester and retiree market segment. These older singles and couples are enthusiastic participants in community life—Mainstream Empty Nesters, Middle-American Retirees, and Blue- Collar Retirees—and many are still actively employed in the medical, legal or financial professions or in academia—Second-City Establishment and Suburban Establishment. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 16 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. More than 71 percent of the empty nesters and retirees would be moving from elsewhere within the City of South Bend; approximately 18 percent would be moving from elsewhere in St. Joseph County; just 3.5 percent would be moving from the regional draw area; and the remaining seven percent would be moving from elsewhere in the U.S. THE MARKET CONTEXT What are their current residential alternatives? —Multi-Family Rental Properties— In January 2018, Zimmerman/Volk Associates compiled data from a variety of sources, including telephone interviews, individual property and rental websites, on 13 selected rental properties, representing nearly 1,850 rental apartments in the city. (See Table 3 following the text.) Property size ranges from just 40 units to nearly 400 units. Walk Score, a number between 0 and 100 denoting the walkability of a specific address or neighborhood, has grown in importance as a value criterion. Walk Scores above 90 indicate a “Walker’s Paradise,” where daily errands do not require a car. Walk Scores between 70 and 90 are considered to be very walkable, where most errands can be accomplished on foot. Walk Scores below 50 indicate that most or almost all errands require an automobile. The Walk Scores of the surveyed rental properties range between 1 and 84. The highest score of 84 is registered by the Central High School Apartments, located within walking distance of several restaurants, shops and entertainment venues in the Downtown. Several properties have Walk Scores of 70 or more, including the Foundry Lofts, the Pointe at St. Joseph, Stephenson Mills, Aurum, Robertson’s Apartments, and the Mar-Main Apartments. —Multi-Family Rental Properties— Table 3 provides detailed information on the 13 rental properties included in the survey and is summarized as follows. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 17 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. —Studios (2 properties)— • Rents for studios range between $515 and $595 per month at the Mar-Main Apartments, a 136-unit property located on West Marion Street, and rent for $582 per month at Robertson’s Apartments, the seniors building on South Michigan Street. • Studios at Mar-Main contain between 400 and 550 square feet; the Robertson’s studios average 575 square feet. • The studio rent per square foot ranges between $1.08 and $1.29 at Mar-Main, and averages $1.01 at Robertson’s. —One-Bedroom Units (12 properties)— • Rents for one-bedroom flats range from $478 per month at Belleville Park Apartments on Belleville Circle to $1,685 per month at the Foundry Lofts on North Eddy Street. • One-bedroom flats range in size from 527 square feet at Cedar Glen Apartments at 425 South 25th Street to 883 square feet at Stephenson Mills on East Colfax Avenue. • One-bedroom rents per square foot range between $0.65 at Belleville Park Apartments to $2.17 at the Foundry Lofts. —Two-Bedroom Units (13 properties)— • Rents for two-bedroom, one- to two-bathroom units range from $525 per month at Washington Dunbar Apartments on North Walnut Street, to $2,107 per month at the Foundry Lofts. Monroe Park Apartments on Fellows Street leases a two- bedroom/one-bath townhouse for $674 per month. • Two-bedroom flats range in size from 550 square feet at Washington Dunbar, to 1,856 square feet at Central High School Apartments. The Monroe Park two- bedroom townhouse contains between 900 square feet of living space. • Two-bedroom rents per square foot for flats fall between $0.65 at Belleville Park Apartments and $2.11 at the Foundry Lofts. The rents per square for the Monroe Park two-bedroom townhouses is $0.75. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 18 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. —Three-Bedroom Units (6 properties)— • Rents for three-bedroom flats range between $699 per month at Washington Dunbar Apartments and $3,606 per month at the Foundry Lofts. Monroe Park Apartments also has a three-bedroom townhouse with two baths that leases for $764 per month. • Three-bedroom flats contain between 1,100 square feet at Washington Dunbar Apartments, and as much as 1,856 square feet at Central High School. The three- bedroom townhouse at Monroe Park Apartments contains 1,020 square feet of living space. • Three-bedroom rents per square foot for flats fall between $0.64 at Washington Dunbar and $2.36 at the Foundry Lofts. The three-bedroom townhouse at Monroe Park leases for $0.75 per square foot. Only Belleville Park Apartments has four-bedroom apartments, which contain between 1,366 and 1,448 square feet of living space, and lease for $709 to $850 per month ($0.52 to $0.59 per square foot). —Multi-Family and Single-Family Attached For-Sale Properties— Table 4 details recent listings of new and resale condominiums and townhouses at various properties in South Bend. Of the 10 attached units on the market at the time of the survey in January, 2018, two condominiums and two townhouses were priced below $100,000; one townhouse was listed at $145,000; the remaining two units were priced above $700,000. Three townhouses remain unsold at the nine-unit Corby Lawrence Townhouses, new construction on East Corby Boulevard in northeast South Bend. The prices of the three units start at $365,000 for a 3,300-square-foot unit containing four bedrooms and three-and-a-half baths ($111 per square foot). A three-bedroom/two-and-a-half bath end unit is priced at $379,900 for nearly 2,300 square feet of living space ($167 per square foot). The most expensive townhouse, with an asking price of $424,945, has just under 3,000 square feet configured as four bedrooms and three-and-a-half baths ($142 per square foot). AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 19 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. The most expensive units on the market include a four-bedroom/four-and-a-half bath townhouse in River Race on the East Bank containing nearly 3,100 square feet and listed at $724,900 ($234 per square foot) and $749,000 for a four-bedroom/three-and-a-half bath condominium in Ivy Quad near the University of Notre Dame with 2,375 square feet of living space ($315 per square foot). —Single-Family Detached For-Sale Properties— Table 5 details the listings of several newly-constructed single-family detached houses on the market in January 2018 in South Bend and priced under $300,000. Allen Edwin Homes has been marketing several models of detached houses at three properties in the far northwestern part of the city, with new construction priced from $176,990 for a 1,458-square-foot three-bedroom/two bath floorplan ($121 per square foot) to $253,900 for a 2,340-square-foot three-bedroom/two-and-a-half bath house ($109 per square foot) at the Jade Crossings community.. Another Allen Edwin Homes community, Laurel Creek, is selling the same three-bedroom models at similar price points ($197,900 to $239,900—$95 to $128 per square foot). A third Allen Edwin Homes community, Lafayette Falls, starts at a higher price point, with a three-bedroom/two-and-a-half bath house containing nearly 1,700 square feet priced at $211,900 ($126 per square foot) and the most expensive house—a three-bedroom/two-and-a-half bath model with over 2,240 square feet of living space—is priced at nearly $250,000 ($111 per square foot). Several houses have been built, or are under construction within other single-family developments in the city. Asking prices range from $183,900 for a three-bedroom/two-bath house situated on a quarter-acre lot and containing just over 1,300 square feet of living space ($140 per square foot) to $267,500 for a 1,634-square-foot three-bedroom house on St. Charles Avenue ($164 per square foot). All but one were built in 2017, and nearly all are located in developments on the edge of the city. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 20 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. OPTIMUM MARKET POSITION: STUDY AREA A As noted above under AVERAGE ANNUAL MARKET POTENTIAL FOR STUDY AREA A, an annual average of 880 younger singles and couples, traditional and non-traditional families, and empty nesters and retirees of all incomes who represent the potential market for new and existing housing units within the Study Area each year over the next five years. The rents and price points for the market-rate component of new rental housing units that could be developed in Study Area A are derived from the income and equity levels of those target households with annual incomes at or above 80 percent AMI, ranging from $34,200 and more for a single-person household to $48,800 and more for a four-person household. For new for-sale housing units, the target households have annual incomes above 100 percent AMI, ranging from $42,700 and more for a single-person household and $61,500 and more for a four-person household. Households with incomes between 30 and 80 percent of the AMI comprise the market for rental “affordable” or workforce housing units. These households have incomes ranging between $12,850 and $34,200 for a single-person household to $24,600 and $48,800 for a four-person household. For new for-sale housing units, the targeted households have annual incomes between 60 and 100 percent AMI, ranging between $25,700 and $42,700 for a single-person household and $49,200 and $61,500 for a four-person household. In general, households with annual incomes at or below 30 percent AMI qualify for Section Eight vouchers and low-income housing tax-credit rental units, and their rents are usually limited to no more than 30 percent of their annual incomes. These household incomes are less than $12,850 for a single-person household to less than $24,600 for a four-person household. What is the market currently able to pay to rent or purchase new dwelling units in Study Area A? The analysis that follows covers households with preferences for multi-family for-rent with incomes between 30 and 80 percent AMI (affordable/workforce units), and with incomes above 80 percent AMI (market-rate units) and households with preferences for multi-family for-sale, and single-family attached and detached for-sale with incomes between 60 and 100 percent AMI (affordable/workforce units) and with incomes above 100 percent AMI (market-rate units). yielding an annual average of AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 21 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. 663 households that represent the potential renters/buyers of new market-rate and affordable housing units in Study Area A each year over the next five years. As derived from the tenure preferences and financial capabilities of those 663 draw area households, the distribution of rental and for-sale housing types would be as shown on the following table: Average Annual Potential Market for New Housing Units Study Area A City of South Bend, St. Joseph County, Indiana . . . . . . . . . HOUSEHOLDS . . . . . . . . HOUSING TYPE NUMBER PERCENT Multi-family for-rent 30% to 80% AMI 154 23.2% > 80% AMI 232 35.0% Total multi-family for-rent 386 58.2% Multi-family for-sale 60% to 100% AMI 20 3.0% > 100% AMI 25 3.8% Total multi-family for-sale 45 6.8% Single-family attached for-sale 60% to 100% AMI 45 6.8% > 100% AMI 44 6.6% Total single-family attached for-sale 89 13.4% Single-family detached for-sale 60% to 100% AMI 38 5.8% > 100% AMI 105 15.8% Total single-family detached for-sale 143 21.6% Grand total 663 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. —Rental Distribution by Rent Range: Multi-Family For-Rent— The number of households able to afford the specified rent ranges detailed on the following tables was determined by calculating a monthly rental payment—excluding utilities and ranging between 25 and 30 percent of annual gross income. (Although it is quite possible that many households will pay up to 40 percent of their annual gross incomes in rent, HUD recommends that a tenant pay no more than 30 percent of gross income for rent including utilities.) An annual average of 232 households with incomes at or above 80 percent of the AMI represent the target markets for newly-constructed market-rate rental housing units in Study Area A (as shown on AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 22 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. Table 6 following the text). The distribution by rent range of the rents those 232 households could support are summarized on the following table: Rent Distribution Target Groups for New Multi-Family For Rent Households with Incomes At or Above 80 Percent AMI Study Area A City of South Bend, St. Joseph County, Indiana MONTHLY HOUSEHOLDS RENT RANGE PER YEAR PERCENTAGE $500–$750 54 23.3% $750–$1,000 73 31.4% $1,000–$1,250 60 24.5% $1,250–$1,500 34 13.4% $1,500 and up 11 2.2% Total: 232 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • The largest group of households that represent the market for new market-rate rental units in Study Area A are younger singles and couples at two-thirds of the market. Just 4.5 percent would be able to afford rents at or above $1,500 per month; approximately 35 percent of these households represent the market for units with rents between $1,000 and $1,500 per month; and the remaining 60.6 percent would require rents between $500 and $1,000 per month. • Traditional and non-traditional families comprise just over 20 percent of the market for new market-rate rental units in Study Area A. Just over two percent of the family market can afford rents greater than $1,500 per month; approximately 53 percent can afford rents between $1,000 and $1,500 per month; and 44.7 percent would require rents between $500 and $1,000 per month. • Empty nesters and retirees represent the remaining 13 percent of the market for new market- rate rental units in Study Area A. Approximately 10 percent of these households could afford new units with rents above $1,500 per month and half could afford new units with rents between $1,000 and $1,500 per month. The remaining 40 percent represent the market for units with rents between $500 and $1,000 per month. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 23 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. An annual average of 154 households with incomes between 30 and 80 percent of the AMI represent the target markets for newly-constructed affordable/workforce rental housing units in Study Area A (see again Table 6). The distribution by rent range of the rents those 154 households could support would be summarized as shown on the following table: Distribution by Rent Range Target Groups for New Multi-Family For Rent Households with Incomes Between 30 Percent and 80 Percent AMI Study Area A City of South Bend, St. Joseph County, Indiana MONTHLY UNITS RENT RANGE PER YEAR PERCENTAGE $250–$400 54 35.1% $400–$550 48 31.2% $550–$700 35 22.7% $700–$850 9 5.8% $850-$1,000 8 5.2% Total: 154 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • At a 65.6 percent share, younger singles and couples represent the largest market for newly- constructed affordable/workforce rental units in Study Area A. Four percent would be able to afford rents between $850 and $1,000 per month; just under 28 percent would represent the market for units with rents between $550 and $850 per month; and the remaining 68.3 percent would require rents between $250 and $550 per month. • At approximately 21.4 percent of the market, traditional and non-traditional families are the next largest market for new affordable/workforce rentals in Study Area A. Three percent of these households can afford rents between $850 and $1,000 per month; over 27 percent can afford rents can afford rents between $550 and $850 per month, and the remaining 69.7 can only afford rents between $250 and $550 per month. • Empty nesters and retirees represent the smallest market, at 13 percent, for new affordable/workforce rental units in Study Area A. Approximately 15 percent of the empty nester and retiree market could afford rents between $850 and $1,000 per month; another 35 percent could pay rents between $550 and $850 per month; and half would require rents between $250 and $550 per month. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 24 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. —For-Sale Distribution by Price Range— For the for-sale unit distribution, the number of households by price range was determined by assuming a down payment (subsidized or otherwise) of 20 percent and then calculating monthly mortgage payments, including taxes and utilities, that would not exceed 30 percent of the annual gross income of the target households. The realization of the full market potential for new market-rate for-sale units may be challenging over the short-term, given continued restrictive development financing and mortgage underwriting by financial institutions, the disinterest of some younger households in becoming owners, the fact that many otherwise-qualified households, particularly current renters, lack the funds for a down payment, and the inability of many older owner households to sell their existing single-family units even at reduced prices. —For-Sale Distribution by Price Range: Multi-Family— An annual average of 25 households with incomes at or above 100 percent of the AMI represent the target markets for newly-constructed market-rate multi-family for-sale (condominium) housing units in Study Area A (as shown on Table 7 following the text). The distribution by price range of the prices those 25 households could support are summarized as on the following table: Distribution by Price Range Target Groups for New Multi-Family For Sale Households with Incomes At or Above 100 Percent AMI Study Area A City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $100,000–$125,000 2 8.0% $125,000–$150,000 4 16.0% $150,000–$175,000 7 28.0% $175,000–$200,000 8 32.0% $200,000 and up 4 16.0% Total: 25 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • At a 72 percent share, younger singles and couples are by far the largest segment of the market for new market-rate multi-family for-sale units (condominiums). Sixteen percent AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 25 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. have the capacity to purchase new condominiums with base prices at or above $200,000. Another 55.6 percent would be able to purchase condominiums priced between $150,000 and $200,000. Just under 28 percent of this segment are younger households who would only be able to afford units priced between $100,000 and $150,000. • Traditional and non-traditional family households comprise 28 percent of the market for this housing type. More than 71 percent of the families would be in the market for new condominiums with base prices between $150,000 and $200,000. The remainder of this market, 28.6 percent, is evenly split between condominium units priced between $100,000 and $150,000 and condominiums priced at $200,000 or more. • Empty nest and retiree households are not potential buyers of new market-rate condominiums in Study Area A. An annual average of just 20 households with incomes between 60 percent and 100 percent of the AMI represent the target markets for newly-constructed affordable multi-family for-sale (condominium) housing units in Study Area A (see again Table 7). For these units, the assumption is that, at minimum, the 20 percent down payment would be subsidized. The distribution by price range of the prices those 20 households could support would therefore be summarized as follows: Distribution by Price Range Target Groups for New Multi-Family For Sale Households with Incomes Between 60 Percent and 100 Percent AMI Study Area A City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $50,000–$75,000 7 35.0% $75,000–$100,000 7 35.0% $100,000–$125,000 6 30.0% Total: 20 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • Younger singles and couples are also the largest segment of the market for newly-constructed affordable multi-family for-sale units (condominiums) in the Study Area, at 65 percent of the market. Just over 23 percent of this market could purchase new condominiums priced between $100,000 and $125,000. The remaining 77 percent of the younger market is evenly AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 26 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. split between units priced between $50,000 and $75,000 and between $75,000 and $100,000. • Family households—predominantly non-traditional families and compact families— comprise 30 percent of the market for newly-constructed affordable condominiums in Study Area A. Approximately two-thirds of this segment would be limited to new affordable condominiums with base prices between $50,000 and $75,000, and 11 percent could afford new units priced between $75,000 and $100,000. The remaining 22.2 percent could afford new condominium units priced between $100,000 and $125,000. • The potential empty nester market—just five percent of the market—is limited to new affordable condominiums priced between $50,000 and $75,000. —For-Sale Distribution By Price Range: Single-Family Attached— An annual average of 44 households with incomes at or above 100 percent of the AMI represent the target markets for newly-constructed market-rate single-family attached for-sale (townhouse/rowhouse) housing units in Study Area A (as shown on Table 8 following the text). The distribution by price range of the prices those 44 households could support are summarized as on the following table: Distribution by Price Range Target Groups for New Single-Family Attached For Sale Households with Incomes At or Above 100 Percent AMI Study Area A City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $125,000–$150,000 11 25.0% $150,000–$175,000 12 27.3% $175,000–$200,000 10 22.7% $200,000–$225,000 5 11.4% $225,000–$250,000 3 6.8% $250,000 and up 3 6.8% Total: 44 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • Younger singles and couples represent more than half of the market for new market-rate single-family attached for-sale units (townhouses/rowhouses/duplexes). Approximately 56.5 percent would require new single-family attached units with base prices between $125,000 AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 27 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. and $175,000, whereas over one-third would be in the market for units priced between $175,000 and $225,000. Just 8.7 percent have the income and down payments to enable them to purchase new single-family attached units priced above $225,000. • At a 40.9 percent share, traditional and non-traditional families make up the next largest segment of the market for new market-rate single-family attached for-sale units. A plurality, 44.4 percent, would require units priced between $125,000 and $175,000. Another third could afford new single-family attached units priced between $175,000 and $225,000, and the remaining 22.2 percent have the incomes and assets to be able to purchase new units priced above $225,000. • Empty nesters and retirees comprise just 6.8 percent of the market for new market-rate single-family attached for-sale units, of which one-third would be able to purchase units priced between $175,000 and $225,000, and the majority, 66.7 percent, would require new units priced between $125,000 and $175,000. An annual average of 45 households with incomes between 60 percent and 100 percent of the AMI represent the target markets for newly-constructed affordable single-family attached for-sale housing units in Study Area A (see again Table 8). Again, for these units, the assumption is that, at minimum, the 20 percent down payment would be subsidized. The distribution by price range of the prices those 45 households could support would therefore be summarized as follows: Distribution by Price Range Target Groups for New Single-Family Attached For Sale Households with Incomes Between 60 Percent and 100 Percent AMI Study Area A City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $50,000–$75,000 17 37.8% $75,000–$100,000 16 35.6% $100,000–$125,000 12 26.6% Total: 45 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • Family households represent the largest target market—nearly 49 percent of the households—for newly-constructed affordable single-family attached for-sale units. Just AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 28 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. under a third could afford newly-constructed affordable units priced between $50,000 and $75,000, and another third would be able to purchase new units with base prices between $100,000 and $125,000. The remaining 36 percent could afford units priced between $75,000 and $100,000 • Younger singles and couples are the second largest segment of the market for newly- constructed affordable single-family attached for-sale units in Study Area A, at a 40 percent share. Approximately 44 percent of this market could only afford these units priced between $50,000 and $75,000; a third would be able to afford units priced between $75,000 and $100,000; and the remaining 22 percent have the incomes to purchase units priced between $100,000 and $125,000. • The smallest group, empty nesters and retirees, comprises 11.1 percent of the market for newly-constructed affordable townhouses in Study Area A. Forty percent of this segment would be limited to new affordable single-family attached units with base prices between $50,000 and $75,000, and forty percent could afford new units priced between $75,000 and $100,000. The remaining 20 percent could afford new units priced between $100,000 and $125,000. —For-Sale Distribution By Price Range: Single-Family Detached— An annual average of 105 households with incomes at or above 100 percent of the AMI represent the target markets for newly-constructed market-rate single-family detached for-sale (urban houses) in Study Area A (as shown on Table 9 following the text). The distribution by price range of the prices those 105 households could support are summarized on the table on the following page. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 29 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. Distribution by Price Range Target Groups for New Single-Family Detached For Sale Households with Incomes At or Above 100 Percent AMI Study Area A City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $150,000–$175,000 27 25.7% $175,000–$200,000 29 27.7% $200,000–$225,000 16 15.2% $225,000–$250,000 16 15.2% $250,000–$275,000 8 7.6% $275,000 and up 9 8.6% Total: 105 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • Traditional and non-traditional families make up the largest segment of the market for new market-rate single-family detached houses, at an approximately 44 percent share. Nearly 22 percent could afford new houses with base prices above $250,000, another 28.3 percent would be in the market for new houses with base prices between $200,000 and $250,000, and half would require units priced between $150,000 and $200,000. • Empty nesters and retirees comprise 39 percent of the market for new market-rate single- family detached houses in the Study Area, of which 17.1 percent would be able to purchase new houses priced above $250,000, and the remaining 83 percent would be evenly split between new detached units priced between $150,000 and $200,000 and between $200,000 and $250,000. • At a share of approximately 17 percent, younger singles and couples represent the smallest segment of the market for new market-rate single-family houses in the Study Area. Nearly 89 percent would require new detached houses with base prices between $150,000 and $200,000, and 11.1 percent could afford units priced between $200,000 and $250,000. An annual average of 38 households with incomes between 60 percent and 100 percent of the AMI represent the target markets for newly-constructed affordable single-family detached for-sale housing units in Study Area A (see again Table 9). Again, for these units, the assumption is that, at minimum, the 20 percent down payment would be subsidized. The distribution by price range of the prices those 38 households could support are summarized on the table on the following page. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 30 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. Distribution by Price Range Target Groups for New Single-Family Detached For Sale Households with Incomes Between 60 Percent and 100 Percent AMI Study Area A City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $50,000–$75,000 10 26.3% $75,000–$100,000 13 34.2% $100,000–$125,000 9 23.7% $125,000–$150,000 6 15.8% Total: 38 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • Traditional and non-traditional families are half of the market for newly-constructed affordable detached houses in Study Area A. Over 68 percent of the family market would be limited to new affordable houses with base prices between $50,000 and $100,000. Just under a third of the traditional and non-traditional families could afford new detached units priced between $100,000 and $150,000. • Empty nesters and retirees are the second largest segment of the market for newly- constructed affordable single-family detached for-sale units in the Study Area, at just over 26 percent of the market. Approximately 40 percent of the older households could only afford detached houses priced between $50,000 and $100,000; 60 percent have the income and assets to purchase new detached houses priced between $100,000 and $150,000. • The smallest market segment, younger singles and couples, makes up just under 24 percent of the potential market for new affordable single-family detached houses. Two-thirds of the younger singles and couples could afford newly-constructed affordable houses priced between $50,000 and $100,000 and one-third have the financial capabilities to purchase new detached houses priced between $100,000 and $150,000. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 31 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. PROPOSED RENT AND PRICE RANGES: STUDY AREA A Based on the tenure and housing preferences of the target households, and their income and equity levels, the range of rents and prices for newly-developed market-rate and affordable/workforce residential units in Study Area A that could be sustained by the market is as follows (see also Table 10 following the text): Base Rent, Price and Size Ranges Study Area A City of South Bend, St. Joseph County, Indiana RENT/PRICE SIZE RENT/PRICE HOUSING TYPE RANGE RANGE PER SQ. FT. MULTI-FAMILY FOR-RENT: ROWHOUSES; MANSION BUILDINGS (4-6 DU PER BUILDING)— Microlofts, Lofts $450–$1,100/month 400–900 sf $1.13–$1.22 psf Apartments, Rowhouses $750–$1,800/month 450–1,200 sf $1.50–$1.67 psf MULTI-FAMILY FOR-SALE: MANSION BUILDINGS (4-6 DU PER BUILDING)— Condominiums $75,000–$165,000 700–1,100 sf $107–$150 psf SINGLE-FAMILY ATTACHED FOR-SALE: DUPLEXES; TRIPLEXES; ROWHOUSES; TOWNHOUSES— Triplexes; Rowhouses $85,000–$160,000 800–1,000 sf $106–$160 psf Duplexes; Townhouses $145,000–$210,000 1,250–1,300 sf $116–$162 psf SINGLE-FAMILY DETACHED FOR-SALE: TINY HOUSES; COTTAGES; URBAN HOUSES— Tiny Houses/Cottages $50,000–$145,000 350–950 sf $143–$153 psf Urban Houses $170,000–$250,000 1,150–1,500 sf $148–$167 psf SOURCE: Zimmerman/Volk Associates, Inc., 2018. The aforementioned rents and prices are in year 2018 dollars, are exclusive of consumer options and upgrades, or floor or location premiums, and cover a broad range of rents and prices for newly- developed units currently sustainable by the market in Study Area A. It is likely that, over a five-year timeframe, rents and prices will change from the 2018 values; barring a substantial economic downturn, the changes are likely to be escalation of values. Location will have a significant impact on rents and prices; new units and buildings situated within a short walking distance of Downtown South Bend, will likely command rents and prices at the upper end of values. Those units and buildings that are further from Downtown, or with few amenities within walking distance, are likely to command rent and prices at the lower end of values. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 32 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. New infill development in Study Area A should build on the renovations, new construction, and improvements that have already been completed. There are multiple vacant lots throughout the Study Area that would be suitable for infill development In the Near Northwest Neighborhood, renovations of existing houses and new construction has dramatically improved several blocks. Infill development should continue on adjacent streets both to the east and west of Cottage Grove Avenue, and could encompass more than just single-family houses to include for-sale duplexes, triplexes, or rowhouses/townhouses. The location of the Muessel Elementary School in this part of the Study Area is likely to attract the family market, in particular. Where possible, new rental development should be limited to corner lots at intersections or along commercial corridors such as Portage Avenue and Lincoln Way. In the Near Westside Neighborhoods, new rental rowhouses or apartments in mansion buildings could be developed in close proximity to the 24-unit Mutual Homes project, expanding available unit types. Because of their close proximity to Downtown South Bend, any vacant land or suitable vacant buildings located on the blocks between Chapin Street and South Chestnut Street to the east and west, and West Washington Street and West Western Avenue to the north and south would be well-suited to new development, both rental and for-sale. The Studebaker National Museum and Oliver Mansion enhance the historic character of this part of the Study Area. MARKET CAPTURE: STUDY AREA A How fast will new units lease or sell? In the context of the target market methodology, new multi-family development, both rental and for-sale, in Study Area A should be able to achieve an annual capture of 10 to 12 percent of the annual potential renters and condominium buyers each year over the next five years. New single- family development, both attached and detached, should be able to achieve an annual capture of five to 7.5 percent of the annual potential single-family attached and detached buyers each year over the next five years. (Nationally, prior to the housing collapse in 2008, new dwelling units represented 15 percent of all units sold; over the past several years, new dwelling units have averaged approximately eight percent of all units sold.) AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 33 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. Based on a 10 to 12 percent capture of the annual potential market for new multi-family housing, and a five to 7.5 percent capture of the annual potential market for new single-family attached and detached housing units, Study Area A should be able to absorb between 56 and 70 new market-rate and affordable/workforce rental and for-sale housing units each year over the next five years, as shown on the following table (see also Table 10 following the text for greater detail): Annual Capture of Market Potential Study Area A City of South Bend, St. Joseph County, Indiana NUMBER OF CAPTURE NUMBER OF HOUSING TYPE HOUSEHOLDS RATE NEW UNITS Multi-Family For-Rent 386 10 - 12% 39 - 46 (lofts/apartments, leaseholder) Multi-Family For-Sale 45 10 - 12% 5 - 6 (lofts/apartments, condo/co-op ownership) Single-Family Attached For-Sale 89 5 – 7.5% 5 - 7 (rowhouses/townhouses, fee-simple ownership) Single-Family Detached For-Sale 143 5 - 7.5% 7 - 11 (urban houses, fee-simple ownership) Total 663 56 - 70 SOURCE: Zimmerman/Volk Associates, Inc., 2018. Over five years, these capture rates could support the construction and absorption of between 280 and 350 new mixed-income dwelling units within Study Area A. These capture rates are well within the target market methodology’s parameters of feasibility. NOTE: Target market capture rates are a unique and highly-refined measure of feasibility. Target market capture rates are not equivalent to—and should not be confused with—penetration rates or traffic conversion rates. The target market capture rate is derived by dividing the annual forecast absorption— in aggregate and by housing type—by the number of households that have the potential to purchase or rent new housing within a specified area in a given year. The penetration rate is derived by dividing the total number of dwelling units planned for a property by the total number of draw area households, sometimes qualified by income. The traffic conversion rate is derived by dividing the total number of buyers or renters by the total number of prospects that have visited a site. Because the prospective market for a location is more precisely defined, target market capture rates are higher than the more grossly-derived penetration rates. However, the resulting higher capture rates are well within the range of prudent feasibility. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 34 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. STUDY AREA A BUILDING AND UNIT TYPES —MULTI-FAMILY BUILDINGS— Because of its smaller scale, the mansion building is the most appropriate multi-family building type, at least initially, in Study Area A: • Mansion Apartment Building: A two- to three-story flexible-use structure with a street façade resembling a large detached or attached house (hence, “mansion”). The attached version of the mansion, typically built to a sidewalk on the front lot line, is most appropriate for downtown locations. The building can accommodate a variety of uses—from rental or for-sale apartments, professional offices, any of these uses over ground-floor retail, a bed and breakfast inn, or a large single-family detached house—and its physical structure complements other buildings within a neighborhood. Parking behind the mansion buildings can be either alley-loaded, or front-loaded served by shared drives. Mansion buildings should be strictly regulated in form, but flexible in use. However, flexibility in use is somewhat constrained by the handicapped accessibility regulations in both the Fair Housing Act and the Americans with Disabilities Act. Other buildings that would be appropriate within Study Area A include the following: • Courtyard Apartment Building: In new construction, an urban, pedestrian-oriented equivalent to conventional garden apartments. An urban courtyard building is three or more stories, often combined with non-residential uses on the ground floor. The building should be built to the sidewalk edge and, to provide privacy and a sense of security, the first floor should be elevated significantly above the sidewalk. • Loft Apartment Building: Either adaptive re-use of older warehouse or manufacturing buildings or a new-construction building type inspired by those buildings. The new- construction version typically has double-loaded corridors. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 35 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • Mixed-Use Building: A pedestrian-oriented building, either attached or free-standing, with apartments and/or offices over flexible ground floor uses that can range from retail to office to residential. —MULTI-FAMILY UNIT TYPES— • Microlofts: Several cities across the country are changing minimum unit size requirements as part of a strategy to attract young knowledge workers with contemporary yet affordable units. Millennial knowledge workers have responded positively to efficiency units as small as 220 square feet, often leasing out new micro loft projects within a matter of days. • Lofts: Unit interiors typically have high ceilings, are fully finished and partitioned into individual rooms. Units may also contain architectural elements reminiscent of hard lofts, such as exposed ceiling beams and ductwork, concrete floors and industrial finishes, particularly if the building is an adaptive re-use of an existing industrial structure. • Apartments: More conventionally-finished single-level units, typically with completely- partitioned rooms.—trim, interior doors, kitchens and baths are often fitted out with higher- end finishes and fixtures than in lofts. —SINGLE-FAMILY ATTACHED— • Rowhouses/Townhouses: Similar in form to conventional suburban townhouses except that the garage—either attached or detached—is located to the rear of the unit and accessed from an alley or auto court. Unlike conventional townhouses, urban rowhouses and townhouses conform to the pattern of streets, typically with shallow front-yard setbacks. • Duplexes/Triplexes: Two- or three-unit townhouses with the garages—either attached or detached—located to the rear of the units. Like the rowhouses/townhouses, urban duplexes/triplexes conform to the pattern of streets, typically with shallow front-yard setbacks. In a corner location, duplex units can each front a different street. —SINGLE-FAMILY DETACHED— • Tiny Houses: Typically, free-standing single-family detached houses, sometimes on wheels, containing less than 500 square feet of living space. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 36 Study Area A The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • Cottages: Small one-, one-and-a-half- or two-story single-family detached houses on small lots, usually with alley-loaded parking. • Urban Houses: One-and-a-half- or two-story single-family detached houses on small lots, often with alley-loaded parking with attached, detached, or open parking—whether alley- loaded or not—set well back from the front façade; in many instances, the garage is framed by a porte-cochère. o Table 1 Annual Market Potential For New And Existing Housing Units Distribution Of Annual Average Number Of Draw Area Households With The Potential To Move To Study Area A Each Year Over The Next Five Years Based On Housing Preferences And Income Levels Study Area A City of South Bend, St. Joseph County, Indiana City of South Bend; Balance of St. Joseph County; Regional Draw Area; Balance of U.S. Draw Areas Annual Number Of Households With The Potential To Rent/Purchase Within The City of South Bend 7,565 Annual Number Of Target Market Households With Potential To Rent/Purchase Within Study Area A 880 Annual Market Potential Below 30% to 60% to 80% to Above 30% AMI 60% AMI 80% AMI 100% AMI 100% AMI Subtotal Multi-Family For-Rent:114 60 94 48 184 500 Multi-Family For-Sale:9 6 11 9 25 60 Single-Family Attached For-Sale:17 14 27 18 44 120 Single-Family Detached For-Sale:45 12 31 7 105 200 Total:185 92 163 82 358 880 Percent:21.0% 10.5% 18.5% 9.3% 40.7%100.0% Note:For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. SOURCE: Claritas, Inc.; Zimmerman/Volk Associates, Inc. Table 2 Annual Market Potential By Lifestage And Income Level Derived From Purchase And Rental Propensities Of Draw Area Households With The Potential To Move To Study Area A Each Year Over The Next Five Years Based On Housing Preferences And Income Levels Study Area A City of South Bend, St. Joseph County, Indiana Below 30% to 60% to 80% to Above Total 30% AMI 60% AMI 80% AMI 100% AMI 100% AMI Number of Households:880 185 92 163 82 358 Empty Nesters & Retirees 15.9% 13.0% 16.3% 12.9% 13.4% 19.3% Traditional & Non-Traditional Families 31.3% 36.2% 20.7% 34.4% 32.9% 29.6% Younger Singles & Couples 52.8% 50.8% 63.0% 52.7% 53.7% 51.1% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Note: For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. SOURCE: Claritas, Inc.; Zimmerman/Volk Associates, Inc. Table 3 Page 1 of 3 Summary Of Selected Rental Properties City of South Bend, St. Joseph County, Indiana January, 2018 Number Unit Base Avg. Unit Rents per Property of Units Type Rent Sizes Sq. Ft. Amenities Address Belleville Park Apts. (2003) 208 Business center, 4940 Belleville Circle 1br/1ba $478 to 734 to $0.65 to clubhouse, Walk Score: 11 $550 816 $0.67 playground. 2br/1ba $650 939 $0.69 2br/2ba $650 997 $0.65 3br/2ba $750 1,154 $0.65 4br/2ba $709 to 1,366 to $0.52 to $850 1,448 $0.59 Mar-Main Apts (1922) 136 Fitness center, 125 W. Marion Street Studio/1ba $515 to 400 to $1.08 to clubhouse. Walk Score: 74 $595 550 $1.29 1br/1ba $685 675 $1.01 1br/1ba/den $745 775 $0.96 1br/1ba/sunroom $745 775 $0.96 1br/1.5ba $725 780 $0.93 2br/1ba $800 800 $1.00 Washington Dunbar 80 Playground. (Renovated 2010)2br/1ba $525 to 550 $0.95 to 118 N. Walnut Street $661 $1.20 Walk Score: 1 3br/2ba $699 to 1,100 $0.64 to $756 $0.69 Cedar Glen Apts.181 Playground, (1951; Renovated 2013)1br/1ba $555 527 $1.05 courtyard. 425 S. 25th Street 2br/1ba $565 to 664 to $0.78 to Walk Score: 35 $595 763 $0.85 Monroe Park Apts. (1994) 57 Laundry facilities. 526 Fellows Street 1br/1ba $579 700 $0.83 Walk Score: 58 2br/1ba TH $674 900 $0.75 3br/2ba TH $764 1,020 $0.75 Robertson's Apts. (1998)92 Seniors 55+ 211 South Michigan Studio/1ba $582 575 $1.01 Walk Score: 80 1br/1ba $592 750 $0.79 2br/1ba $748 1,050 $0.71 SOURCE: Zimmerman/Volk Associates, Inc. Table 3 Page 2 of 3 Summary Of Selected Rental Properties City of South Bend, St. Joseph County, Indiana January, 2018 Number Unit Base Avg. Unit Rents per Property of Units Type Rent Sizes Sq. Ft. Amenities Address Riverside North Apts. (1966) 145 Fitness center, 1587 Riverside Drive 1br/1ba $610 to 800 to $0.76 to pool, Walk Score: 42 $805 820 $0.98 car wash station, 2br/1ba $700 to 890 to $0.79 to BBQ/picnic area. $880 900 $0.98 2br/2ba $765 to 1,000 to $0.75 to $945 1,255 $0.77 3br/2ba $1,015 to 1,410 $0.72 to $1,065 $0.76 Hurwich Farms 396 Fitness center, 2701 Appaloosa Lane 1br/1ba $720 692 $1.04 clubhouse, pool. Walk Score: 48 2br/2ba $850 932 $0.91 sport courts. Central HS Apts. (1913) 106 Fitness center. 330 West Colfax Avenue 1br/1ba $835 to 590 to $1.12 to Walk Score: 84 $865 774 $1.42 2br/1ba $915 to 803 to $0.89 to $1,050 1,181 $1.14 1br/1.5ba $950 957 $0.99 2br/1.5ba $1,085 to 1,059 $1.02 to $1,395 1,579 $1.32 2br/1ba $1,320 to 1,453 to $0.82 to $1,520 1,856 $0.91 3br/1ba $1,510 1,856 $0.81 Aurum (2014)60 Clubhouse, 825 Sorin Street 1br/1ba $899 to 596 to $1.51 to putting green, Walk Score: 72 $920 602 $1.53 business center. 2br/2ba $1,299 to 1,139 to $1.14 to $1,549 1,299 $1.19 Stephenson Mills 40 Laundry facility. 332 West Colfax Avenue 1br/1ba $909 to 619 to $1.13 to (rental office address)$995 883 $1.47 Walk Score: 77 2br/1ba $1,155 to 1,094 to $0.89 to $1,325 1,489 $1.06 2br/2ba $1,290 to 1,132 to $0.95 to $1,425 1,500 $1.14 SOURCE: Zimmerman/Volk Associates, Inc. Table 3 Page 3 of 3 Summary Of Selected Rental Properties City of South Bend, St. Joseph County, Indiana January, 2018 Number Unit Base Avg. Unit Rents per Property of Units Type Rent Sizes Sq. Ft. Amenities Address Pointe at St. Joseph 79 Fitness center, 307 East Lasalle Avenue 1br/1ba $925 to 784 to $1.18 to business center, Walk Score: 78 $955 700 $1.36 clubhouse, pool. 2br/1.5ba $1,120 to 1,020 $1.10 to $1,195 $1.17 2br/2ba $1,130 to 1,032 to $1.09 to $1,235 1,151 $1.07 2br/2ba/den $1,225 to 1,076 $1.14 to $1,300 $1.21 The Foundry Lofts (2009) 266 Fitness center, 1233 North Eddy Street 1br/1ba $1,337 to 625 to $2.14 to business center, Walk Score: 70 $1,685 776 $2.17 clubhouse, 2br/2ba $1,827 to 866 to $1.88 to rooftop deck. $2,107 1,123 $2.11 3br/2.5ba $2,053 to 1,189 to $1.73 to $3,606 1,528 $2.36 SOURCE: Zimmerman/Volk Associates, Inc. Table 4 Summary Of For-Sale Multi-Family And Single-Family Attached Listings City of South Bend, St. Joseph County, Indiana January, 2018 Unit Beds/ Unit Price Unit Size Price Per Total Total Development (Date Opened) Type Baths Range Range Sq. Ft. Units Sales Address/Developer . . . . . . . . . . New Construction . . . . . . . . . . Corby Lawrence TH (2017)TH 4br/3.5ba $365,000 3,303 $111 9 6 East Corby Boulevard 3br/2.5ba End Unit $379,900 2,270 $167 4br/3.5ba $424,945 2,993 $142 . . . . . . . . . . Resales . . . . . . . . . . 2500 Topsfield Rd (1964)CO 1br/1ba $47,500 800 $59 1br/1ba $59,900 800 $75 Cornwall Court (1983)TH 2br/1.5ba $85,000 1,054 $81 Lansdown Blvd (1982)TH 3br/1.5ba $99,900 2,162 $46 Coventry Trail (1973)TH 2br/2.5ba $145,000 1,616 $90 River Race (2012)TH 4br/4.5ba $724,900 3,096 $234 Ivy Quad (2015)CO 4br/3.5ba $749,000 2,375 $315 SOURCE: Zimmerman/Volk Associates, Inc. Multiple Listing Service, Table 5 Page 1 of 2 Summary of Selected Single-Family Listings New Construction Priced Under $300,000 City of South Bend, St. Joseph County, Indiana January, 2018 Lot Unit List Unit Subdivision/Area Size Year Built Price Size Price psf Configuration Jade Crossings 0.47 2006-2018 . . . Available floorplans . . . Allen Edwin Homes $176,900 1,458 $121 3br/2ba $190,900 1,743 $110 3br/2ba $193,900 2,040 $95 3br/2ba $199,900 2,174 $92 3br/2ba $207,900 1,702 $122 3br/2.5ba $208,900 1,412 $148 3br/2ba $211,900 1,870 $113 3br/2.5ba $213,900 1,600 $134 3br/2ba $220,900 2,075 $106 3br/2.5ba $220,900 2,121 $104 3br/2.5ba $223,900 2,246 $100 3br/2.5ba $232,900 2,393 $97 3br/2.5ba $237,900 2,410 $99 4br/2.5ba $237,900 2,626 $91 4br/2.5ba $241,900 1,658 $146 3br/2ba $245,900 2,244 $110 3br/2.5ba $253,900 2,340 $109 3br/2.5ba Laurel Creek . . . Available floorplans . . . Allen Edwin Homes $197,900 1,743 $114 3br/2ba $206,900 2,174 $95 3br/2ba $214,900 1,702 $126 3br/2.5ba $214,900 1,682 $128 3br/2.5ba $218,900 1,870 $117 3br/2.5ba $227,900 2,075 $110 3br/2.5ba $239,900 2,393 $100 3br/2.5ba Lafayette Falls 0.24 2004-2018 . . . Available floorplans . . . Allen Edwin Homes $211,900 1,682 $126 3br/2.5ba $211,900 1,702 $125 3br/2ba $212,900 1,412 $151 3br/2ba $215,900 1,870 $115 3br/2.5ba $217,900 1,600 $136 3br/2ba $224,900 2,075 $108 3br/2.5ba $224,900 2,121 $106 3br/2.5ba $227,900 2,246 $101 3br/2.5ba $236,900 2,393 $99 3br/2.5ba $241,900 2,626 $92 4br/2.5ba $241,900 2,410 $100 4br/2.5ba $245,900 1,658 $148 3br/2ba $249,900 2,244 $111 3br/2.5ba SOURCE: Multiple Listing Service; Zimmerman/Volk Associates, Inc. Table 5 Page 2 of 2 Summary of Selected Single-Family Listings New Construction Priced Under $300,000 City of South Bend, St. Joseph County, Indiana January, 2018 Lot Unit List Unit Subdivision/Area Size Year Built Price Size Price psf Configuration Blue Winged Trail 0.23 2017 $183,900 1,312 $140 3br/2ba Cherry Pointe Drive 0.17 2017 $186,900 1,743 $107 3br/2.5ba Blue Winged Trail 0.26 2017 $188,900 1,321 $143 3br/2ba Common Elder Trail 0.26 2017 $193,900 1,453 $133 3br/2.5ba Sapphire Drive 0.16 2017 $202,900 2,040 $99 3br/2.5ba Kiefer Way 0.20 2017 $209,900 3,166 $66 3br/2.5ba St. Charles Avenue 0.15 2016 $267,500 1,634 $164 3br/2ba SOURCE: Multiple Listing Service; Zimmerman/Volk Associates, Inc. Table 6 Target Groups For New Multi-Family For Rent Study Area A City of South Bend, St. Joseph County, Indiana . . . . . Number of Households . . . . . Empty Nesters 30% to Above Percent of & Retirees**80% AMI† 80% AMI†Total Total Mainstream Empty Nesters 1 4 5 1.3% Middle-American Retirees 2 7 9 2.3% Cosmopolitan Couples 2 2 4 1.0% Blue-Collar Retirees 2 2 4 1.0% Hometown Seniors 2 2 4 1.0% Second City Seniors 11 13 24 6.2% Subtotal:20 30 50 13.0% Traditional & Non-Traditional Families†† Kids 'r' Us 1 3 4 1.0% Multi-Ethnic Families 1 3 4 1.0% Uptown Families 7 14 21 5.4% In-Town Families 13 15 28 7.3% Single-Parent Families 1 2 3 0.8% New American Strivers 10 10 20 5.2% Subtotal:33 47 80 20.7% Younger Singles & Couples** New Bohemians 2 7 9 2.3% The VIPs 3 11 14 3.6% Fast-Track Professionals 3 15 18 4.7% Suburban Achievers 3 6 9 2.3% Suburban Strivers 12 21 33 8.5% Small-City Singles 12 17 29 7.5% Downtown Couples 2 2 4 1.0% Downtown Proud 3 4 7 1.8% Twentysomethings 25 36 61 15.8% Second-City Strivers 17 22 39 10.1% Multi-Ethnic Singles 19 14 33 8.5% Subtotal:101 155 256 66.3% Total Households:154 232 386 100.0% Percent of Total:39.9%60.1%100.0% † For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. **Predominantly one- and two-person households. †† Predominantly three -to five-person households. SOURCE: Claritas, Inc. Zimmerman/Volk Associates, Inc. Table 7 Target Groups For New Multi-Family For Sale Study Area A City of South Bend, St. Joseph County, Indiana . . . . . Number of Households . . . . . Empty Nesters 60% to Above & Retirees**100% AMI† 100% AMI†Total Percent Second City Seniors 1 0 1 2.2% Subtotal:1 0 1 2.2% Traditional & Non-Traditional Families†† Uptown Families 1 4 5 11.1% In-Town Families 2 1 3 6.7% New American Strivers 3 2 5 11.1% Subtotal:6 7 13 28.9% Younger Singles & Couples** New Bohemians 1 3 4 8.9% The VIPs 0 5 5 11.1% Fast-Track Professionals 1 4 5 11.1% Suburban Strivers 2 1 3 6.7% Small-City Singles 3 2 5 11.1% Twentysomethings 2 2 4 8.9% Second-City Strivers 2 1 3 6.7% Multi-Ethnic Singles 2 0 2 4.4% Subtotal:13 18 31 68.9% Total Households:20 25 45 100.0% Percent of Total: 44.4%55.6%100.0% † For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. **Predominantly one- and two-person households. †† Predominantly three -to five-person households. SOURCE: Claritas, Inc. Zimmerman/Volk Associates, Inc. Table 8 Target Groups For New Single-Family Attached For Sale Study Area A City of South Bend, St. Joseph County, Indiana . . . . . Number of Households . . . . . Empty Nesters 60% to Above & Retirees**100% AMI† 100% AMI†Total Percent Blue-Collar Retirees 3 2 5 5.6% Second City Seniors 2 1 3 3.4% Subtotal:5 3 8 9.0% Traditional & Non-Traditional Families†† Button-Down Families 2 2 4 4.5% Kids 'r' Us 2 3 5 5.6% Uptown Families 6 6 12 13.5% In-Town Families 11 5 16 18.0% New American Strivers 1 2 3 3.4% Subtotal:22 18 40 44.9% Younger Singles & Couples** The VIPs 2 3 5 5.6% Suburban Achievers 3 4 7 7.9% Suburban Strivers 3 5 8 9.0% Small-City Singles 7 5 12 13.5% Twentysomethings 1 2 3 3.4% Second-City Strivers 1 3 4 4.5% Multi-Ethnic Singles 1 1 2 2.2% Subtotal:18 23 41 46.1% Total Households:45 44 89 100.0% Percent of Total: 50.6%49.4%100.0% † For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. **Predominantly one- and two-person households. †† Predominantly three -to five-person households. SOURCE: Claritas, Inc. Zimmerman/Volk Associates, Inc. Table 9 Target Groups For New Urban Single-Family Detached For Sale Study Area A City of South Bend, St. Joseph County, Indiana . . . . . Number of Households . . . . . Empty Nesters 60% to Above & Retirees**100% AMI† 100% AMI†Total Percent Suburban Establishment 0 5 5 3.5% Second-City Establishment 1 4 5 3.5% Mainstream Empty Nesters 1 14 15 10.5% Middle-American Retirees 2 8 10 7.0% Blue-Collar Retirees 2 4 6 4.2% Middle-Class Move-Downs 2 1 3 2.1% Hometown Seniors 1 2 3 2.1% Second City Seniors 1 3 4 2.8% Subtotal:10 41 51 35.7% Traditional & Non-Traditional Families†† Unibox Transferees 1 4 5 3.5% Button-Down Families 0 5 5 3.5% Fiber-Optic Families 1 4 5 3.5% Late-Nest Suburbanites 1 3 4 2.8% Full-Nest Suburbanites 1 3 4 2.8% Kids 'r' Us 3 4 7 4.9% Multi-Ethnic Families 2 2 4 2.8% Uptown Families 4 10 14 9.8% In-Town Families 6 10 16 11.2% New American Strivers 0 1 1 0.7% Subtotal:19 46 65 45.5% Younger Singles & Couples** The VIPs 1 2 3 2.1% Suburban Achievers 2 2 4 2.8% Small-City Singles 4 10 14 9.8% Suburban Strivers 1 2 3 2.1% Multi-Ethnic Singles 1 2 3 2.1% Subtotal:9 18 27 18.9% Total Households:38 105 143 100.0% Percent of Total: 26.6%73.4%100.0% † For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. **Predominantly one- and two-person households. †† Predominantly three -to five-person households. SOURCE: Claritas, Inc. Zimmerman/Volk Associates, Inc. Table 10 Optimum Market Position--Affordable/Workforce, and Market-Rate Dwelling Units Mixed-Income Development Study Area A City of South Bend, St. Joseph County, IndianaMarch, 2018 Base Base Base Annual Percent of Rent/Price Unit Size Rent/Price Market Households Housing Type Range*Range Per Sq. Ft.*Capture Number 58.2% Multi-Family For-Rent: Rowhouses; Mansion Buildings (4-6 du per buildig)39 to 46 200 Microlofts, Lofts $450 to 400 to $1.13 to 20 to 24 Studio/1ba to 2br/1ba $1,100 900 $1.22 186 Apartments, Rowhouses $750 to 450 to $1.50 to 19 to 22 Studio/1ba to 3br/2ba $1,800 1,200 $1.67 6.8% Multi-Family For-Sale: Mansion Buildings (4-6 du per building)5 to 6 45 Condominiums $75,000 to 700 to $107 to 5 to 6 1br/1ba and 2br/2ba $165,000 1,100 $150 13.4% Single-Family Attached For-Sale: Duplexes; Triplexes; Rowhouses; Townhouses 5 to 7 50 Triplexes; Rowhouses $85,000 to 800 to $106 to 3 to 4 1br/1.5ba to 2br/1.5ba $160,000 1,000 $160 39 Duplexes; Townhouses $145,000 to 1,250 to $116 to 2 to 3 2br/2.5ba to 3br/2.5ba $210,000 1,300 $162 21.6% Single-Family Detached For-Sale: Tiny Houses; Cottages; Urban Houses 7 to 11 65 Tiny Houses/Cottages $50,000 to 350 to $143 to 3 to 5 1br/1ba and 2br/1.5ba $145,000 950 $153 78 Urban Houses $170,000 to 1,150 to $148 to 4 to 6 Two- to Four-Bedrooms $250,000 1,500 $167 100.0% 56 to 70 663 target households new units/year 17 to 24 NOTE:Base rents/prices in year 2018 dollars and exclude floor and view premiums, new ownership options and upgrades.units/year SOURCE: Zimmerman/Volk Associates, Inc. ZIMMERMAN/VOLK ASSOCIATES, INC. Post Office Box 4907 Clinton, New Jersey 08809 908 735-6336 info@ZVA.cc • www.ZVA.cc Residential Market Analysis Across the Urban-to-Rural Transect ASSUMPTIONS AND LIMITATIONS— Every effort has been made to insure the accuracy of the data contained within this analysis. Demographic and economic estimates and projections have been obtained from government agencies at the national, state, and county levels. Market information has been obtained from sources presumed to be reliable, including developers, owners, and/or sales agents. However, this information cannot be warranted by Zimmerman/Volk Associates, Inc. While the proprietary residential target market methodology™ employed in this analysis allows for a margin of error in base data, it is assumed that the market data and government estimates and projections are substantially accurate. Absorption scenarios are based upon the assumption that a normal economic environment will prevail in a relatively steady state during development of the subject property. Absorption paces are likely to be slower during recessionary periods and faster during periods of recovery and high growth. Absorption scenarios are also predicated on the assumption that the product recommendations will be implemented generally as outlined in this report and that the developer will apply high-caliber design, construction, marketing, and management techniques to the development of the property. Recommendations are subject to compliance with all applicable regulations. Relevant accounting, tax, and legal matters should be substantiated by appropriate counsel. o ZIMMERMAN/VOLK ASSOCIATES, INC. Post Office Box 4907 Clinton, New Jersey 08809 908 735-6336 info@ZVA.cc • www.ZVA.cc Residential Market Analysis Across the Urban-to-Rural Transect RIGHTS AND STUDY OWNERSHIP— Zimmerman/Volk Associates, Inc. retains all rights, title and interest in the ZVA residential target market methodology™ and target market descriptions contained within this study. The specific findings of the analysis are the property of the client and can be distributed at the client’s discretion. © Zimmerman/Volk Associates, Inc., 2018 o An Analysis of Residential Market Potential Study Area B The City of South Bend St. Joseph County, Indiana March, 2018 Conducted by On Behalf of ZIMMERMAN/VOLK ASSOCIATES, INC. THE CITY OF SOUTH BEND P.O. Box 4907 227 West Jefferson Boulevard Clinton, New Jersey 08809 South Bend, Indiana 46601 ZIMMERMAN/VOLK ASSOCIATES, INC. Post Office Box 4907 Clinton, New Jersey 08809 908 735-6336 info@ZVA.cc • www.ZVA.cc Residential Market Analysis Across the Urban-to-Rural Transect Study Contents An Analysis of Residential Market Potential: Study Area B 1 Executive Summary 1 Introduction 5 Annual Market Potential for the City of South Bend 6 Annual Market Potential for Study Area B 8 Target Market Analysis 11 The Market Context 15 Optimum Market Position: Study Area B 19 Proposed Rent and Price Ranges: Study Area B 31 Market Capture: Study Area B 32 Study Area B Building and Unit Types 34 Supporting Tables 36 Table 1: Annual Market Potential For New And Existing Housing Units Table 2: Annual Market Potential By Lifestage And Income Level Table 3: Summary Of Selected Rental Properties Table 4: Summary Of For-Sale Multi-Family and Single-Family Detached Listings Table 5: Summary Of Single-Family Listings: New Construction Priced Under $300,000 Table 6: Target Groups For New Multi-Family For Rent Table 7: Target Groups For New Multi-Family For Sale Table 8: Target Groups For New Single-Family Attached For Sale Table 9: Target Groups For New Urban Single-Family Detached For Sale Table 10: Optimum Market Position Affordable/Workforce and Market-Rate Dwelling Units Mixed-Income Development Assumptions and Limitations Copyright o ZIMMERMAN/VOLK ASSOCIATES, INC. Post Office Box 4907 Clinton, New Jersey 08809 908 735-6336 info@ZVA.cc • www.ZVA.cc Residential Market Analysis Across the Urban-to-Rural Transect AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 EXECUTIVE SUMMARY This study has determined that, from the market perspective, between 56 and 69 new mixed-income rental and for-sale dwelling units could be developed and absorbed within Study Area B each year over the next five years. The housing mix of 56 to 69 units would include 36 to 42 new rental units, eight to nine new condominiums, five to eight new duplexes/triplexes/rowhouses/townhouses, and seven to 10 new cottages/bungalows/urban houses. For the purposes of this analysis, Study Area B encompasses Census Tracts 17, 29, and 30, including all of Monroe Park and the Southeast Neighborhood. This study examines affordability based on the following general income groupings: • Households with incomes below 30 percent AMI (the majority of these households typically qualify only for public housing or older existing units); • Households with incomes between 30 and 60 percent of AMI (these households typically qualify for low-income housing tax credit units, existing affordable rental housing, or heavily subsidized ownership housing); • Households with incomes between 60 and 80 percent of AMI (these households typically qualify for new workforce or affordable rental housing or subsidized ownership housing); • Households with incomes between 80 and 100 percent AMI (these households typically qualify for existing market-rate rentals or new workforce or affordable for-sale housing); and • Households with incomes above 100 percent AMI (these households generally have sufficient incomes to rent or purchase market-rate housing). AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 2 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. A total of 855 households represent the annual potential market for new and existing housing units in Study Area B and have been segmented by income, based on the St. Joseph County, IN area median family income (AMI), which, for fiscal year 2017 is $61,500. The combined tenure and housing type preferences and financial capabilities of the 855 target households are shown on the following table. (See again Table 1.) Tenure/Housing Type Propensities by Income Average Annual Market Potential For New and Existing Housing Units Study Area B City of South Bend, St. Joseph County, Indiana . . . . . . . . . HOUSEHOLDS . . . . . . . . HOUSING TYPE NUMBER PERCENT Multi-family for-rent < 30% AMI 92 10.8% 30% to 60% AMI 52 6.1% 60% to 80% AMI 84 9.8% 80% to 100% AMI 41 4.8% > 100% AMI 176 20.5% Total multi-family for-rent 445 52.0% Multi-family for-sale < 30% AMI 9 1.1% 30% to 60% AMI 10 1.2% 60% to 80% AMI 14 1.6% 80% to 100% AMI 16 1.9% > 100% AMI 46 5.3% Total multi-family for-sale 95 11.1% Single-family attached for-sale < 30% AMI 20 2.4% 30% to 60% AMI 19 2.2% 60% to 80% AMI 26 3.0% 80% to 100% AMI 16 1.9% > 100% AMI 54 6.3% Total single-family attached for-sale 135 15.8% Single-family detached for-sale < 30% AMI 38 4.5% 30% to 60% AMI 8 0.9% 60% to 80% AMI 31 3.7% 80% to 100% AMI 8 0.9% > 100% AMI 95 11.1% Total single-family detached for-sale 180 21.1% Grand total 855 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. Summarizing the incomes and financial capabilities of the 855 target households that represent the annual potential market for new and renovated housing units in Study Area B, 18.6 percent (159 AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 3 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. households) have incomes at 30 percent or less than the AMI; 10.4 percent (89 households) have incomes between 30 and 60 percent AMI; 18.1 percent (155 households) have incomes between 60 and 80 percent AMI; 9.5 percent (81 households) have incomes between 80 and 100 percent AMI; and 43.4 percent (371 households) have incomes above 100 percent AMI. —OPTIMUM MARKET POSITION— The 36 to 42 new mixed-income rental lofts and apartments in mansion and courtyard buildings that could be absorbed each year include the following: • 15 to 18 studio and one-bedroom lofts ranging in size between 500 and 700 square feet, with proposed base rents ranging between $550 and $900 per month ($1.10 to $1.29 per square foot). • 21 to 24 one-, two-, and three-bedroom apartments ranging in size between 650 and 1,250 square feet, with proposed base rents ranging between $850 and $1,750 per month ($1.31 to $1.40 per square foot). • Absorption has been forecast at a 10 to 12 percent capture of the annual potential multi-family for-rent market. The eight to nine new mixed-income mansion condominiums that could be absorbed each year include the following: • One- and two-bedroom condominiums ranging in size between 650 and 1,000 square feet, with proposed base prices ranging between $70,000 and $145,000 ($108 to $145 per square foot). • Absorption has been forecast at a 10 to 12 percent capture of the annual potential multi-family for-sale market. The five to eight new mixed-income for-sale duplexes, triplexes, rowhouses, and townhouses that could be absorbed each year include the following: • 3 to 5 one- and two-bedroom triplexes and rowhouses ranging in size between 750 and 950 square feet, with proposed base prices ranging between $80,000 and $150,000 ($107 to $158 per square foot). AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 4 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • 2 to 3 two- and three-bedroom duplexes and townhouses ranging in size between 1,200 and 1,300 square feet, with proposed base prices ranging between $135,000 and $200,000 ($113 to $154 per square foot). • Absorption has been forecast at a five to 7.5 percent capture of the annual potential single-family attached for-sale market. The seven to 10 new mixed-income for-sale cottages, bungalows, and urban single-family detached houses that could be absorbed each year include the following: • 4 to 6 two- and three-bedroom cottages and bungalows ranging in size between 900 and 1,400 square feet, with proposed base prices ranging between $95,000 and $160,000 ($106 to $114 per square foot). • 3 to 4 two- and three-bedroom urban houses ranging in size between 1,250 and 1,450 square feet, with proposed base prices ranging between $165,000 and $225,000 ($132 to $155 per square foot). • Absorption is forecast at a five to 7.5 percent capture of the annual potential single- family detached for-sale market. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 5 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. INTRODUCTION The purpose of this study is to determine the depth and breadth of the potential market for new and renovated mixed-income dwelling units within Study Area B, City of South Bend, Indiana and includes determination of the target households, the appropriate residential mix corresponding to the housing preferences and financial capabilities of the target households, and the optimum market position for new and renovated rental and for-sale housing units within the Study Area. For the purposes of this analysis, Study Area B encompasses Census Tracts 17, 29, and 30, including all of Monroe Park and the Southeast Neighborhood. The extent and characteristics of the potential market for new and existing housing units within Study Area B were identified using Zimmerman/Volk Associates’ proprietary target market methodology. In contrast to conventional supply/demand analysis—which is limited to supply-side dynamics and baseline demographic projections—target market analysis establishes the market potential for new and existing housing based on the housing preferences and socio-economic characteristics of households in the relevant draw areas. The target market methodology is particularly effective in defining housing potential because it encompasses not only basic demographic characteristics, such as income qualification and age, but also less-frequently analyzed attributes such as mobility rates, lifestage, lifestyle patterns, and household compatibility issues (see METHODOLOGY, provided together with migration and detailed target market tables in a separate document). In brief, this study determined: • Where the potential renters and buyers of new and existing housing units in the City of South Bend and Study Area B are likely to move from (the draw areas); • How many households have the potential to move within and to the city and the Study Area each year if appropriate housing units were to be made available (depth and breadth of the market); • Who the households are that represent the potential market for new units in the Study Area (the target markets); AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 6 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • What their housing preferences are in aggregate (rental or ownership, multi-family or single- family); • What their range of affordability is by housing type (income qualifications); • What their current housing alternatives are (rental and for-sale residential development in the city); • What the target markets are currently able to pay to rent or purchase new dwelling units in Study Area B (affordable and market-rate base rents and prices); and • How quickly the new units will lease or sell (absorption forecasts). AVERAGE ANNUAL MARKET POTENTIAL FOR THE CITY OF SOUTH BEND Analysis of migration, mobility, socio-economic and lifestyle characteristics of households currently living within defined draw areas is integral to the determination of the depth and breadth of the potential market for new and existing housing units within the City of South Bend and the Study Area. The extent and characteristics of the potential market for new residential units within the City of South Bend and the Study Area have been examined through detailed analysis of households living within the relevant draw areas. These draw areas were determined through analysis of migration and mobility data, with additional supporting data drawn from the 2016 American Community Survey for the City of South Bend and St. Joseph County, and incorporating information obtained from real estate brokers, sales and leasing agents and other knowledgeable sources, as well as from field investigation. Where are the potential renters and buyers of new and existing housing units in the City of South Bend likely to move from? Analysis of the most recent St. Joseph County migration and mobility data available from the Internal Revenue Service—from 2010 through 2014—shows that the number of households moving into the county into peaked at 5,280 households in 2012, then fell to 3,855 households by 2014. (See Appendix One, Table 1.) Elkhart County, Indiana, directly to the east, consistently accounts for approximately 16 to 18 percent of household migration into St. Joseph County. Berrien County, Michigan, due north of St. Joseph County, represents between approximately six and seven percent AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 7 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. of St. Joseph County migration, followed by Cook County, Illinois—at between four and 5.5 percent—and Marshall County, Indiana—at four to five percent. All other counties accounted individually for less than four percent of household migration into St. Joseph County. Over the study period, annual out-migration from St. Joseph County reached a recent peak in 2011, with 5,675 out-migrating households, then falling each year thereafter to reach just over 4,000 households by 2014. Approximately 13 to 16 percent of out-migrating St. Joseph County households have moved to Elkhart County, representing 640 to 855 St. Joseph County movers over the study period. Net migration—the difference between households moving into the county and those moving out— showed household losses over the entire study period, with the smallest loss—155 households— occurring in 2014, at the end of the study period, and the largest loss—650 households—in 2010, at the beginning of the study period. Based on the migration and mobility data, then, the draw areas for the City of South Bend and the Study Area have been delineated as follows (see also METHODOLOGY): • The local draw area, covering households living within the South Bend city limits. • The county draw area, covering households living elsewhere in St. Joseph County. • The regional draw area, covering households with the potential to move to the City of South Bend from Elkhart, Berrien, Cook, and Marshall Counties. • The national draw area, covering households with the potential to move to the City of South Bend from all other U.S. counties. As derived from the updated migration and mobility analyses, then, the draw area distribution of all households with the potential to move within or to the City of South Bend each year over the next five years is therefore as follows (see also Appendix One, Table 8): Average Annual Market Potential by Draw Area City of South Bend, St. Joseph County, Indiana City of South Bend: 51.9% Balance of St. Joseph County: 23.3% Regional Draw Area (Elkhart, Berrien, Cook, and Marshall Counties): 8.1% Balance of the U.S.: 16.7% Total: 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 8 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. How many households have the potential to move within and to the city each year? As determined by the target market methodology, which accounts for household mobility within the City of South Bend, as well as migration and mobility patterns for households currently living in all other counties, an annual average of 7,565 households represent the potential market for new and existing housing units within the city each year over the next five years. Approximately 48 percent of the target households will be moving to the city from outside the South Bend city limits. AVERAGE ANNUAL MARKET POTENTIAL FOR STUDY AREA B Where are the potential renters and buyers of new and existing housing units in Study Area B likely to move from? The target market methodology identifies those households with a preference for living in downtown, in-town, and walkable neighborhoods. After discounting for those segments of the city’s annual potential market that typically choose suburban and/or rural locations, the distribution of draw area market potential for new and existing dwelling units within Study Area B would be as follows (see also Appendix One, Table 9): Average Annual Market Potential by Draw Area Study Area B City of South Bend, St. Joseph County, Indiana City of South Bend: 58.5% Balance of St. Joseph County: 23.4% Regional Draw Area (Elkhart, Berrien, Cook, and Marshall Counties): 5.3% Balance of the U.S.: 12.8% Total: 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. How many households have the potential to move to Study Area B each year over the next five years? Based on the analysis, which accounts for household mobility within the City of South Bend and the balance of St. Joseph County, as well as migration and mobility patterns for households currently living in all other cities and counties across the country, an annual average of 855 younger singles and couples, empty nesters and retirees, and traditional and non-traditional families of all incomes AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 9 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. represent the potential market for new and existing housing units within the Study Area each year over the next five years. What are their housing preferences in aggregate? The housing preferences of the draw area households—derived from their tenure (rental/ownership) choices and broad financial capacities—are outlined on the following table (see Table 1 following the text): Average Annual Potential Market for New and Existing Housing Units Study Area B City of South Bend, St. Joseph County, Indiana NUMBER OF PERCENT HOUSING TYPE HOUSEHOLDS OF TOTAL Multi-family for-rent 445 52.0% (lofts/apartments, leaseholder) Multi-family for-sale 95 11.1% (lofts/apartments, condo/co-op ownership) Single-family attached for-sale 135 15.8% (townhouses/live-work, fee-simple/ condominium ownership) Single-family detached for-sale 180 21.1% (houses, fee-simple ownership) Total 855 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. Nationally, market propensities for higher-density urban housing continues to grow. Approximately 52 percent of the 855 target households comprise the market for rental dwelling units; an increasing percentage are renters by choice; many, however, would prefer to own but cannot afford the type of housing they want in neighborhoods where they would consider living. Younger people in particular are challenged by the burden of significant education debt as well as lack of an adequate down payment. The remaining 48 percent of the market would choose some form of ownership housing (12 percentage points below the current estimated homeownership rate in the city of approximately 60 percent). Just under 44 percent of the annual potential ownership market would prefer single-family detached units—which currently represent an estimated 73 percent of the existing housing stock in South Bend. The remaining 56 percent of the ownership market would choose for-sale single-family AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 10 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. attached (duplexes/townhouses/live-work units) or multi-family units (condominium/co-operative units). What is their range of affordability by housing type? The 855 households that represent the annual potential market for new and existing housing units in Study Area B have also been segmented by income, based on South Bend-Mishawaka, IN metro area median family income (AMI), which, for fiscal year 2017 is $61,500 for a family of four. This study examines affordability based on the following general income groupings: • Households with incomes below 30 percent AMI (the majority of these households typically qualify only for public housing or older existing units); • Households with incomes between 30 and 60 percent of AMI (these households typically qualify for low-income housing tax credit units, existing affordable rental housing, or heavily subsidized ownership housing); • Households with incomes between 60 and 80 percent of AMI (these households typically qualify for new workforce or affordable rental housing or subsidized ownership housing); • Households with incomes between 80 and 100 percent AMI (these households typically qualify for existing market-rate rentals or new workforce or affordable for-sale housing); and • Households with incomes above 100 percent AMI (these households generally have sufficient incomes to rent or purchase market-rate housing). The combined tenure and housing type preferences and financial capabilities of the 855 target households are shown on the following table. (See again Table 1.) Tenure/Housing Type Propensities by Income Average Annual Market Potential For New and Existing Housing Units Study Area B City of South Bend, St. Joseph County, Indiana . . . . . . . . . HOUSEHOLDS . . . . . . . . HOUSING TYPE NUMBER PERCENT Multi-family for-rent < 30% AMI 92 10.8% 30% to 60% AMI 52 6.1% 60% to 80% AMI 84 9.8% 80% to 100% AMI 41 4.8% > 100% AMI 176 20.5% Total multi-family for-rent 445 52.0% continued on the next page … . . . continued on this page. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 11 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. . . . . . . . . . HOUSEHOLDS . . . . . . . . HOUSING TYPE NUMBER PERCENT Multi-family for-sale < 30% AMI 9 1.1% 30% to 60% AMI 10 1.2% 60% to 80% AMI 14 1.6% 80% to 100% AMI 16 1.9% > 100% AMI 46 5.3% Total multi-family for-sale 95 11.1% Single-family attached for-sale < 30% AMI 20 2.4% 30% to 60% AMI 19 2.2% 60% to 80% AMI 26 3.0% 80% to 100% AMI 16 1.9% > 100% AMI 54 6.3% Total single-family attached for-sale 135 15.8% Single-family detached for-sale < 30% AMI 38 4.5% 30% to 60% AMI 8 0.9% 60% to 80% AMI 31 3.7% 80% to 100% AMI 8 0.9% > 100% AMI 95 11.1% Total single-family detached for-sale 180 21.1% Grand total 855 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. Summarizing the incomes and financial capabilities of the 855 target households that represent the annual potential market for new and renovated housing units in Study Area B, 18.6 percent (159 households) have incomes at 30 percent or less than the AMI; 10.4 percent (89 households) have incomes between 30 and 60 percent AMI; 18.1 percent (155 households) have incomes between 60 and 80 percent AMI; 9.5 percent (81 households) have incomes between 80 and 100 percent AMI; and 43.4 percent (371 households) have incomes above 100 percent AMI. TARGET MARKET ANALYSIS Who are the households that represent the potential market for new and renovated units in Study Area B? The aftermath of the housing crash has seen a measurable shift in market preferences from home ownership to rental dwelling units, particularly among younger households, yielding a higher share of consumer preference for multi-family rentals even among relatively affluent consumers than AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 12 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. would have been typical a decade ago. At the same time, there has been a significant shift in neighborhood preferences from single-use subdivisions toward mixed-use, walkable neighborhoods. This shift has been driven by the convergence of the preferences of the two largest generations in the history of America: the Baby Boomers (currently estimated at just under 74 million), born between 1946 and 1964, and the estimated nearly 89 million Millennials, who were born from 1977 to 1996 and, in 2010, surpassed the Boomers in population. The convergence of two generations of this size—simultaneously reaching a point when housing in walkable neighborhoods matches their life stage—is unprecedented. In addition to their shared preference for walkable urban living, the Boomers and Millennials are changing housing markets in multiple ways. In contrast to the traditional family (married couples with children) that comprised the typical post-war American household, Boomers and Millennials are households of predominantly singles and couples. As a result, nationally, the home-buying market now contains more than 63 percent one- and two-person households, and the 37 percent of the homebuyers that could be categorized as family households are equally likely to be non- traditional as traditional families. One consequence of this evolution is that mixed-income development is now more likely to succeed than when suburban preferences dominated the housing market. As determined by the target market analysis, the general market segments, by lifestage and housing type, that represent the potential market for new and existing housing units in Study Area B include (see also Table 2 following the text: • Younger singles and childless couples—including students, young hospital and university affiliates, entry-level and mid-level management positions, and office, government and retail workers (42.1 percent); • Empty nesters and retirees, a few with incomes from social security alone, some others who also have pensions, savings and investments, and many who are still working (30.4 percent); and AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 13 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • Traditional and non-traditional family households, single parents with one or two children, as well as traditional family household heads affiliated with one of the hospitals or educational/cultural institutions located in the city (27.5 percent); Affordability continues to be a challenge for the influx of young people who are just entering the job market and are living on their own for the first time. This challenge has been addressed in other cities in part by the introduction of smaller, less expensive units. Approximately 20 percent of the younger singles and couples that comprise the target markets for the Study Area have incomes that fall below 30 percent of AMI. If they are employed, these households, for the most part Twentysomethings and Multi-Ethnic Singles, work in part-time or lower-paying jobs, including entry-level retail, such as store clerks, and service occupations, such as waiters and waitresses; many are students. Another 31 percent of the households in this market segment have incomes that fall within the 30- to-60 percent and 60-to-80 percent income bands. These include recent college graduates just beginning their white-collar careers, lower-level medical personnel, and general office workers in the target groups of Small-City Singles, Second-City Strivers, and Suburban Strivers as well as those Twentysomethings and Multi-Ethnic Singles, who have full-time or higher-paying employment. The remaining 49 percent of the younger singles and couples have incomes that are at or above 80 percent of the AMI. These include the target groups of New Bohemians, The VIPs, and Fast-Track Professionals, as well as more affluent households among the Twentysomethings, Small-City Singles, Suburban Strivers, and Second-City Strivers, who are engaged in mid-level office work; academic and medical affiliates; and artists and artisans. Approximately 57 percent of the younger singles and couples moving to the Study Area would be moving from elsewhere in the city; 24 percent would be moving from elsewhere in St. Joseph County; 4.1 percent would be moving from the regional draw area; and the remaining 15.3 percent would be moving from elsewhere in the U.S. The next largest general market segment, at 30.4 percent of the annual potential market, is comprised of older households (empty nesters and retirees). A significant number of these target AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 14 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. households have grown children who have recently moved out of the family home; some are retired, but a significant number are still working, particularly those with lower household income. In this general market segment, approximately 13 percent have incomes below 30 percent of AMI— older singles and couples struggling on limited incomes, mostly from social security—nearly all of whom are living in substandard housing, predominantly Second City Seniors. Another quarter of the older target households have incomes between 30 and 80 percent of the area median. These households include Blue-Collar Retirees, Middle-American Retirees, and Mainstream Retirees, retired couples who have pensions or IRAs in addition to social security. Most of these households have incomes closer to 80 percent of the AMI than 30 percent. Empty nesters and retirees with incomes at or above 80 percent of AMI comprise over 61 percent of this market segment. These are the most well-to-do households in every older target market group; most of them are still working, accounting for their higher incomes and more stable financial situations. Over 46 percent of the empty nesters and retirees would be moving from elsewhere within the City of South Bend; just under a third would be moving from elsewhere in St. Joseph County; approximately 7.7 percent would be moving from the regional draw area; and the remaining 13.5 percent would be moving from elsewhere in the U.S. Family-oriented households represent 27.5 percent of the market for housing within Study Area Nearly 60 percent of these family households are likely to be potential buyers, rather than renters. The target households include a mix of non-traditional families, notably single parents with one to three younger children, and traditional family households, married couples with children. Married couples with children comprise just under 22 percent of all American households (and less than 16 percent in South Bend). Households with children are now increasingly diverse and in some areas are largely non-traditional families. Just over 23 percent of the family households that comprise the annual potential market for the Study Area have incomes below 30 percent of AMI and typically spend up to half of their incomes on AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 15 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. housing costs. Many of these households are single-parent families—In-Town Families and New American Strivers—struggling to make ends meet. More than 28 percent of the family-oriented households have incomes that fall within the 30-to-60 and 60-to-80 percent income bands, including Uptown Families and some of the In-Town Families and New American Strivers market groups. A significant number of the heads of household in these family groups are production or blue-collar workers; many of them already live in the Study Area. The remaining 48 percent of the traditional and non-traditional families have incomes at or above 80 percent of AMI. These households are, in large part, dual-income households, with medical careers, in academic positions, or middle-management jobs. These households include Unibox Transferees, Button-Down Families, Kids ‘r’ Us, Fiber-Optic Families, and Uptown Families. Over three-quarters of these family households are already living in the City of South Bend; 13 percent are currently living elsewhere in St. Joseph County. Approximately four percent would be moving to the Study Area from the regional draw area, and the remaining eight percent would be moving from elsewhere in the U.S., particularly other counties in Indiana. THE MARKET CONTEXT What are their current residential alternatives? —Multi-Family Rental Properties— In January 2018, Zimmerman/Volk Associates compiled data from a variety of sources, including telephone interviews, individual property and rental websites, on 13 selected rental properties, representing nearly 1,850 rental apartments in the city. (See Table 3 following the text.) Property size ranges from just 40 units to nearly 400 units. Walk Score, a number between 0 and 100 denoting the walkability of a specific address or neighborhood, has grown in importance as a value criterion. Walk Scores above 90 indicate a “Walker’s Paradise,” where daily errands do not require a car. Walk Scores between 70 and 90 are considered to be very walkable, where most errands can be accomplished on foot. Walk Scores below 50 indicate that most or almost all errands require an automobile. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 16 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. The Walk Scores of the surveyed rental properties range between 1 and 84. The highest score of 84 is registered by the Central High School Apartments, located within walking distance of several restaurants, shops and entertainment venues in the Downtown. Several properties have Walk Scores of 70 or more, including the Foundry Lofts, the Pointe at St. Joseph, Stephenson Mills, Aurum, Robertson’s Apartments, and the Mar-Main Apartments. —Multi-Family Rental Properties— Table 3 provides detailed information on the 13 rental properties included in the survey and is summarized as follows. —Studios (2 properties)— • Rents for studios range between $515 and $595 per month at the Mar-Main Apartments, a 136-unit property located on West Marion Street, and rent for $582 per month at Robertson’s Apartments, the seniors building on South Michigan Street. • Studios at Mar-Main contain between 400 and 550 square feet; the Robertson’s studios average 575 square feet. • The studio rent per square foot ranges between $1.08 and $1.29 at Mar-Main, and averages $1.01 at Robertson’s. —One-Bedroom Units (12 properties)— • Rents for one-bedroom flats range from $478 per month at Belleville Park Apartments on Belleville Circle to $1,685 per month at the Foundry Lofts on North Eddy Street. • One-bedroom flats range in size from 527 square feet at Cedar Glen Apartments at 425 South 25th Street to 883 square feet at Stephenson Mills on East Colfax Avenue. • One-bedroom rents per square foot range between $0.65 at Belleville Park Apartments to $2.17 at the Foundry Lofts. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 17 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. —Two-Bedroom Units (13 properties)— • Rents for two-bedroom, one- to two-bathroom units range from $525 per month at Washington Dunbar Apartments on North Walnut Street, to $2,107 per month at the Foundry Lofts. Monroe Park Apartments on Fellows Street leases a two- bedroom/one-bath townhouse for $674 per month. • Two-bedroom flats range in size from 550 square feet at Washington Dunbar, to 1,856 square feet at Central High School Apartments. The Monroe Park two- bedroom townhouse contains between 900 square feet of living space. • Two-bedroom rents per square foot for flats fall between $0.65 at Belleville Park Apartments and $2.11 at the Foundry Lofts. The rents per square for the Monroe Park two-bedroom townhouses is $0.75. —Three-Bedroom Units (6 properties)— • Rents for three-bedroom flats range between $699 per month at Washington Dunbar Apartments and $3,606 per month at the Foundry Lofts. Monroe Park Apartments also has a three-bedroom townhouse with two baths that leases for $764 per month. • Three-bedroom flats contain between 1,100 square feet at Washington Dunbar Apartments, and as much as 1,856 square feet at Central High School. The three- bedroom townhouse at Monroe Park Apartments contains 1,020 square feet of living space. • Three-bedroom rents per square foot for flats fall between $0.64 at Washington Dunbar and $2.36 at the Foundry Lofts. The three-bedroom townhouse at Monroe Park leases for $0.75 per square foot. Only Belleville Park Apartments has four-bedroom apartments, which contain between 1,366 and 1,448 square feet of living space, and lease for $709 to $850 per month ($0.52 to $0.59 per square foot). AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 18 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. —Multi-Family and Single-Family Attached For-Sale Properties— Table 4 details recent listings of new and resale condominiums and townhouses at various properties in South Bend. Of the 10 attached units on the market at the time of the survey in January, 2018, two condominiums and two townhouses were priced below $100,000; one townhouse was listed at $145,000; the remaining two units were priced above $700,000. Three townhouses remain unsold at the nine-unit Corby Lawrence Townhouses, new construction on East Corby Boulevard in northeast South Bend. The prices of the three units start at $365,000 for a 3,300-square-foot unit containing four bedrooms and three-and-a-half baths ($111 per square foot). A three-bedroom/two-and-a-half bath end unit is priced at $379,900 for nearly 2,300 square feet of living space ($167 per square foot). The most expensive townhouse, with an asking price of $424,945, has just under 3,000 square feet configured as four bedrooms and three-and-a-half baths ($142 per square foot). The most expensive units on the market include a four-bedroom/four-and-a-half bath townhouse in River Race on the East Bank containing nearly 3,100 square feet and listed at $724,900 ($234 per square foot) and $749,000 for a four-bedroom/three-and-a-half bath condominium in Ivy Quad near the University of Notre Dame with 2,375 square feet of living space ($315 per square foot). —Single-Family Detached For-Sale Properties— Table 5 details the listings of several newly-constructed single-family detached houses on the market in January 2018 in South Bend and priced under $300,000. Allen Edwin Homes has been marketing several models of detached houses at three properties in the far northwestern part of the city, with new construction priced from $176,990 for a 1,458-square-foot three-bedroom/two bath floorplan ($121 per square foot) to $253,900 for a 2,340-square-foot three-bedroom/two-and-a-half bath house ($109 per square foot) at the Jade Crossings community.. Another Allen Edwin Homes community, Laurel Creek, is selling the same three-bedroom models at similar price points ($197,900 to $239,900—$95 to $128 per square foot). A third Allen Edwin Homes community, Lafayette Falls, starts at a higher price point, with a three-bedroom/two-and-a-half bath house containing nearly 1,700 square feet priced at $211,900 ($126 per square foot) and the most AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 19 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. expensive house—a three-bedroom/two-and-a-half bath model with over 2,240 square feet of living space—is priced at nearly $250,000 ($111 per square foot). Several houses have been built, or are under construction within other single-family developments in the city. Asking prices range from $183,900 for a three-bedroom/two-bath house situated on a quarter-acre lot and containing just over 1,300 square feet of living space ($140 per square foot) to $267,500 for a 1,634-square-foot three-bedroom house on St. Charles Avenue ($164 per square foot). All but one were built in 2017, and nearly all are located in developments on the edge of the city. OPTIMUM MARKET POSITION: STUDY AREA B As noted above under AVERAGE ANNUAL MARKET POTENTIAL FOR STUDY AREA B, an annual average of 855 younger singles and couples, empty nesters and retirees, and traditional and non-traditional families of all incomes represent the potential market for new and existing housing units within the Study Area each year over the next five years. The rents and price points for the market-rate component of new rental housing units that could be developed in Study Area B are derived from the income and equity levels of those target households with annual incomes at or above 80 percent AMI, ranging from $34,200 and more for a single-person household to $48,800 and more for a four-person household. For new for-sale housing units, the target households have annual incomes above 100 percent AMI, ranging from $42,700 and more for a single-person household and $61,500 and more for a four-person household. Households with incomes between 30 and 80 percent of the AMI comprise the market for rental “affordable” or workforce housing units. These households have incomes ranging between $12,850 and $34,200 for a single-person household to $24,600 and $48,800 for a four-person household. For new for-sale housing units, the targeted households have annual incomes between 60 and 100 percent AMI, ranging between $25,700 and $42,700 for a single-person household and $49,200 and $61,500 for a four-person household. In general, households with annual incomes at or below 30 percent AMI qualify for Section Eight vouchers and low-income housing tax-credit rental units, and their rents are usually limited to no AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 20 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. more than 30 percent of their annual incomes. These household incomes are less than $12,850 for a single-person household to less than $24,600 for a four-person household. What is the market currently able to pay to rent or purchase new dwelling units in Study Area B? The analysis that follows covers households with preferences for multi-family for-rent with incomes between 30 and 80 percent AMI (affordable/workforce units), and with incomes above 80 percent AMI (market-rate units) and households with preferences for multi-family for-sale, and single-family attached and detached for-sale with incomes between 60 and 100 percent AMI (affordable/workforce units) and with incomes above 100 percent AMI (market-rate units). yielding an annual average of 659 households that represent the potential renters/buyers of new market-rate and affordable housing units in Study Area B each year over the next five years. As derived from the tenure preferences and financial capabilities of those 659 draw area households, the distribution of rental and for-sale housing types would be as shown on the following table: Average Annual Potential Market for New Housing Units Study Area B City of South Bend, St. Joseph County, Indiana . . . . . . . . . HOUSEHOLDS . . . . . . . . HOUSING TYPE NUMBER PERCENT Multi-family for-rent 30% to 80% AMI 136 20.7% > 80% AMI 217 32.9% Total multi-family for-rent 353 53.6% Multi-family for-sale 60% to 100% AMI 30 4.5% > 100% AMI 46 7.0% Total multi-family for-sale 76 11.5% Single-family attached for-sale 60% to 100% AMI 42 6.4% > 100% AMI 54 8.2% Total single-family attached for-sale 96 14.6% continued on the next page … AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 21 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. . . . continued on this page. . . . . . . . . . HOUSEHOLDS . . . . . . . . HOUSING TYPE NUMBER PERCENT Single-family detached for-sale 60% to 100% AMI 39 5.9% > 100% AMI 95 14.4% Total single-family detached for-sale 134 20.3% Grand total 659 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. —Rental Distribution by Rent Range: Multi-Family For-Rent— The number of households able to afford the specified rent ranges detailed on the following tables was determined by calculating a monthly rental payment—excluding utilities and ranging between 25 and 30 percent of annual gross income. (Although it is quite possible that many households will pay up to 40 percent of their annual gross incomes in rent, HUD recommends that a tenant pay no more than 30 percent of gross income for rent including utilities.) Approximately 61.5 percent of the 353 target renter households have incomes at or above 80 percent of the AMI. An annual average of 217 households with incomes at or above 80 percent of the AMI represent the target markets for newly-constructed market-rate rental housing units in Study Area B (as shown on Table 6 following the text). The distribution by rent range of the rents those 217 households could support are summarized on the following table: Rent Distribution Target Groups for New Multi-Family For Rent Households with Incomes At or Above 80 Percent AMI Study Area B City of South Bend, St. Joseph County, Indiana MONTHLY HOUSEHOLDS RENT RANGE PER YEAR PERCENTAGE $500–$750 47 21.7% $750–$1,000 62 28.6% $1,000–$1,250 58 26.7% $1,250–$1,500 35 16.1% $1,500 and up 15 6.9% Total: 217 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • The largest group of households that represent the market for new market-rate rental units in Study Area B are younger singles and couples at 56.7 percent of the market. Just under six AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 22 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. percent would be able to afford rents at or above $1,500 per month; approximately 37 percent of these households represent the market for units with rents between $1,000 and $1,500 per month; and the remaining 57.7 percent would require rents between $500 and $1,000 per month. • Empty nesters and retirees make up one quarter of the market for new market-rate rental units in Study Area B. Just under 13 percent of these households could afford new units with rents above $1,500 per month and 53 percent could afford new units with rents between $1,000 and $1,500 per month. The remaining 34.5 percent represent the market for units with rents between $500 and $1,000 per month. • Traditional and non-traditional families comprise 18 percent of the market for new market- rate rental units in Study Area B. Less than three percent of the family market can afford rents greater than $1,500 per month; the rest of the family market is evenly divided between rents between $1,000 and $1,500 per month and rents between $500 and $1,000 per month. An annual average of 136 households with incomes between 30 and 80 percent of the AMI represent the target markets for newly-constructed affordable/workforce rental housing units in Study Area B (see again Table 6). The distribution by rent range of the rents those 136 households could support are summarized as shown on the following table: Distribution by Rent Range Target Groups for New Multi-Family For Rent Households with Incomes Between 30 Percent and 80 Percent AMI Study Area B City of South Bend, St. Joseph County, Indiana MONTHLY UNITS RENT RANGE PER YEAR PERCENTAGE $250–$400 38 27.9% $400–$550 43 31.6% $550–$700 33 24.3% $700–$850 13 9.6% $850-$1,000 9 6.6% Total: 136 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • At just under 60 percent, younger singles and couples represent the largest market for newly- constructed affordable/workforce rental units in Study Area B. Five percent would be able to AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 23 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. afford rents between $850 and $1,000 per month; just over 32 percent would represent the market for units with rents between $550 and $850 per month; and the remaining 63 percent would require rents between $250 and $550 per month. • At approximately 21.3 percent of the market, traditional and non-traditional families are the next largest market for new affordable/workforce rentals in Study Area B. Approximately 2.6 percent of these households are able to lease units with rents between $850 and $1,000 per month; 48.7 percent can afford rents can afford rents between $550 and $850 per month, and the remaining 48.7 percent are financially limited to rents between $250 and $550 per month. • Empty nesters and retirees represent the smallest market, at just over 19 percent, for new affordable/workforce rental units in Study Area B. Approximately 11.5 percent of the empty nester and retiree market have the incomes to support rents between $850 and $1,000 per month; another 53.8 percent could pay rents between $550 and $850 per month; and just under 35 percent could only afford rents between $250 and $550 per month. —For-Sale Distribution by Price Range— For the for-sale unit distribution, the number of households by price range was determined by assuming a down payment (subsidized or otherwise) of 20 percent and then calculating monthly mortgage payments, including taxes and utilities, that would not exceed 30 percent of the annual gross income of the target households. The realization of the full market potential for new market-rate for-sale units may be challenging over the short-term, given continued restrictive development financing and mortgage underwriting by financial institutions, the disinterest of some younger households in becoming owners, the fact that many otherwise-qualified households, particularly current renters, lack the funds for a down payment, and the inability of many older owner households to sell their existing single-family units even at reduced prices. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 24 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. —For-Sale Distribution by Price Range: Multi-Family— An annual average of 46 households with incomes at or above 100 percent of the AMI represent the target markets for newly-constructed market-rate multi-family for-sale (condominium) housing units in Study Area B (as shown on Table 7 following the text). The distribution by price range of the prices those 46 households could support are summarized as on the following table: Distribution by Price Range Target Groups for New Multi-Family For Sale Households with Incomes At or Above 100 Percent AMI Study Area B City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $125,000–$150,000 7 15.2% $150,000–$175,000 10 21.7% $175,000–$200,000 9 19.6% $200,000–$225,000 8 17.4% $225,000 and up 12 26.1% Total: 46 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • At a 48 percent share, empty nesters and retirees represent a plurality of the market for new market-rate multi-family for-sale units (condominiums) in Study Area B. Approximately 36.4 percent of these older households have the capacity to purchase new condominiums with base prices at or above $225,000; the same percentage would be able to purchase new condominiums priced between $175,000 and $225,000. The remaining 27.3 percent of this segment would only be able to afford units priced between $125,000 and $175,000. • Younger singles and couples comprise 41.3 percent of the market for this housing type in the Study Area. Over 47 percent of these younger households would be in the market for new condominiums with base prices between $125,000 and $175,000. Another 31.6 percent could afford new condominium units priced between $175,000 and $225,000 and the remaining 21.1 percent have the income and assets to purchase condominiums priced at $225,000 or more. • Family households are a very small share of the market—just under 11 percent—for new market-rate condominiums in Study Area B, with 40 percent able to afford new units priced AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 25 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. between $125,000 and $175,000, and the majority—60 percent—capable of purchasing units priced between $175,000 and $225,000. An annual average of just 30 households with incomes between 60 percent and 100 percent of the AMI represent the target markets for newly-constructed affordable multi-family for-sale (condominium) housing units in Study Area B (see again Table 7). For these units, the assumption is that, at minimum, the 20 percent down payment would be subsidized. The distribution by price range of the prices those 30 households could support would therefore be summarized as follows: Distribution by Price Range Target Groups for New Multi-Family For Sale Households with Incomes Between 60 Percent and 100 Percent AMI Study Area B City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $50,000–$75,000 8 26.7% $75,000–$100,000 10 33.3% $100,000–$125,000 12 40.0% Total: 30 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • Younger singles and couples are the largest segment of the market for newly-constructed affordable/workforce multi-family for-sale units (condominiums) in the Study Area, at nearly 57 percent of the market. Just under 30 percent of this market could only purchase new condominiums priced between $50,000 and $75,000. The remaining 70.6 percent of the younger market is evenly split between units priced between $75,000 and $100,000 and between $100,000 and $125,000. • The empty-nester and retiree market—approximately a third of the market—is the next largest group of households that represent the potential market for new affordable/workforce multi-family for-sale units in Study Area B. A plurality—40 percent—have the income and assets to purchase new affordable condominiums priced between $100,000 and $125,000. The remaining 60 percent are evenly divided between older households able to purchase new condominiums priced between $75,000 and $100,000 and households with incomes limiting to new affordable condominiums priced between $50,000 and $75,000. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 26 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • Family households comprise 10 percent of the market for newly-constructed affordable/workforce condominiums in Study Area B. A third of these families would be limited to new affordable condominiums with base prices between $75,000 and $100,000, two-thirds could afford new units priced between $100,000 and $125,000. —For-Sale Distribution By Price Range: Single-Family Attached— An annual average of 54 households with incomes at or above 100 percent of the AMI represent the target markets for newly-constructed market-rate single-family attached for-sale (townhouse/rowhouse) housing units in Study Area B (as shown on Table 8 following the text). The distribution by price range of the prices those 54 households could support are summarized as on the table following this page: Distribution by Price Range Target Groups for New Single-Family Attached For Sale Households with Incomes At or Above 100 Percent AMI Study Area B City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $125,000–$150,000 12 22.2% $150,000–$175,000 15 27.7% $175,000–$200,000 11 20.4% $200,000–$225,000 9 16.7% $225,000 and up 7 13.0% Total: 54 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • Empty nesters and retirees comprise just under 39 percent of the market for new market-rate single-family attached for-sale units (townhouses/rowhouses/duplexes), of which one-third would be able to purchase units priced at $225,000 or more. Another 19 percent would be in the financial position to purchase new single-family attached units with prices between $175,000 and $225,000, and a plurality—47.6 percent—would require new units priced between $125,000 and $175,000. • At a 37 percent share, traditional and non-traditional families make up a slightly smaller segment of the market for new market-rate single-family attached for-sale units. One quarter AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 27 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. would require units priced between $125,000 and $175,000 and three-quarters could afford new single-family attached units priced between $175,000 and $225,000. • Younger singles and couples represent 24 percent of the market for new market-rate single- family attached for-sale units. As a group they are considerably less affluent than empty nesters/retirees and traditional and non-traditional families, with more than 92 percent only able to afford new units priced between $125,000 and $175,000. The remaining 7.7 percent would be in the market for units priced between $175,000 and $225,000. Just 8.7 percent have the income and down payments to enable them to purchase new single-family attached units priced above $225,000. An annual average of 42 households with incomes between 60 percent and 100 percent of the AMI represent the target markets for newly-constructed affordable single-family attached for-sale housing units in Study Area B (see again Table 8). Again, for these units, the assumption is that, at minimum, the 20 percent down payment would be subsidized. The distribution by price range of the prices those 42 households could support would therefore be summarized as follows: Distribution by Price Range Target Groups for New Single-Family Attached For Sale Households with Incomes Between 60 Percent and 100 Percent AMI Study Area B City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $50,000–$75,000 17 40.5% $75,000–$100,000 18 42.8% $100,000–$125,000 7 16.7% Total: 42 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • As with the market-rate units, empty nesters and retirees are the largest segment (nearly 43 percent) of the market for newly-constructed affordable/workforce single-family attached units in Study Area B. A third of this segment would be limited to new affordable single- family attached units with base prices between $50,000 and $75,000, and 38.9 percent could afford new units priced between $75,000 and $100,000. The remaining 27.8 percent have the financial capability to purchase new units priced between $100,000 and $125,000. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 28 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • Family households are again the next largest target market—35.7 percent of the households—for newly-constructed affordable/workforce single-family attached for-sale units in the Study Area. Nearly 47 percent of the families are only able to purchase new units priced between $50,000 and $75,000; the same percentage would be able to purchase new units with base prices between $75,000 and $100,000. The remaining 6.7 percent have the financial capacity to afford new units priced between $100,000 and $125,000 • At 21.4 percent, younger singles and couples are the smallest segment of the market for newly-constructed affordable/workforce single-family attached for-sale units in Study Area B. Over 44 percent of this market could only afford these units priced between $50,000 and $75,000; the same percentage would be able to purchase units priced between $75,000 and $100,000; and the remaining 11.1 percent have the incomes to purchase units priced between $100,000 and $125,000. —For-Sale Distribution By Price Range: Single-Family Detached— An annual average of 95 households with incomes at or above 100 percent of the AMI represent the target markets for newly-constructed market-rate for-sale urban single-family detached houses in Study Area B (as shown on Table 9 following the text). The distribution by price range of the prices those 95 households could support are summarized on the table on the following page. Distribution by Price Range Target Groups for New Single-Family Detached For Sale Households with Incomes At or Above 100 Percent AMI Study Area B City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $150,000–$175,000 25 26.3% $175,000–$200,000 29 30.5% $200,000–$225,000 18 18.9% $225,000–$250,000 12 12.6% $250,000–$275,000 2 2.2% $275,000 and up 9 9.5% Total: 95 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • Empty nesters and retirees make up the largest segment of the market for new market-rate single-family detached houses in the Study Area, at an approximately 47 per share. Just 4.4 AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 29 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. percent would be able to purchase new houses priced above $250,000, and 42.2 percent could afford new detached units priced between $200,000 and $250,000. The majority— over 53 percent—would be in the market for new urban detached houses with base prices between $150,000 and $200,000. • At 40 percent, traditional and non-traditional families are the next largest segment of the market for new market-rate urban single-family detached houses in Study Area B. Nearly 24 percent could afford new houses priced at $250,000 or more, another 28.9 percent would be in the market for new houses with base prices between $200,000 and $250,000, and 47.4 percent would require houses priced between $150,000 and $200,000. • At a share of 12.6 percent, younger singles and couples represent the smallest segment of the market for new market-rate urban single-family houses in the Study Area. All of these younger households could only pay for new detached houses with base prices between $150,000 and $200,000. An annual average of 39 households with incomes between 60 percent and 100 percent of the AMI represent the target markets for newly-constructed affordable single-family detached for-sale housing units in Study Area B (see again Table 9). Again, for these units, the assumption is that, at minimum, the 20 percent down payment would be subsidized. The distribution by price range of the prices those 39 households could support are summarized on the table on the following page. Distribution by Price Range Target Groups for New Single-Family Detached For Sale Households with Incomes Between 60 Percent and 100 Percent AMI Study Area B City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $50,000–$75,000 11 28.2% $75,000–$100,000 13 33.3% $100,000–$125,000 9 23.1% $125,000–$150,000 6 15.4% Total: 39 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • Traditional and non-traditional families are nearly 59 percent of the market for newly- constructed affordable/workforce urban detached houses in Study Area B. Nearly 70 percent AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 30 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. of the family market would be limited to new affordable/workforce houses with base prices between $50,000 and $100,000. Just over 30 percent of the traditional and non-traditional families could afford new detached units priced between $100,000 and $150,000. • Empty nesters and retirees are the second largest segment of the market for newly- constructed affordable/workforce single-family urban detached for-sale units in the Study Area, at just under 31 percent of the market. Approximately 42 percent of the older households could only afford detached houses priced between $50,000 and $100,000; over 58 percent have the income and assets to purchase new detached houses priced between $100,000 and $150,000. • The smallest market segment, younger singles and couples, makes up just over 10 percent of the potential market for new affordable/workforce urban single-family detached houses. Three-quarters of the younger singles and couples could afford newly-constructed affordable urban houses priced between $50,000 and $100,000 and one-quarter have the financial capabilities to purchase new urban detached houses priced between $100,000 and $150,000. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 31 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. PROPOSED RENT AND PRICE RANGES: STUDY AREA B Based on the tenure and housing preferences of the target households, and their income and equity levels, the range of rents and prices for newly-developed market-rate and affordable/workforce residential units in Study Area B that could be sustained by the market is as follows (see also Table 10 following the text): Base Rent, Price and Size Ranges Study Area B City of South Bend, St. Joseph County, Indiana RENT/PRICE SIZE RENT/PRICE HOUSING TYPE RANGE RANGE PER SQ. FT. MULTI-FAMILY FOR-RENT: MANSION BUILDINGS (4-6 DU PER BLDG); COURTYARD BUILDINGS— Lofts $550–$900/month 500–700 sf $1.10–$1.29 psf Apartments $850–$1,750/month 650–1,250 sf $1.31–$1.40 psf MULTI-FAMILY FOR-SALE: MANSION BUILDINGS (4-6 DU PER BUILDING)— Condominiums $70,000–$145,000 650–1,000 sf $108–$145 psf SINGLE-FAMILY ATTACHED FOR-SALE: DUPLEXES; TRIPLEXES; ROWHOUSES; TOWNHOUSES— Triplexes; Rowhouses $80,000–$150,000 750–950 sf $107–$158 psf Duplexes; Townhouses $135,000–$200,000 1,200–1,300 sf $113–$154 psf SINGLE-FAMILY DETACHED FOR-SALE: COTTAGES; BUNGALOWS; URBAN HOUSES— Cottages; Bungalows $95,000–$160,000 900–1,400 sf $106–$114 psf Urban Houses $165,000–$225,000 1,250–1,450 sf $132–$155 psf SOURCE: Zimmerman/Volk Associates, Inc., 2018. The aforementioned rents and prices are in year 2018 dollars, are exclusive of consumer options and upgrades, or floor or location premiums, and cover a broad range of rents and prices for newly- developed units currently sustainable by the market in Study Area B. It is likely that, over a five-year timeframe, rents and prices will change from the 2018 values; barring a substantial economic downturn, the changes are likely to be escalation of values. As in Study Area A, location will have an impact on rents and prices. There are strong blocks within the Study Area, as well as numerous vacant lots and parcels where small-scale development would be suitable. New mixed-use (rental apartments and ground-floor retail) development should be located AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 32 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. along the major corridors, particularly South Michigan Street, which forms the western edge of the Study Area. The Monroe Park area, in the northern part of Study Area B, is close to Downtown South Bend; Four Winds Field, home of the minor-league baseball team, the South Bend Cubs, is located three blocks west of South Michigan Street. The 57-unit low-income housing property Monroe Park Apartments is also located in Monroe Park, where one-bedroom apartments and two- and three- bedroom townhouses lease for $579 to $764 per month. South of the railroad tracks, in the middle of the Study Area, is located the South Bend campus of Ivy Tech Community College, one of 75 located throughout Indiana. The YWCA North Central Indiana Treatment Center, providing substance abuse services as well as outpatient and residential long-term treatment to women, and the nearly 10-acre Southeast Neighborhood Park, with playgrounds, softball and soccer fields, and a splash pad, are across Fellows Street from Ivy Tech. Riley High School, home to the Technology and Engineering Magnet Program, nationally certified as an Innovation High School, is situated in the southern part of the Study Area, adjacent to Studebaker Park—site of the Studebaker nine-hole golf course and putting green. Several vacant lots on the blocks between Ivy Tech and the high school are already proposed for redevelopment. MARKET CAPTURE: STUDY AREA B How fast will new units lease or sell? In the context of the target market methodology, new multi-family development, both rental and for-sale, in Study Area B should be able to achieve an annual capture of 10 to 12 percent of the annual potential renters and condominium buyers each year over the next five years. New single- family development, both attached and detached, should be able to achieve an annual capture of five to 7.5 percent of the annual potential single-family attached and detached buyers each year over the next five years. (Nationally, prior to the housing collapse in 2008, new dwelling units represented 15 percent of all units sold; over the past several years, new dwelling units have averaged approximately eight percent of all units sold.) AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 33 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. Based on a 10 to 12 percent capture of the annual potential market for new multi-family housing, and a five to 7.5 percent capture of the annual potential market for new single-family attached and detached housing units, Study Area B should be able to absorb between 57 and 70 new market-rate and affordable/workforce rental and for-sale housing units each year over the next five years, as shown on the following table (see also Table 10 following the text for greater detail): Annual Capture of Market Potential Study Area B City of South Bend, St. Joseph County, Indiana NUMBER OF CAPTURE NUMBER OF HOUSING TYPE HOUSEHOLDS RATE NEW UNITS Multi-Family For-Rent 353 10 - 12% 36 - 42 (lofts/apartments, leaseholder) Multi-Family For-Sale 76 10 - 12% 8 – 9 (lofts/apartments, condo/co-op ownership) Single-Family Attached For-Sale 96 5 – 7.5% 5 - 8 (rowhouses/townhouses, fee-simple ownership) Single-Family Detached For-Sale 134 5 - 7.5% 7 - 10 (urban houses, fee-simple ownership) Total 659 56 – 69 SOURCE: Zimmerman/Volk Associates, Inc., 2018. Over five years, these capture rates could support the construction and absorption of between 280 and 345 new mixed-income dwelling units within Study Area B. These capture rates are well within the target market methodology’s parameters of feasibility. NOTE: Target market capture rates are a unique and highly-refined measure of feasibility. Target market capture rates are not equivalent to—and should not be confused with—penetration rates or traffic conversion rates. The target market capture rate is derived by dividing the annual forecast absorption— in aggregate and by housing type—by the number of households that have the potential to purchase or rent new housing within a specified area in a given year. The penetration rate is derived by dividing the total number of dwelling units planned for a property by the total number of draw area households, sometimes qualified by income. The traffic conversion rate is derived by dividing the total number of buyers or renters by the total number of prospects that have visited a site. Because the prospective market for a location is more precisely defined, target market capture rates are higher than the more grossly-derived penetration rates. However, the resulting higher capture rates are well within the range of prudent feasibility. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 34 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. STUDY AREA B BUILDING AND UNIT TYPES —MULTI-FAMILY BUILDINGS— • Courtyard Apartment Building: In new construction, an urban, pedestrian-oriented equivalent to conventional garden apartments. An urban courtyard building is three or more stories, often combined with non-residential uses on the ground floor. The building should be built to the sidewalk edge and, to provide privacy and a sense of security, the first floor should be elevated significantly above the sidewalk. • Loft Apartment Building: Either adaptive re-use of older warehouse or manufacturing buildings or a new-construction building type inspired by those buildings. The new- construction version typically has double-loaded corridors. • Mansion Apartment Building: A two- to three-story flexible-use structure with a street façade resembling a large detached or attached house (hence, “mansion”). The attached version of the mansion, typically built to a sidewalk on the front lot line, is most appropriate for downtown locations. The building can accommodate a variety of uses—from rental or for- sale apartments, professional offices, any of these uses over ground-floor retail, a bed and breakfast inn, or a large single-family detached house—and its physical structure complements other buildings within a neighborhood. Parking behind the mansion buildings can be either alley-loaded, or front-loaded served by shared drives. Mansion buildings should be strictly regulated in form, but flexible in use. However, flexibility in use is somewhat constrained by the handicapped accessibility regulations in both the Fair Housing Act and the Americans with Disabilities Act. • Mixed-Use Building: A pedestrian-oriented building, either attached or free-standing, with apartments and/or offices over flexible ground floor uses that can range from retail to office to residential. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 35 Study Area B The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. —MULTI-FAMILY UNIT TYPES— • Lofts: Unit interiors typically have high ceilings, are fully finished and partitioned into individual rooms. Units may also contain architectural elements reminiscent of hard lofts, such as exposed ceiling beams and ductwork, concrete floors and industrial finishes, particularly if the building is an adaptive re-use of an existing industrial structure. • Apartments: More conventionally-finished single-level units, typically with completely- partitioned rooms.—trim, interior doors, kitchens and baths are often fitted out with higher- end finishes and fixtures than in lofts. —SINGLE-FAMILY ATTACHED— • Rowhouses/Townhouses: Similar in form to conventional suburban townhouses except that the garage—either attached or detached—is located to the rear of the unit and accessed from an alley or auto court. Unlike conventional townhouses, urban rowhouses and townhouses conform to the pattern of streets, typically with shallow front-yard setbacks. • Duplexes/Triplexes: Two- or three-unit townhouses with the garages—either attached or detached—located to the rear of the units. Like the rowhouses/townhouses, urban duplexes/triplexes conform to the pattern of streets, typically with shallow front-yard setbacks. In a corner location, duplex units can each front a different street. —SINGLE-FAMILY DETACHED— • Cottages/Bungalows: Small one-, one-and-a-half- or two-story single-family detached houses on small lots, usually with alley-loaded parking. • Urban Houses: One-and-a-half- or two-story single-family detached houses on small lots, often with alley-loaded parking with attached, detached, or open parking—whether alley- loaded or not—set well back from the front façade; in many instances, the garage is framed by a porte-cochère. o Table 1 Annual Market Potential For New And Existing Housing Units Distribution Of Annual Average Number Of Draw Area Households With The Potential To Move To Study Area B Each Year Over The Next Five Years Based On Housing Preferences And Income Levels Study Area B City of South Bend, St. Joseph County, Indiana City of South Bend; Balance of St. Joseph County; Regional Draw Area; Balance of U.S. Draw Areas Annual Number Of Households With The Potential To Rent/Purchase Within The City of South Bend 7,565 Annual Number Of Target Market Households With Potential To Rent/Purchase Within Study Area B 855 Annual Market Potential Below 30% to 60% to 80% to Above 30% AMI 60% AMI 80% AMI 100% AMI 100% AMI Subtotal Multi-Family For-Rent:92 52 84 41 176 445 Multi-Family For-Sale:9 10 14 16 46 95 Single-Family Attached For-Sale:20 19 26 16 54 135 Single-Family Detached For-Sale:38 8 31 8 95 180 Total:159 89 155 81 371 855 Percent:18.6% 10.4% 18.1% 9.5% 43.4%100.0% Note:For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. SOURCE: Claritas, Inc.; Zimmerman/Volk Associates, Inc. Table 2 Annual Market Potential By Lifestage And Income Derived From Purchase And Rental Propensities Of Draw Area Households With The Potential To Move To Study Area B Each Year Over The Next Five Years Based On Housing Preferences And Income Levels Study Area B City of South Bend, St. Joseph County, Indiana Below 30% to 60% to 80% to Above Total 30% AMI 60% AMI 80% AMI 100% AMI 100% AMI Number of Households:855 159 89 155 81 371 Empty Nesters & Retirees 30.4% 22.0% 29.2% 25.8% 30.9% 36.1% Traditional & Non-Traditional Families 27.5% 34.6% 18.0% 31.6% 27.1% 25.1% Younger Singles & Couples 42.1% 43.4% 52.8% 42.6% 42.0% 38.8% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Note: For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. SOURCE: Claritas, Inc.; Zimmerman/Volk Associates, Inc. Table 3 Page 1 of 3 Summary Of Selected Rental Properties City of South Bend, St. Joseph County, Indiana January, 2018 Number Unit Base Avg. Unit Rents per Property of Units Type Rent Sizes Sq. Ft. Amenities Address Belleville Park Apts. (2003) 208 Business center, 4940 Belleville Circle 1br/1ba $478 to 734 to $0.65 to clubhouse, Walk Score: 11 $550 816 $0.67 playground. 2br/1ba $650 939 $0.69 2br/2ba $650 997 $0.65 3br/2ba $750 1,154 $0.65 4br/2ba $709 to 1,366 to $0.52 to $850 1,448 $0.59 Mar-Main Apts (1922) 136 Fitness center, 125 W. Marion Street Studio/1ba $515 to 400 to $1.08 to clubhouse. Walk Score: 74 $595 550 $1.29 1br/1ba $685 675 $1.01 1br/1ba/den $745 775 $0.96 1br/1ba/sunroom $745 775 $0.96 1br/1.5ba $725 780 $0.93 2br/1ba $800 800 $1.00 Washington Dunbar 80 Playground. (Renovated 2010)2br/1ba $525 to 550 $0.95 to 118 N. Walnut Street $661 $1.20 Walk Score: 1 3br/2ba $699 to 1,100 $0.64 to $756 $0.69 Cedar Glen Apts.181 Playground, (1951; Renovated 2013)1br/1ba $555 527 $1.05 courtyard. 425 S. 25th Street 2br/1ba $565 to 664 to $0.78 to Walk Score: 35 $595 763 $0.85 Monroe Park Apts. (1994) 57 Laundry facilities. 526 Fellows Street 1br/1ba $579 700 $0.83 Walk Score: 58 2br/1ba TH $674 900 $0.75 3br/2ba TH $764 1,020 $0.75 Robertson's Apts. (1998)92 Seniors 55+ 211 South Michigan Studio/1ba $582 575 $1.01 Walk Score: 80 1br/1ba $592 750 $0.79 2br/1ba $748 1,050 $0.71 SOURCE: Zimmerman/Volk Associates, Inc. Table 3 Page 2 of 3 Summary Of Selected Rental Properties City of South Bend, St. Joseph County, Indiana January, 2018 Number Unit Base Avg. Unit Rents per Property of Units Type Rent Sizes Sq. Ft. Amenities Address Riverside North Apts. (1966) 145 Fitness center, 1587 Riverside Drive 1br/1ba $610 to 800 to $0.76 to pool, Walk Score: 42 $805 820 $0.98 car wash station, 2br/1ba $700 to 890 to $0.79 to BBQ/picnic area. $880 900 $0.98 2br/2ba $765 to 1,000 to $0.75 to $945 1,255 $0.77 3br/2ba $1,015 to 1,410 $0.72 to $1,065 $0.76 Hurwich Farms 396 Fitness center, 2701 Appaloosa Lane 1br/1ba $720 692 $1.04 clubhouse, pool. Walk Score: 48 2br/2ba $850 932 $0.91 sport courts. Central HS Apts. (1913) 106 Fitness center. 330 West Colfax Avenue 1br/1ba $835 to 590 to $1.12 to Walk Score: 84 $865 774 $1.42 2br/1ba $915 to 803 to $0.89 to $1,050 1,181 $1.14 1br/1.5ba $950 957 $0.99 2br/1.5ba $1,085 to 1,059 $1.02 to $1,395 1,579 $1.32 2br/1ba $1,320 to 1,453 to $0.82 to $1,520 1,856 $0.91 3br/1ba $1,510 1,856 $0.81 Aurum (2014)60 Clubhouse, 825 Sorin Street 1br/1ba $899 to 596 to $1.51 to putting green, Walk Score: 72 $920 602 $1.53 business center. 2br/2ba $1,299 to 1,139 to $1.14 to $1,549 1,299 $1.19 Stephenson Mills 40 Laundry facility. 332 West Colfax Avenue 1br/1ba $909 to 619 to $1.13 to (rental office address)$995 883 $1.47 Walk Score: 77 2br/1ba $1,155 to 1,094 to $0.89 to $1,325 1,489 $1.06 2br/2ba $1,290 to 1,132 to $0.95 to $1,425 1,500 $1.14 SOURCE: Zimmerman/Volk Associates, Inc. Table 3 Page 3 of 3 Summary Of Selected Rental Properties City of South Bend, St. Joseph County, Indiana January, 2018 Number Unit Base Avg. Unit Rents per Property of Units Type Rent Sizes Sq. Ft. Amenities Address Pointe at St. Joseph 79 Fitness center, 307 East Lasalle Avenue 1br/1ba $925 to 784 to $1.18 to business center, Walk Score: 78 $955 700 $1.36 clubhouse, pool. 2br/1.5ba $1,120 to 1,020 $1.10 to $1,195 $1.17 2br/2ba $1,130 to 1,032 to $1.09 to $1,235 1,151 $1.07 2br/2ba/den $1,225 to 1,076 $1.14 to $1,300 $1.21 The Foundry Lofts (2009) 266 Fitness center, 1233 North Eddy Street 1br/1ba $1,337 to 625 to $2.14 to business center, Walk Score: 70 $1,685 776 $2.17 clubhouse, 2br/2ba $1,827 to 866 to $1.88 to rooftop deck. $2,107 1,123 $2.11 3br/2.5ba $2,053 to 1,189 to $1.73 to $3,606 1,528 $2.36 SOURCE: Zimmerman/Volk Associates, Inc. Table 4 Summary Of For-Sale Multi-Family And Single-Family Attached Listings City of South Bend, St. Joseph County, Indiana January, 2018 Unit Beds/ Unit Price Unit Size Price Per Total Total Development (Date Opened) Type Baths Range Range Sq. Ft. Units Sales Address/Developer . . . . . . . . . . New Construction . . . . . . . . . . Corby Lawrence TH (2017)TH 4br/3.5ba $365,000 3,303 $111 9 6 East Corby Boulevard 3br/2.5ba End Unit $379,900 2,270 $167 4br/3.5ba $424,945 2,993 $142 . . . . . . . . . . Resales . . . . . . . . . . 2500 Topsfield Rd (1964)CO 1br/1ba $47,500 800 $59 1br/1ba $59,900 800 $75 Cornwall Court (1983)TH 2br/1.5ba $85,000 1,054 $81 Lansdown Blvd (1982)TH 3br/1.5ba $99,900 2,162 $46 Coventry Trail (1973)TH 2br/2.5ba $145,000 1,616 $90 River Race (2012)TH 4br/4.5ba $724,900 3,096 $234 Ivy Quad (2015)CO 4br/3.5ba $749,000 2,375 $315 SOURCE: Zimmerman/Volk Associates, Inc. Multiple Listing Service, Table 5 Page 1 of 2 Summary of Selected Single-Family Listings New Construction Priced Under $300,000 City of South Bend, St. Joseph County, Indiana January, 2018 Lot Unit List Unit Subdivision/Area Size Year Built Price Size Price psf Configuration Jade Crossings 0.47 2006-2018 . . . Available floorplans . . . Allen Edwin Homes $176,900 1,458 $121 3br/2ba $190,900 1,743 $110 3br/2ba $193,900 2,040 $95 3br/2ba $199,900 2,174 $92 3br/2ba $207,900 1,702 $122 3br/2.5ba $208,900 1,412 $148 3br/2ba $211,900 1,870 $113 3br/2.5ba $213,900 1,600 $134 3br/2ba $220,900 2,075 $106 3br/2.5ba $220,900 2,121 $104 3br/2.5ba $223,900 2,246 $100 3br/2.5ba $232,900 2,393 $97 3br/2.5ba $237,900 2,410 $99 4br/2.5ba $237,900 2,626 $91 4br/2.5ba $241,900 1,658 $146 3br/2ba $245,900 2,244 $110 3br/2.5ba $253,900 2,340 $109 3br/2.5ba Laurel Creek . . . Available floorplans . . . Allen Edwin Homes $197,900 1,743 $114 3br/2ba $206,900 2,174 $95 3br/2ba $214,900 1,702 $126 3br/2.5ba $214,900 1,682 $128 3br/2.5ba $218,900 1,870 $117 3br/2.5ba $227,900 2,075 $110 3br/2.5ba $239,900 2,393 $100 3br/2.5ba Lafayette Falls 0.24 2004-2018 . . . Available floorplans . . . Allen Edwin Homes $211,900 1,682 $126 3br/2.5ba $211,900 1,702 $125 3br/2ba $212,900 1,412 $151 3br/2ba $215,900 1,870 $115 3br/2.5ba $217,900 1,600 $136 3br/2ba $224,900 2,075 $108 3br/2.5ba $224,900 2,121 $106 3br/2.5ba $227,900 2,246 $101 3br/2.5ba $236,900 2,393 $99 3br/2.5ba $241,900 2,626 $92 4br/2.5ba $241,900 2,410 $100 4br/2.5ba $245,900 1,658 $148 3br/2ba $249,900 2,244 $111 3br/2.5ba SOURCE: Multiple Listing Service; Zimmerman/Volk Associates, Inc. Table 5 Page 2 of 2 Summary of Selected Single-Family Listings New Construction Priced Under $300,000 City of South Bend, St. Joseph County, Indiana January, 2018 Lot Unit List Unit Subdivision/Area Size Year Built Price Size Price psf Configuration Blue Winged Trail 0.23 2017 $183,900 1,312 $140 3br/2ba Cherry Pointe Drive 0.17 2017 $186,900 1,743 $107 3br/2.5ba Blue Winged Trail 0.26 2017 $188,900 1,321 $143 3br/2ba Common Elder Trail 0.26 2017 $193,900 1,453 $133 3br/2.5ba Sapphire Drive 0.16 2017 $202,900 2,040 $99 3br/2.5ba Kiefer Way 0.20 2017 $209,900 3,166 $66 3br/2.5ba St. Charles Avenue 0.15 2016 $267,500 1,634 $164 3br/2ba SOURCE: Multiple Listing Service; Zimmerman/Volk Associates, Inc. Table 6 Page 1 of 2 Target Groups For New Multi-Family For Rent Study Area B City of South Bend, St. Joseph County, Indiana . . . . . Number of Households . . . . . Empty Nesters 30% to Above Percent of & Retirees**80% AMI† 80% AMI†Total Total Urban Establishment 0 5 5 1.4% Mainstream Empty Nesters 3 11 14 4.0% Middle-American Retirees 2 7 9 2.5% Country Couples 1 4 5 1.4% Cosmopolitan Couples 2 3 5 1.4% Blue-Collar Retirees 5 8 13 3.7% Middle-Class Move-Downs 2 2 4 1.1% Small-Town Seniors 3 5 8 2.3% Hometown Seniors 3 5 8 2.3% Second City Seniors 5 5 10 2.8% Subtotal:26 55 81 22.9% Traditional & Non-Traditional Families†† Small-Town Families 1 3 4 1.1% Uptown Families 5 11 16 4.5% Hometown Families 3 4 7 2.0% In-Town Families 10 11 21 5.9% New American Strivers 10 10 20 5.7% Subtotal:29 39 68 19.3% † For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. **Predominantly one- and two-person households. SOURCE: Claritas, Inc. Zimmerman/Volk Associates, Inc. Table 6 Page 2 of 2 Target Groups For New Multi-Family For Rent Study Area B City of South Bend, St. Joseph County, Indiana . . . . . Number of Households . . . . . Younger 30% to Above Percent of Singles & Couples**80% AMI†80% AMI†Total Total New Bohemians 2 7 9 2.5% The VIPs 3 11 14 4.0% Fast-Track Professionals 3 11 14 4.0% Suburban Achievers 3 6 9 2.5% Suburban Strivers 10 15 25 7.1% Small-City Singles 10 15 25 7.1% Downtown Couples 2 2 4 1.1% Downtown Proud 2 2 4 1.1% Twentysomethings 19 27 46 13.0% Second-City Strivers 14 17 31 8.8% Multi-Ethnic Singles 13 10 23 6.5% Subtotal:81 123 204 57.8% Total Households:136 217 353 100.0% Percent of Total:38.5%61.5%100.0% † For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. **Predominantly one- and two-person households. SOURCE: Claritas, Inc. Zimmerman/Volk Associates, Inc. Table 7 Target Groups For New Multi-Family For Sale Study Area B City of South Bend, St. Joseph County, Indiana . . . . . Number of Households . . . . . Empty Nesters 60% to Above & Retirees**100% AMI† 100% AMI†Total Percent Suburban Establishment 0 5 5 6.6% Second City Establishment 0 5 5 6.6% Mainstream Empty Nesters 2 6 8 10.5% Middle-American Retirees 3 0 3 3.9% Blue-Collar Retirees 4 6 10 13.2% Small Town Seniors 1 0 1 1.3% Subtotal:10 22 32 42.1% Traditional & Non-Traditional Families†† Uptown Families 1 4 5 6.6% In-Town Families 2 1 3 3.9% Subtotal:3 5 8 10.5% Younger Singles & Couples** The VIPs 1 4 5 6.6% Fast-Track Professionals 1 4 5 6.6% Suburban Achievers 2 3 5 6.6% Suburban Strivers 2 0 2 2.6% Small-City Singles 7 5 12 15.8% Twentysomethings 2 3 5 6.6% Multi-Ethnic Singles 2 0 2 2.6% Subtotal:17 19 36 47.4% Total Households:30 46 76 100.0% Percent of Total: 39.5%60.5%100.0% † For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. **Predominantly one- and two-person households. †† Predominantly three -to five-person households. SOURCE: Claritas, Inc. Zimmerman/Volk Associates, Inc. Table 8 Page 1 of 2 Target Groups For New Single-Family Attached For Sale Study Area B City of South Bend, St. Joseph County, Indiana . . . . . Number of Households . . . . . Empty Nesters 60% to Above & Retirees**100% AMI† 100% AMI†Total Percent Suburban Establishment 2 3 5 5.2% Traditional Couples 1 4 5 5.2% Second City Establishment 2 1 3 3.1% Mainstream Empty Nesters 2 3 5 5.2% Middle-American Retirees 2 0 2 2.1% Country Couples 1 3 4 4.2% Blue-Collar Retirees 2 4 6 6.3% Middle-Class Move-Downs 2 1 3 3.1% Small-Town Seniors 3 1 4 4.2% Hometown Seniors 1 1 2 2.1% Subtotal:18 21 39 40.6% Traditional & Non-Traditional Families†† Fiber-Optic Families 1 4 5 5.2% Kids 'r' Us 2 3 5 5.2% Multi-Ethnic Families 2 2 4 4.2% Uptown Families 4 8 12 12.5% In-Town Families 4 2 6 6.3% New American Strivers 2 1 3 3.1% Subtotal:15 20 35 36.5% † For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. **Predominantly one- and two-person households. †† Predominantly three -to five-person households. SOURCE: Claritas, Inc. Zimmerman/Volk Associates, Inc. Table 8 Page 2 of 2 Target Groups For New Single-Family Attached For Sale Study Area B City of South Bend, St. Joseph County, Indiana . . . . . Number of Households . . . . . Younger 60% to Above Singles & Couples**100% AMI† 100% AMI†Total Percent Suburban Achievers 1 2 3 3.1% Suburban Strivers 3 2 5 5.2% Small-City Singles 2 4 6 6.3% Twentysomethings 1 1 2 2.1% Second-City Strivers 1 2 3 3.1% Multi-Ethnic Singles 1 2 3 3.1% Subtotal:9 13 22 22.9% Total Households:42 54 96 100.0% Percent of Total: 43.8%56.3%100.0% † For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. **Predominantly one- and two-person households. SOURCE: Claritas, Inc. Zimmerman/Volk Associates, Inc. Table 9 Target Groups For New Urban Single-Family Detached For Sale Study Area B City of South Bend, St. Joseph County, Indiana . . . . . Number of Households . . . . . Empty Nesters 60% to Above & Retirees**100% AMI† 100% AMI†Total Percent Traditional Couples 1 2 3 2.2% Mainstream Empty Nesters 1 7 8 6.0% Middle-American Retirees 2 17 19 14.2% Country Couples 1 3 4 3.0% Hometown Retirees 2 2 4 3.0% Blue-Collar Retirees 2 5 7 5.2% Small-Town Seniors 0 5 5 3.7% Hometown Seniors 2 3 5 3.7% Second City Seniors 1 1 2 1.5% Subtotal:12 45 57 42.5% Traditional & Non-Traditional Families†† Unibox Transferees 1 4 5 3.7% Button-Down Families 1 4 5 3.7% Full-Nest Suburbanites 1 3 4 3.0% Kids 'r' Us 3 4 7 5.2% Traditional Families 2 2 4 3.0% Small-Town Families 1 3 4 3.0% Four-By-Four Families 2 2 4 3.0% Uptown Families 3 3 6 4.5% Hometown Families 1 3 4 3.0% In-Town Families 7 8 15 11.2% New American Strivers 1 2 3 2.2% Subtotal:23 38 61 45.5% Younger Singles & Couples** Blue-Collar Traditionalists 1 2 3 2.2% Suburban Strivers 1 6 7 5.2% Small-City Singles 2 4 6 4.5% Subtotal:4 12 16 11.9% Total Households:39 95 134 100.0% Percent of Total: 29.1%70.9%100.0% † For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. **Predominantly one- and two-person households. †† Predominantly three -to five-person households. SOURCE: Claritas, Inc. Zimmerman/Volk Associates, Inc. Table 10 Optimum Market Position--Affordable/Workforce, and Market-Rate Dwelling Units Mixed-Income Development Study Area B City of South Bend, St. Joseph County, IndianaMarch, 2018 Base Base Base Annual Percent of Rent/Price Unit Size Rent/Price Market Households Housing Type Range*Range Per Sq. Ft.*Capture Number 52.8% Multi-Family For-Rent: Mansion Buildings (4-6 du per bldg); Courtyard Buildings 36 to 42 150 Lofts $550 to 500 to $1.10 to 15 to 18 Studio/1ba and 1br/1ba $900 700 $1.29 203 Apartments $850 to 650 to $1.31 to 21 to 24 1br/1ba to 3br/2ba $1,750 1,250 $1.40 12.9% Multi-Family For-Sale: Mansion Buildings (4-6 du per building)8 to 9 76 Condominiums $70,000 to 650 to $108 to 8 to 9 1br/1ba and 2br/2ba $145,000 1,000 $145 14.6% Single-Family Attached For-Sale: Duplexes; Triplexes; Rowhouses; Townhouses 5 to 8 60 Triplexes; Rowhouses $80,000 to 750 to $107 to 3 to 5 1br/1.5ba to 2br/1.5ba $150,000 950 $158 36 Duplexes; Townhouses $135,000 to 1,200 to $113 to 2 to 3 2br/2.5ba to 3br/2.5ba $200,000 1,300 $154 20.3% Single-Family Detached For-Sale: Cottages; Bungalows; Urban Houses 7 to 10 75 Cottages/Bungalows $95,000 to 900 to $106 to 4 to 6 2br/1ba and 3br/1.5ba $160,000 1,400 $114 59 Urban Houses $165,000 to 1,250 to $132 to 3 to 4 Two- to Three-Bedrooms $225,000 1,450 $155 100.5% 56 to 69 659 target households new units/year 20 to 27 NOTE:Base rents/prices in year 2018 dollars and exclude floor and view premiums, new ownership options and upgrades.units/year SOURCE: Zimmerman/Volk Associates, Inc. ZIMMERMAN/VOLK ASSOCIATES, INC. Post Office Box 4907 Clinton, New Jersey 08809 908 735-6336 info@ZVA.cc • www.ZVA.cc Residential Market Analysis Across the Urban-to-Rural Transect ASSUMPTIONS AND LIMITATIONS— Every effort has been made to insure the accuracy of the data contained within this analysis. Demographic and economic estimates and projections have been obtained from government agencies at the national, state, and county levels. Market information has been obtained from sources presumed to be reliable, including developers, owners, and/or sales agents. However, this information cannot be warranted by Zimmerman/Volk Associates, Inc. While the proprietary residential target market methodology™ employed in this analysis allows for a margin of error in base data, it is assumed that the market data and government estimates and projections are substantially accurate. Absorption scenarios are based upon the assumption that a normal economic environment will prevail in a relatively steady state during development of the subject property. Absorption paces are likely to be slower during recessionary periods and faster during periods of recovery and high growth. Absorption scenarios are also predicated on the assumption that the product recommendations will be implemented generally as outlined in this report and that the developer will apply high-caliber design, construction, marketing, and management techniques to the development of the property. Recommendations are subject to compliance with all applicable regulations. Relevant accounting, tax, and legal matters should be substantiated by appropriate counsel. o ZIMMERMAN/VOLK ASSOCIATES, INC. Post Office Box 4907 Clinton, New Jersey 08809 908 735-6336 info@ZVA.cc • www.ZVA.cc Residential Market Analysis Across the Urban-to-Rural Transect RIGHTS AND STUDY OWNERSHIP— Zimmerman/Volk Associates, Inc. retains all rights, title and interest in the ZVA residential target market methodology™ and target market descriptions contained within this study. The specific findings of the analysis are the property of the client and can be distributed at the client’s discretion. © Zimmerman/Volk Associates, Inc., 2018 o An Analysis of Residential Market Potential Study Area C The City of South Bend St. Joseph County, Indiana March, 2018 Conducted by On Behalf of ZIMMERMAN/VOLK ASSOCIATES, INC. THE CITY OF SOUTH BEND P.O. Box 4907 227 West Jefferson Boulevard Clinton, New Jersey 08809 South Bend, Indiana 46601 ZIMMERMAN/VOLK ASSOCIATES, INC. Post Office Box 4907 Clinton, New Jersey 08809 908 735-6336 info@ZVA.cc • www.ZVA.cc Residential Market Analysis Across the Urban-to-Rural Transect Study Contents An Analysis of Residential Market Potential: Study Area C 1 Executive Summary 1 Introduction 5 Annual Market Potential for the City of South Bend 6 Annual Market Potential for Study Area C 8 Target Market Analysis 12 The Market Context 15 Optimum Market Position: Study Area C 19 Proposed Rent and Price Ranges: Study Area C 31 Market Capture: Study Area C 32 Study Area C Building and Unit Types 34 Supporting Tables 37 Table 1: Annual Market Potential For New And Existing Housing Units Table 2: Annual Market Potential By Lifestage And Income Level Table 3: Summary Of Selected Rental Properties Table 4: Summary Of For-Sale Multi-Family and Single-Family Detached Listings Table 5: Summary Of Single-Family Listings: New Construction Priced Under $300,000 Table 6: Target Groups For New Multi-Family For Rent Table 7: Target Groups For New Multi-Family For Sale Table 8: Target Groups For New Single-Family Attached For Sale Table 9: Target Groups For New Urban Single-Family Detached For Sale Table 10: Optimum Market Position Affordable/Workforce and Market-Rate Dwelling Units Mixed-Income Development Assumptions and Limitations Copyright o ZIMMERMAN/VOLK ASSOCIATES, INC. Post Office Box 4907 Clinton, New Jersey 08809 908 735-6336 info@ZVA.cc • www.ZVA.cc Residential Market Analysis Across the Urban-to-Rural Transect AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 EXECUTIVE SUMMARY This study has determined that, from the market perspective, between 71 and 93 new mixed-income rental and for-sale dwelling units could be developed and absorbed within Study Area C each year over the next five years. The housing mix of 71 to 93 units would include 39 to 47 new rental units, 10 to 12 new condominiums, six to nine new duplexes/triplexes/rowhouses/townhouses, and 16 to 25 new cottages/bungalows/houses. For the purposes of this analysis, Study Area C encompasses the residential portions of Census Tracts 22, 27, 28, and 34, including the eastern section of the Westside Neighborhood and Rum Village. This study examines affordability based on the following general income groupings: • Households with incomes below 30 percent AMI (the majority of these households typically qualify only for public housing or older existing units); • Households with incomes between 30 and 60 percent of AMI (these households typically qualify for low-income housing tax credit units, existing affordable rental housing, or heavily subsidized ownership housing); • Households with incomes between 60 and 80 percent of AMI (these households typically qualify for new workforce or affordable rental housing or subsidized ownership housing); • Households with incomes between 80 and 100 percent AMI (these households typically qualify for existing market-rate rentals or new workforce or affordable for-sale housing); and • Households with incomes above 100 percent AMI (these households generally have sufficient incomes to rent or purchase market-rate housing). AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 2 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. A total of 1,250 households represent the annual potential market for new and existing housing units in Study Area C and have been segmented by income, based on the St. Joseph County, IN area median family income (AMI), which, for fiscal year 2017 is $61,500 for a family of four. The combined tenure and housing type preferences and financial capabilities of the 1,250 target households are shown on the following table. Tenure/Housing Type Propensities by Income Average Annual Market Potential For New and Existing Housing Units Study Area C City of South Bend, St. Joseph County, Indiana . . . . . . . . . HOUSEHOLDS . . . . . . . . HOUSING TYPE NUMBER PERCENT Multi-family for-rent < 30% AMI 125 10.0% 30% to 60% AMI 84 6.7% 60% to 80% AMI 98 7.8% 80% to 100% AMI 97 7.8% > 100% AMI 111 8.9% Total multi-family for-rent 515 41.2% Multi-family for-sale < 30% AMI 17 1.4% 30% to 60% AMI 13 1.0% 60% to 80% AMI 22 1.8% 80% to 100% AMI 28 2.2% > 100% AMI 50 4.0% Total multi-family for-sale 130 10.4% Single-family attached for-sale < 30% AMI 19 1.5% 30% to 60% AMI 15 1.2% 60% to 80% AMI 30 2.4% 80% to 100% AMI 29 2.3% > 100% AMI 57 4.6% Total single-family attached for-sale 150 12.0% Single-family detached for-sale < 30% AMI 78 6.2% 30% to 60% AMI 56 4.5% 60% to 80% AMI 67 5.4% 80% to 100% AMI 60 4.8% > 100% AMI 194 15.5% Total single-family detached for-sale 455 36.4% Grand total 1,250 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. Summarizing the incomes and financial capabilities of the 1,250 target households that represent the annual potential market for new and renovated housing units in Study Area C, 19.1 percent (239 AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 3 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. households) have incomes at 30 percent or less than the AMI; 13.4 percent (168 households) have incomes between 30 and 60 percent AMI; 17.4 percent (217 households) have incomes between 60 and 80 percent AMI; 17.1 percent (214 households) have incomes between 80 and 100 percent AMI; and 33.0 percent (412 households) have incomes above 100 percent AMI. —OPTIMUM MARKET POSITION— The 39 to 47 new mixed-income rental lofts and apartments in courtyard buildings that could be absorbed each year include the following: • 20 to 24 studio and one-bedroom lofts ranging in size between 550 and 750 square feet, with proposed base rents ranging between $600 and $900 per month ($1.09 to $1.20 per square foot). • 19 to 23 one-, two-, and three-bedroom apartments ranging in size between 600 and 1,300 square feet, with proposed base rents ranging between $750 and $1,500 per month ($1.15 to $1.25 per square foot). • Absorption has been forecast at a 10 to 12 percent capture of the annual potential multi-family for-rent market. The 10 to 12 new mixed-income mansion condominiums that could be absorbed each year include the following: • One- and two-bedroom condominiums ranging in size between 650 and 1,000 square feet, with proposed base prices ranging between $70,000 and $130,000 ($108 to $130 per square foot). • Absorption has been forecast at a 10 to 12 percent capture of the annual potential multi-family for-sale market. The six to nine new mixed-income for-sale duplexes, triplexes, rowhouses, and townhouses that could be absorbed each year include the following: • 2 to 4 one- and two-bedroom triplexes and rowhouses ranging in size between 750 and 1,100 square feet, with proposed base prices ranging between $80,000 and $140,000 ($107 to $127 per square foot). AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 4 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • 4 to 5 two- and three-bedroom duplexes and townhouses ranging in size between 1,200 and 1,650 square feet, with proposed base prices ranging between $125,000 and $195,000 ($104 to $118 per square foot). • Absorption has been forecast at a five to 7.5 percent capture of the annual potential single-family attached for-sale market. The 16 to 25 new mixed-income for-sale cottages, bungalows, and two-story houses that could be absorbed each year include the following: • 5 to 8 two- and three-bedroom cottages and bungalows ranging in size between 900 and 1,400 square feet, with proposed base prices ranging between $90,000 and $145,000 ($100 to $104 per square foot). • 11 to 17 three- and four-bedroom two-story houses ranging in size between 1,350 and 1,750 square feet, with proposed base prices ranging between $150,000 and $225,000 ($111 to $129 per square foot). • Absorption is forecast at a five to 7.5 percent capture of the annual potential single- family detached for-sale market. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 5 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. INTRODUCTION The purpose of this study is to determine the depth and breadth of the potential market for new and renovated mixed-income dwelling units within Study Area C, City of South Bend, Indiana and includes determination of the target households, the appropriate residential mix corresponding to the housing preferences and financial capabilities of the target households, and the optimum market position for new and renovated rental and for-sale housing units within the Study Area. For the purposes of this analysis, Study Area C encompasses the residential portions of Census Tracts 22, 27, 28,and 34, including the eastern section of the Westside Neighborhood and Rum Village. The extent and characteristics of the potential market for new and existing housing units within Study Area C were identified using Zimmerman/Volk Associates’ proprietary target market methodology. In contrast to conventional supply/demand analysis—which is limited to supply-side dynamics and baseline demographic projections—target market analysis establishes the market potential for new and existing housing based on the housing preferences and socio-economic characteristics of households in the relevant draw areas. The target market methodology is particularly effective in defining housing potential because it encompasses not only basic demographic characteristics, such as income qualification and age, but also less-frequently analyzed attributes such as mobility rates, lifestage, lifestyle patterns, and household compatibility issues (see METHODOLOGY, provided together with migration and detailed target market tables in a separate document). In brief, this study determined: • Where the potential renters and buyers of new and existing housing units in the City of South Bend and Study Area C are likely to move from (the draw areas); • How many households have the potential to move within and to the city and the Study Area each year if appropriate housing units were to be made available (depth and breadth of the market); • Who the households are that represent the potential market for new units in the Study Area (the target markets); AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 6 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • What their housing preferences are in aggregate (rental or ownership, multi-family or single- family); • What their range of affordability is by housing type (income qualifications); • What their current housing alternatives are (rental and for-sale residential development in the city); • What the target markets are currently able to pay to rent or purchase new dwelling units in Study Area C (affordable and market-rate base rents and prices); and • How quickly the new units will lease or sell (absorption forecasts). AVERAGE ANNUAL MARKET POTENTIAL FOR THE CITY OF SOUTH BEND Analysis of migration, mobility, socio-economic and lifestyle characteristics of households currently living within defined draw areas is integral to the determination of the depth and breadth of the potential market for new and existing housing units within the City of South Bend and the Study Area. The extent and characteristics of the potential market for new residential units within the City of South Bend and the Study Area have been examined through detailed analysis of households living within the relevant draw areas. These draw areas were determined through analysis of migration and mobility data, with additional supporting data drawn from the 2016 American Community Survey for the City of South Bend and St. Joseph County, and incorporating information obtained from real estate brokers, sales and leasing agents and other knowledgeable sources, as well as from field investigation. Where are the potential renters and buyers of new and existing housing units in the City of South Bend likely to move from? Analysis of the most recent St. Joseph County migration and mobility data available from the Internal Revenue Service—from 2010 through 2014—shows that the number of households moving into the county into peaked at 5,280 households in 2012, then fell to 3,855 households by 2014. (See Appendix One, Table 1.) Elkhart County, Indiana, directly to the east, consistently accounts for approximately 16 to 18 percent of household migration into St. Joseph County. Berrien County, Michigan, due north of St. Joseph County, represents between approximately six and seven percent AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 7 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. of St. Joseph County migration, followed by Cook County, Illinois—at between four and 5.5 percent—and Marshall County, Indiana—at four to five percent. All other counties accounted individually for less than four percent of household migration into St. Joseph County. Over the study period, annual out-migration from St. Joseph County reached a recent peak in 2011, with 5,675 out-migrating households, then falling each year thereafter to reach just over 4,000 households by 2014. Approximately 13 to 16 percent of out-migrating St. Joseph County households have moved to Elkhart County, representing 640 to 855 St. Joseph County movers over the study period. Net migration—the difference between households moving into the county and those moving out— showed household losses over the entire study period, with the smallest loss—155 households— occurring in 2014, at the end of the study period, and the largest loss—650 households—in 2010, at the beginning of the study period. Based on the migration and mobility data, then, the draw areas for the City of South Bend and the Study Area have been delineated as follows (see also METHODOLOGY): • The local draw area, covering households living within the South Bend city limits. • The county draw area, covering households living elsewhere in St. Joseph County. • The regional draw area, covering households with the potential to move to the City of South Bend from Elkhart, Berrien, Cook, and Marshall Counties. • The national draw area, covering households with the potential to move to the City of South Bend from all other U.S. counties. As derived from the updated migration and mobility analyses, then, the draw area distribution of all households with the potential to move within or to the City of South Bend each year over the next five years is therefore as follows (see also Appendix One, Table 8): Average Annual Market Potential by Draw Area City of South Bend, St. Joseph County, Indiana City of South Bend: 51.9% Balance of St. Joseph County: 23.3% Regional Draw Area (Elkhart, Berrien, Cook, and Marshall Counties): 8.1% Balance of the U.S.: 16.7% Total: 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 8 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. How many households have the potential to move within and to the city each year? As determined by the target market methodology, which accounts for household mobility within the City of South Bend, as well as migration and mobility patterns for households currently living in all other counties, an annual average of 7,565 households represent the potential market for new and existing housing units within the city each year over the next five years. Approximately 48 percent of the target households will be moving to the city from outside the South Bend city limits. AVERAGE ANNUAL MARKET POTENTIAL FOR STUDY AREA C Where are the potential renters and buyers of new and existing housing units in Study Area C likely to move from? The target market methodology identifies those households with a preference for living in downtown, in-town, and walkable neighborhoods. After discounting for those segments of the city’s annual potential market that typically choose suburban and/or rural locations, the distribution of draw area market potential for new and existing dwelling units within Study Area C would be as follows (see also Appendix One, Table 9): Average Annual Market Potential by Draw Area Study Area C City of South Bend, St. Joseph County, Indiana City of South Bend: 60.0% Balance of St. Joseph County: 21.2% Regional Draw Area (Elkhart, Berrien, Cook, and Marshall Counties): 6.8% Balance of the U.S.: 12.0% Total: 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. How many households have the potential to move to Study Area C each year over the next five years? Based on the analysis, which accounts for household mobility within the City of South Bend and the balance of St. Joseph County, as well as migration and mobility patterns for households currently living in all other cities and counties across the country, an annual average of 1,250 traditional and non-traditional families, younger singles and couples, and empty nesters and retirees of all incomes AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 9 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. represent the potential market for new and existing housing units within the Study Area each year over the next five years. What are their housing preferences in aggregate? The housing preferences of the draw area households—derived from their tenure (rental/ownership) choices and broad financial capacities—are outlined on the following table (see Table 1 following the text): Average Annual Potential Market for New and Existing Housing Units Study Area C City of South Bend, St. Joseph County, Indiana NUMBER OF PERCENT HOUSING TYPE HOUSEHOLDS OF TOTAL Multi-family for-rent 515 41.2% (lofts/apartments, leaseholder) Multi-family for-sale 130 10.4% (lofts/apartments, condo/co-op ownership) Single-family attached for-sale 150 12.0% (townhouses/live-work, fee-simple/ condominium ownership) Single-family detached for-sale 455 36.4% (houses, fee-simple ownership) Total 1,250 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. Nationally, although market propensities for higher-density urban housing continues to grow, in Study Area C, the potential market has a higher preference for single-family detached houses compared to Study Areas A and B. Slightly over 41 percent of the 1,250 target households comprise the market for rental dwelling units; the percentage of households in this Study Area that cannot afford to buy is also higher than in Study Areas A and B. Younger people in this market are severely hampered by lack of an adequate down payment. The remaining 59 percent of the market would choose some form of ownership housing (close to the current estimated homeownership rate in the city of approximately 60 percent). Approximately 62 percent of the annual potential ownership market would prefer single-family detached units—which currently represent an estimated 73 percent of the existing housing stock in South Bend. The AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 10 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. remaining 38 percent of the ownership market would choose for-sale single-family attached (duplexes/townhouses/live-work units) or multi-family units (condominium/co-operative units). What is their range of affordability by housing type? The 1,250 households that represent the annual potential market for new and existing housing units in Study Area C have also been segmented by income, based on South Bend-Mishawaka, IN metro area median family income (AMI), which, for fiscal year 2017 is $61,500 for a family of four.This study examines affordability based on the following general income groupings: • Households with incomes below 30 percent AMI (the majority of these households typically qualify only for public housing or older existing units); • Households with incomes between 30 and 60 percent of AMI (these households typically qualify for low-income housing tax credit units, existing affordable rental housing, or heavily subsidized ownership housing); • Households with incomes between 60 and 80 percent of AMI (these households typically qualify for new workforce or affordable rental housing or subsidized ownership housing); • Households with incomes between 80 and 100 percent AMI (these households typically qualify for existing market-rate rentals or new workforce or affordable for-sale housing); and • Households with incomes above 100 percent AMI (these households generally have sufficient incomes to rent or purchase market-rate housing). The combined tenure and housing type preferences and financial capabilities of the 1,250 target households are shown on the table following this page. (See again Table 1.) AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 11 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. Tenure/Housing Type Propensities by Income Average Annual Market Potential For New and Existing Housing Units Study Area C City of South Bend, St. Joseph County, Indiana . . . . . . . . . HOUSEHOLDS . . . . . . . . HOUSING TYPE NUMBER PERCENT Multi-family for-rent < 30% AMI 125 10.0% 30% to 60% AMI 84 6.7% 60% to 80% AMI 98 7.8% 80% to 100% AMI 97 7.8% > 100% AMI 111 8.9% Total multi-family for-rent 515 41.2% Multi-family for-sale < 30% AMI 17 1.4% 30% to 60% AMI 13 1.0% 60% to 80% AMI 22 1.8% 80% to 100% AMI 28 2.2% > 100% AMI 50 4.0% Total multi-family for-sale 130 10.4% Single-family attached for-sale < 30% AMI 19 1.5% 30% to 60% AMI 15 1.2% 60% to 80% AMI 30 2.4% 80% to 100% AMI 29 2.3% > 100% AMI 57 4.6% Total single-family attached for-sale 150 12.0% Single-family detached for-sale < 30% AMI 78 6.2% 30% to 60% AMI 56 4.5% 60% to 80% AMI 67 5.4% 80% to 100% AMI 60 4.8% > 100% AMI 194 15.5% Total single-family detached for-sale 455 36.4% Grand total 1,250 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. Summarizing the incomes and financial capabilities of the 1,250 target households that represent the annual potential market for new and renovated housing units in Study Area C, 19.1 percent (239 households) have incomes at 30 percent or less than the AMI; 13.4 percent (168 households) have incomes between 30 and 60 percent AMI; 17.4 percent (217 households) have incomes between 60 and 80 percent AMI; 17.1 percent (214 households) have incomes between 80 and 100 percent AMI; and 33.0 percent (412 households) have incomes above 100 percent AMI. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 12 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. TARGET MARKET ANALYSIS Who are the households that represent the potential market for new and renovated units in Study Area C? The aftermath of the housing crash has seen a measurable shift in market preferences from home ownership to rental dwelling units, particularly among younger households. At the same time, there has been a significant shift in neighborhood preferences from single-use subdivisions toward mixed- use, walkable neighborhoods. This shift has been driven by the convergence of the preferences of the two largest generations in the history of America: the Baby Boomers (currently estimated at just under 74 million), born between 1946 and 1964, and the estimated nearly 89 million Millennials, who were born from 1977 to 1996 and, in 2010, surpassed the Boomers in population. The convergence of two generations of this size—simultaneously reaching a point when housing in walkable neighborhoods matches their life stage—is unprecedented. In addition to their shared preference for walkable urban living, the Boomers and Millennials are changing housing markets in multiple ways. In contrast to the traditional family (married couples with children) that comprised the typical post-war American household, Boomers and Millennials are households of predominantly singles and couples. As a result, nationally, the home-buying market now contains more than 63 percent one- and two-person households, and the 37 percent of the homebuyers that could be categorized as family households are equally likely to be non- traditional as traditional families. One consequence of this evolution is that mixed-income development is now more likely to succeed than when suburban preferences dominated the housing market. As determined by the target market analysis, the general market segments, by lifestage and housing type, that represent the potential market for new and existing housing units in Study Area C include (see also Table 2 following the text: • Traditional and non-traditional family households, single parents with one or two children, as well as traditional families and multi-generational households, with employment centered around the services and production (45.2 percent); AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 13 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • Younger singles and childless couples—including students, young hospital and university affiliates, entry-level white-collar employment, retail workers, waiters and waitresses (28.8 percent); and • Empty nesters and retirees, a few with incomes from social security alone, some who also have pensions, savings and investments, and others who are still working (26.0 percent) Family households hold the largest share of market potential—over 45 percent—for new and renovated housing units within Study Area C. More than 65 percent of these family households are likely to be potential buyers, rather than renters. The target households include a mix of non- traditional families, notably single parents with one to three younger children, and traditional family households, married couples with children. Married couples with children comprise just under 22 percent of all American households (and less than 16 percent in South Bend). Households with children are now increasingly diverse and in Study Area C include a significant number of Hispanic families. More than 21 percent of the family households that comprise the annual potential market for the Study Area have incomes below 30 percent of AMI and typically spend half or more of their incomes on housing costs. Many of these households are single-parent families—primarily In-Town Families—struggling to make ends meet. Almost 13 percent of the family-oriented households have incomes that fall within the 30-to-60 percent income band and another 17.5 percent in the 60-to-80 percent income band. These households include Uptown Families and Kids ‘r’ Us market groups. A significant number of the heads of household in these family groups are blue-collar workers; many of them already live in the Study Area. The remaining 48.6 percent of the family households have incomes at or above 80 percent of AMI. These households are primarily two-income households, with stable middle-management jobs, in government or one of the professions. These households include New Town Families, Button-Down Families, Traditional Families, Small-Town Families, and the most well-to-do Uptown Families. Nearly 62 percent of these family households are already living in the City of South Bend—a majority already live in the Study Area; 16.8 percent are living elsewhere in St. Joseph County. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 14 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. Approximately eight percent would be moving to the Study Area from the regional draw area, and the remaining 13.3 percent would be moving from elsewhere in the U.S., particularly other counties in Indiana. Just under 18 percent of the younger singles and couples that comprise the target markets for the Study Area have incomes that fall below 30 percent of AMI. If they are employed, these households— for the most part Second-City Strivers, Twentysomethings, and Multi-Ethnic Singles—work in part- time or lower-paying jobs, including entry-level retail, such as store clerks, and service occupations, such as waiters and waitresses; many are students. Another 29.4 percent of the households in this market segment have incomes that fall within the 30- to-60 percent and 60-to-80 percent income bands. These include recent college graduates just starting their first jobs, lower-level medical personnel, and general office workers in the target groups of Small-City Singles, Second-City Strivers, and Suburban Strivers as well as those Twentysomethings and Multi-Ethnic Singles, who are employed full-time. The remaining 59.7 percent of the younger singles and couples have incomes that are at or above 80 percent of the AMI. These include the target groups of The VIPs, Fast-Track Professionals, and Suburban Achievers, as well as the higher-earning households among the Small-City Singles, Twentysomethings, and Suburban Strivers, some who are engaged in mid-level office work; some in technology-related fields. Just under 60 percent of the younger singles and couples moving to the Study Area would be moving from elsewhere in the city; 23.6 percent would be moving from elsewhere in St. Joseph County; 5.6 percent would be moving from the regional draw area; and the remaining 11.2 percent would be moving from elsewhere in the U.S. The smallest general market segment, at 26 percent of the annual potential market, is comprised of older households (empty nesters and retirees). A significant number of these target households have grown children who have recently moved out of the family home; many are retired, but a significant number are still working, particularly those with lower household incomes. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 15 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. In this general market segment, approximately 17 percent have incomes below 30 percent of AMI— older singles and couples struggling on limited incomes, mostly from social security—nearly all of whom are living in substandard housing, predominantly Second City Seniors and in this Study Area also Small-Town Seniors and some struggling Middle-American Retirees. Another third of the older target households have incomes between 30 and 80 percent of the area median. These households include some Blue-Collar Retirees, Middle-American Retirees, and Second City Seniors, retired couples who have small pensions or IRAs in addition to social security. Most of these households have incomes clustered in the middle of the range of the AMI. Empty nesters and retirees with incomes at or above 80 percent of AMI comprise just under half of this market segment. These are the most well-to-do households in every older target market group; most of them are still working, accounting for their higher incomes and more stable financial circumstances. Nearly 57 percent of the empty nesters and retirees would be moving from elsewhere within the City of South Bend; just under 32 percent would be moving from elsewhere in St. Joseph County; approximately 6.2 percent would be moving from the regional draw area; and the remaining 10.8 percent would be moving from elsewhere in the U.S. THE MARKET CONTEXT What are their current residential alternatives? —Multi-Family Rental Properties— In January 2018, Zimmerman/Volk Associates compiled data from a variety of sources, including telephone interviews, individual property and rental websites, on 13 selected rental properties, representing nearly 1,850 rental apartments in the city. (See Table 3 following the text.) Property size ranges from just 40 units to nearly 400 units. Walk Score, a number between 0 and 100 denoting the walkability of a specific address or neighborhood, has grown in importance as a value criterion. Walk Scores above 90 indicate a “Walker’s Paradise,” where daily errands do not require a car. Walk Scores between 70 and 90 are AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 16 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. considered to be very walkable, where most errands can be accomplished on foot. Walk Scores below 50 indicate that most or almost all errands require an automobile. The Walk Scores of the surveyed rental properties range between 1 and 84. The highest score of 84 is registered by the Central High School Apartments, located within walking distance of several restaurants, shops and entertainment venues in the Downtown. Several properties have Walk Scores of 70 or more, including the Foundry Lofts, the Pointe at St. Joseph, Stephenson Mills, Aurum, Robertson’s Apartments, and the Mar-Main Apartments. —Multi-Family Rental Properties— Table 3 provides detailed information on the 13 rental properties included in the survey and is summarized as follows. —Studios (2 properties)— • Rents for studios range between $515 and $595 per month at the Mar-Main Apartments, a 136-unit property located on West Marion Street, and rent for $582 per month at Robertson’s Apartments, the seniors building on South Michigan Street. • Studios at Mar-Main contain between 400 and 550 square feet; the Robertson’s studios average 575 square feet. • The studio rent per square foot ranges between $1.08 and $1.29 at Mar-Main, and averages $1.01 at Robertson’s. —One-Bedroom Units (12 properties)— • Rents for one-bedroom flats range from $478 per month at Belleville Park Apartments on Belleville Circle to $1,685 per month at the Foundry Lofts on North Eddy Street. • One-bedroom flats range in size from 527 square feet at Cedar Glen Apartments at 425 South 25th Street to 883 square feet at Stephenson Mills on East Colfax Avenue. • One-bedroom rents per square foot range between $0.65 at Belleville Park Apartments to $2.17 at the Foundry Lofts. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 17 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. —Two-Bedroom Units (13 properties)— • Rents for two-bedroom, one- to two-bathroom units range from $525 per month at Washington Dunbar Apartments on North Walnut Street, to $2,107 per month at the Foundry Lofts. Monroe Park Apartments on Fellows Street leases a two- bedroom/one-bath townhouse for $674 per month. • Two-bedroom flats range in size from 550 square feet at Washington Dunbar, to 1,856 square feet at Central High School Apartments. The Monroe Park two- bedroom townhouse contains between 900 square feet of living space. • Two-bedroom rents per square foot for flats fall between $0.65 at Belleville Park Apartments and $2.11 at the Foundry Lofts. The rents per square for the Monroe Park two-bedroom townhouses is $0.75. —Three-Bedroom Units (6 properties)— • Rents for three-bedroom flats range between $699 per month at Washington Dunbar Apartments and $3,606 per month at the Foundry Lofts. Monroe Park Apartments also has a three-bedroom townhouse with two baths that leases for $764 per month. • Three-bedroom flats contain between 1,100 square feet at Washington Dunbar Apartments, and as much as 1,856 square feet at Central High School. The three- bedroom townhouse at Monroe Park Apartments contains 1,020 square feet of living space. • Three-bedroom rents per square foot for flats fall between $0.64 at Washington Dunbar and $2.36 at the Foundry Lofts. The three-bedroom townhouse at Monroe Park leases for $0.75 per square foot. Only Belleville Park Apartments has four-bedroom apartments, which contain between 1,366 and 1,448 square feet of living space, and lease for $709 to $850 per month ($0.52 to $0.59 per square foot). AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 18 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. —Multi-Family and Single-Family Attached For-Sale Properties— Table 4 details recent listings of new and resale condominiums and townhouses at various properties in South Bend. Of the 10 attached units on the market at the time of the survey in January, 2018, two condominiums and two townhouses were priced below $100,000; one townhouse was listed at $145,000; the remaining two units were priced above $700,000. Three townhouses remain unsold at the nine-unit Corby Lawrence Townhouses, new construction on East Corby Boulevard in northeast South Bend. The prices of the three units start at $365,000 for a 3,300-square-foot unit containing four bedrooms and three-and-a-half baths ($111 per square foot). A three-bedroom/two-and-a-half bath end unit is priced at $379,900 for nearly 2,300 square feet of living space ($167 per square foot). The most expensive townhouse, with an asking price of $424,945, has just under 3,000 square feet configured as four bedrooms and three-and-a-half baths ($142 per square foot). The most expensive units on the market include a four-bedroom/four-and-a-half bath townhouse in River Race on the East Bank containing nearly 3,100 square feet and listed at $724,900 ($234 per square foot) and $749,000 for a four-bedroom/three-and-a-half bath condominium in Ivy Quad near the University of Notre Dame with 2,375 square feet of living space ($315 per square foot). —Single-Family Detached For-Sale Properties— Table 5 details the listings of several newly-constructed single-family detached houses on the market in January 2018 in South Bend and priced under $300,000. Allen Edwin Homes has been marketing several models of detached houses at three properties in the far northwestern part of the city, with new construction priced from $176,990 for a 1,458-square-foot three-bedroom/two bath floorplan ($121 per square foot) to $253,900 for a 2,340-square-foot three-bedroom/two-and-a-half bath house ($109 per square foot) at the Jade Crossings community.. Another Allen Edwin Homes community, Laurel Creek, is selling the same three-bedroom models at similar price points ($197,900 to $239,900—$95 to $128 per square foot). A third Allen Edwin Homes community, Lafayette Falls, starts at a higher price point, with a three-bedroom/two-and-a-half bath house containing nearly 1,700 square feet priced at $211,900 ($126 per square foot) and the most AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 19 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. expensive house—a three-bedroom/two-and-a-half bath model with over 2,240 square feet of living space—is priced at nearly $250,000 ($111 per square foot). Several houses have been built, or are under construction within other single-family developments in the city. Asking prices range from $183,900 for a three-bedroom/two-bath house situated on a quarter-acre lot and containing just over 1,300 square feet of living space ($140 per square foot) to $267,500 for a 1,634-square-foot three-bedroom house on St. Charles Avenue ($164 per square foot). All but one were built in 2017, and nearly all are located in developments on the edge of the city. OPTIMUM MARKET POSITION: STUDY AREA C As noted above under AVERAGE ANNUAL MARKET POTENTIAL FOR STUDY AREA C, an annual average of 1,250 traditional and non-traditional families, younger singles and couples, and empty nesters and retirees of all incomes represent the potential market for new and existing housing units within the Study Area each year over the next five years. The rents and price points for the market-rate component of new rental housing units that could be developed in Study Area C are derived from the income and equity levels of those target households with annual incomes at or above 80 percent AMI, ranging from $34,200 and more for a single-person household to $48,800 and more for a four-person household. For new for-sale housing units, the target households have annual incomes above 100 percent AMI, ranging from $42,700 and more for a single-person household and $61,500 and more for a four-person household. Households with incomes between 30 and 80 percent of the AMI comprise the market for rental “affordable” or workforce housing units. These households have incomes ranging between $12,850 and $34,200 for a single-person household to $24,600 and $48,800 for a four-person household. For new for-sale housing units, the targeted households have annual incomes between 60 and 100 percent AMI, ranging between $25,700 and $42,700 for a single-person household and $49,200 and $61,500 for a four-person household. In general, households with annual incomes at or below 30 percent AMI qualify for Section Eight vouchers and low-income housing tax-credit rental units, and their rents are usually limited to no AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 20 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. more than 30 percent of their annual incomes. These household incomes are less than $12,850 for a single-person household to less than $24,600 for a four-person household. What is the market currently able to pay to rent or purchase new dwelling units in Study Area C? The analysis that follows covers households with preferences for multi-family for-rent with incomes between 30 and 80 percent AMI (affordable/workforce units), and with incomes above 80 percent AMI (market-rate units) and households with preferences for multi-family for-sale, and single-family attached and detached for-sale with incomes between 60 and 100 percent AMI (affordable/workforce units) and with incomes above 100 percent AMI (market-rate units). yielding an annual average of 927 households that represent the potential renters/buyers of new market-rate and affordable housing units in Study Area C each year over the next five years. As derived from the tenure preferences and financial capabilities of those 927 draw area households, the distribution of rental and for-sale housing types would be as shown on the following table: Average Annual Potential Market for New Housing Units Study Area C City of South Bend, St. Joseph County, Indiana . . . . . . . . . HOUSEHOLDS . . . . . . . . HOUSING TYPE NUMBER PERCENT Multi-family for-rent 30% to 80% AMI 182 19.6% > 80% AMI 208 22.4% Total multi-family for-rent 390 42.0% Multi-family for-sale 60% to 100% AMI 50 5.4% > 100% AMI 50 5.4% Total multi-family for-sale 100 10.8% Single-family attached for-sale 60% to 100% AMI 59 6.4% > 100% AMI 57 6.1% Total single-family attached for-sale 116 12.5% continued on the following page . . . AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 21 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. . . . continued from the preceding page. . . . . . . . . . HOUSEHOLDS . . . . . . . . HOUSING TYPE NUMBER PERCENT Single-family detached for-sale 60% to 100% AMI 127 13.7% > 100% AMI 194 21.0% Total single-family detached for-sale 321 34.7% Grand total 927 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. —Rental Distribution by Rent Range: Multi-Family For-Rent— The number of households able to afford the specified rent ranges detailed on the following tables was determined by calculating a monthly rental payment—excluding utilities and ranging between 25 and 30 percent of annual gross income. (Although it is quite possible that many households will pay up to 40 percent of their annual gross incomes in rent, HUD recommends that a tenant pay no more than 30 percent of gross income for rent including utilities.) Approximately 53.3 percent of the 390 target renter households have incomes at or above 80 percent of the AMI. An annual average of 208 households with incomes at or above 80 percent of the AMI represent the target markets for newly-constructed market-rate rental housing units in Study Area C (as shown on Table 6 following the text). The distribution by rent range of the rents those 208 households could support are summarized on the following table: Rent Distribution Target Groups for New Multi-Family For Rent Households with Incomes At or Above 80 Percent AMI Study Area C City of South Bend, St. Joseph County, Indiana MONTHLY HOUSEHOLDS RENT RANGE PER YEAR PERCENTAGE $500–$750 62 29.8% $750–$1,000 68 32.6% $1,000–$1,250 49 23.6% $1,250–$1,500 22 10.6% $1,500 and up 7 3.4% Total: 208 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • The largest group of households that represent the market for new market-rate rental units in Study Area C are younger singles and couples at 51 percent of the market. Less than four AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 22 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. percent would be able to afford rents at or above $1,500 per month; approximately 22 percent of these households represent the market for units with rents between $1,000 and $1,500 per month; and the remaining three-quarters would require rents between $500 and $1,000 per month. • Traditional and non-traditional families comprise 31.3 percent of the market for new market-rate rental units in Study Area C. Just over three percent of the family market can afford rents greater than $1,500 per month; the majority of the family market—50.8 percent—is financially capable of paying rents between $1,000 and $1,500 per month. Over 46 percent can only afford rents between $500 and $1,000 per month. • Empty nesters and retirees make 17.8 percent of the market for new market-rate rental units in Study Area C. Just under three percent of these households could afford new units with rents above $1,500 per month and 40.5 percent could afford new units with rents between $1,000 and $1,500 per month. The remaining 56.8 percent represent the market for units with rents between $500 and $1,000 per month. An annual average of 182 households with incomes between 30 and 80 percent of the AMI represent the target markets for newly-constructed affordable/workforce rental housing units in Study Area C (see again Table 6). The distribution by rent range of the rents those 182 households could support are summarized as shown on the following table: Distribution by Rent Range Target Groups for New Multi-Family For Rent Households with Incomes Between 30 Percent and 80 Percent AMI Study Area C City of South Bend, St. Joseph County, Indiana MONTHLY UNITS RENT RANGE PER YEAR PERCENTAGE $250–$400 58 31.9% $400–$550 59 32.4% $550–$700 42 23.1% $700–$850 14 7.7% $850-$1,000 9 4.9% Total: 182 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • At just over 40 percent of the market, traditional and non-traditional families are the largest market for new affordable/workforce rentals in Study Area C. Just over four percent of these AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 23 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. households are able to lease units with rents between $850 and $1,000 per month; 37 percent can afford rents can afford rents between $550 and $850 per month, and the remaining 58.9 percent are financially limited to rents between $250 and $550 per month. • At 34.1 percent, younger singles and couples represent the next largest market for newly- constructed affordable/workforce rental units in Study Area C. Just over three percent would be able to afford rents between $850 and $1,000 per month; nearly 31 percent would represent the market for units with rents between $550 and $850 per month; and the remaining two-thirds would require rents between $250 and $550 per month. • Empty nesters and retirees represent the smallest market, at just under 26 percent, for new affordable/workforce rental units in Study Area C. Approximately 8.5 percent of the empty nester and retiree market have the incomes to support rents between $850 and $1,000 per month; another 21.3 percent could pay rents between $550 and $850 per month; more than under 70 percent could only afford rents between $250 and $550 per month. —For-Sale Distribution by Price Range— For the for-sale unit distribution, the number of households by price range was determined by assuming a down payment (subsidized or otherwise) of 20 percent and then calculating monthly mortgage payments, including taxes and utilities, that would not exceed 30 percent of the annual gross income of the target households. The realization of the full market potential for new market-rate for-sale units may be challenging over the short-term, given continued restrictive development financing and mortgage underwriting by financial institutions, the disinterest of some younger households in becoming owners, the fact that many otherwise-qualified households, particularly current renters, lack the funds for a down payment, and the inability of many older owner households to sell their existing single-family units even at reduced prices. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 24 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. —For-Sale Distribution by Price Range: Multi-Family— An annual average of 50 households with incomes at or above 100 percent of the AMI represent the target markets for newly-constructed market-rate multi-family for-sale (condominium) housing units in Study Area C (as shown on Table 7 following the text). The distribution by price range of the prices those 50 households could support are summarized as on the following table: Distribution by Price Range Target Groups for New Multi-Family For Sale Households with Incomes At or Above 100 Percent AMI Study Area C City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $125,000–$150,000 8 16.0% $150,000–$175,000 15 30.0% $175,000–$200,000 14 28.0% $200,000–$225,000 8 16.0% $225,000 and up 5 10.0% Total: 50 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • Younger singles and couples comprise 46 percent of the market for new market-rate multi- family for-sale units (condominiums) in Study Area C. Just under 44 percent of these younger households would be in the market for new condominiums with base prices between $125,000 and $175,000. Another 39.1 percent could afford new condominium units priced between $175,000 and $225,000 and the remaining 17.4 percent have the income and assets to purchase condominiums priced at $225,000 or more. • At a 34 percent share, empty nesters and retirees represent the second largest market segment for this housing type in the Study Area. Approximately six percent of these older households have the capacity to purchase new condominiums with base prices at or above $225,000; 41.2 percent would be able to purchase new condominiums priced between $175,000 and $225,000. The majority—52.0 percent of this segment—would only be able to afford units priced between $125,000 and $175,000. • Family households are a 20 percent of the market for new market-rate condominiums in Study Area C, with 40 percent able to afford new units priced between $125,000 and AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 25 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. $175,000, and the majority—60 percent—capable of purchasing units priced between $175,000 and $225,000. An annual average of 50 households with incomes between 60 percent and 100 percent of the AMI represent the target markets for newly-constructed affordable multi-family for-sale (condominium) housing units in Study Area C (see again Table 7). For these units, the assumption is that, at minimum, the 20 percent down payment would be subsidized. The distribution by price range of the prices those 30 households could support would therefore be summarized as follows: Distribution by Price Range Target Groups for New Multi-Family For Sale Households with Incomes Between 60 Percent and 100 Percent AMI Study Area C City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $50,000–$75,000 15 30.0% $75,000–$100,000 19 38.0% $100,000–$125,000 16 32.0% Total: 50 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • Younger singles and couples are the largest segment of the market for newly-constructed affordable/workforce multi-family for-sale units (condominiums) in the Study Area, at 42 percent of the market. A third of this market could only purchase new condominiums priced between $50,000 and $75,000. Over 38 percent would be in the market for units priced between $75,000 and $100,000 and the remaining 28.6 percent of the younger market is able to afford new units priced between $100,000 and $125,000. • The empty-nester and retiree market—approximately 32 percent of the market—is the next largest group of households that represent the potential market for new affordable/workforce multi-family for-sale units in Study Area C. One-quarter of this market has the income and assets to purchase new affordable condominiums priced between $100,000 and $125,000. Another 31.3 percent are able to purchase new condominiums priced between $75,000 and $100,000 and the remaining 43.8 percent of the households have incomes limiting to new affordable condominiums priced between $50,000 and $75,000. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 26 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • Family households comprise 26 percent of the market for newly-constructed affordable/workforce condominiums in Study Area C. Approximately eight percent of these families would be limited to new affordable/workforce condominiums with base prices between $50,000 and $75,000, and the remaining 92 percent are evenly divided between new units priced between $75,000 and $100,000 and between $100,000 and$125,000. —For-Sale Distribution By Price Range: Single-Family Attached— An annual average of 57 households with incomes at or above 100 percent of the AMI represent the target markets for newly-constructed market-rate single-family attached for-sale (townhouse/rowhouse) housing units in Study Area C (as shown on Table 8 following the text). The distribution by price range of the prices those 57 households could support are summarized on the following table: Distribution by Price Range Target Groups for New Single-Family Attached For Sale Households with Incomes At or Above 100 Percent AMI Study Area C City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $125,000–$150,000 10 17.5% $150,000–$175,000 16 28.1% $175,000–$200,000 15 26.3% $200,000–$225,000 11 19.3% $225,000 and up 5 8.8% Total: 57 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • Younger singles and couples represent 42 percent of the market for new market-rate single- family attached for-sale units in Study Area C. More than 58 percent only able to afford new units priced between $125,000 and $175,000. Another third would be in the market for units priced between $175,000 and $225,000. Just 8.3 percent have the income and down payments to enable them to purchase new single-family attached units priced above $225,000. • At a 35 percent share, traditional and non-traditional families make up a somewhat smaller segment of the market for new market-rate single-family attached for-sale units. Thirty AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 27 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. percent would require units priced between $125,000 and $175,000 and 65 percent could afford new single-family attached units priced between $175,000 and $225,000. Just five percent have the income and assets to purchase new units priced at $225,000 or more. • Empty nesters and retirees comprise the remaining 23 percent of the market for new market- rate single-family attached for-sale units, of which just over 15 percent would be able to purchase units priced at $225,000 or more. Another 38.5 percent would be in the financial position to purchase new single-family attached units with prices between $175,000 and $225,000, and a plurality—46.2 percent—would require new units priced between $125,000 and $175,000. An annual average of 59 households with incomes between 60 percent and 100 percent of the AMI represent the target markets for newly-constructed affordable/workforce single-family attached for-sale housing units in Study Area C (see again Table 8). Again, for these units, the assumption is that, at minimum, the 20 percent down payment would be subsidized. The distribution by price range of the prices those 59 households could support would therefore be summarized as follows: Distribution by Price Range Target Groups for New Single-Family Attached For Sale Households with Incomes Between 60 Percent and 100 Percent AMI Study Area C City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $50,000–$75,000 24 40.7% $75,000–$100,000 27 45.8% $100,000–$125,000 8 13.5% Total: 59 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. • Family households are the largest target market—47.5 percent of the targeted households— for newly-constructed affordable/workforce single-family attached for-sale units in Study Area C. Over 46 percent of the families are only able to purchase new units priced between $50,000 and $75,000; 39.3 percent would be able to purchase new units with base prices between $75,000 and $100,000. The remaining 14.3 percent have the financial capacity to afford new units priced between $100,000 and $125,000 AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 28 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • At 27.1 percent, younger singles and couples are the next largest segment of the market for newly-constructed affordable/workforce single-family attached for-sale units in the Study Area, just slightly larger than the empty-nester/retiree market. Over 31 percent of the younger households could only afford these units priced between $50,000 and $75,000; the majority—56.3 percent—would be able to purchase units priced between $75,000 and $100,000; and the remaining 12.5 percent have the incomes to purchase units priced between $100,000 and $125,000. • Empty nesters and retirees are the smallest segment (at 25.4 percent, just slightly smaller than the younger targeted households) of the market for newly-constructed affordable/workforce single-family attached units in Study Area C. Forty percent of this segment would be limited to new affordable single-family attached units with base prices between $50,000 and $75,000, and 46.7 percent could afford new units priced between $75,000 and $100,000. The remaining 13.3 percent have the financial capability to purchase new units priced between $100,000 and $125,000. —For-Sale Distribution By Price Range: Single-Family Detached— An annual average of 194 households with incomes at or above 100 percent of the AMI represent the target markets for newly-constructed market-rate for-sale single-family detached houses in Study Area C (as shown on Table 9 following the text). The distribution by price range of the prices those 194 households could support are summarized on the table on the following page. Distribution by Price Range Target Groups for New Single-Family Detached For Sale Households with Incomes At or Above 100 Percent AMI Study Area C City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $150,000–$175,000 48 24.7% $175,000–$200,000 53 27.3% $200,000–$225,000 39 20.2% $225,000–$250,000 21 10.8% $250,000–$275,000 19 9.8% $275,000 and up 14 7.2% Total: 194 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 29 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • At near 63 percent, traditional and non-traditional families are by far the largest segment of the market for new market-rate single-family detached houses in Study Area C. Nearly 27 percent could afford new houses priced at $250,000 or more, another 35.8 percent would be in the market for new houses with base prices between $200,000 and $250,000, and 37.4 percent would require houses priced between $150,000 and $200,000. • Empty nesters and retirees make up the next largest segment of the market for new market- rate single-family detached houses in the Study Area, at an approximately 31 percent share. Just Over 28 percent could afford new detached units priced between $200,000 and $250,000. The clear majority—nearly 72 percent—would be in the market for new detached houses with base prices between $150,000 and $200,000. • At a share of just 6.2 percent, younger singles and couples represent the smallest segment of the market for new market-rate single-family houses in the Study Area. All of these younger households could only pay for new detached houses with base prices between $150,000 and $200,000. An annual average of 127 households with incomes between 60 percent and 100 percent of the AMI represent the target markets for newly-constructed affordable single-family detached for-sale housing units in Study Area C (see again Table 9). Again, for these units, the assumption is that, at minimum, the 20 percent down payment would be subsidized. The distribution by price range of the prices those 127 households could support are summarized on the following table. Distribution by Price Range Target Groups for New Single-Family Detached For Sale Households with Incomes Between 60 Percent and 100 Percent AMI Study Area C City of South Bend, St. Joseph County, Indiana PRICE HOUSEHOLDS RANGE PER YEAR PERCENTAGE $50,000–$75,000 33 26.0% $75,000–$100,000 45 35.4% $100,000–$125,000 37 29.1% $125,000–$150,000 12 9.4% Total: 127 100.0% SOURCE: Zimmerman/Volk Associates, Inc., 2018. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 30 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. • Traditional and non-traditional families are over 59 percent of the market for newly- constructed affordable/workforce detached houses in Study Area C. Just under 63 percent of the family market would be limited to new affordable/workforce houses with base prices between $50,000 and $100,000. Just over 37 percent of the traditional and non-traditional families could afford new detached units priced between $100,000 and $150,000. • Empty nesters and retirees are the second largest segment of the market for newly- constructed affordable/workforce single-family urban detached for-sale units in the Study Area, at just 31.5 percent of the market. Approximately 60 percent of the older households could only afford detached houses priced between $50,000 and $100,000; the remaining 40 percent have the income and assets to purchase new detached houses priced between $100,000 and $150,000. • The smallest market segment, younger singles and couples, makes up just 9.4 percent of the potential market for new affordable/workforce urban single-family detached houses. Over 58 percent of the younger singles and couples could afford newly-constructed affordable urban houses priced between $50,000 and $100,000 and 41.7 percent have the financial capabilities to purchase new urban detached houses priced between $100,000 and $150,000. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 31 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. PROPOSED RENT AND PRICE RANGES: STUDY AREA C Based on the tenure and housing preferences of the target households, and their income and equity levels, the range of rents and prices for newly-developed market-rate and affordable/workforce residential units in Study Area C that could be sustained by the market is as follows (see also Table 10 following the text): Base Rent, Price and Size Ranges Study Area C City of South Bend, St. Joseph County, Indiana RENT/PRICE SIZE RENT/PRICE HOUSING TYPE RANGE RANGE PER SQ. FT. MULTI-FAMILY FOR-RENT: COURTYARD BUILDINGS— Lofts $600–$900/month 550–750 sf $1.09–$1.20 psf Apartments $750–$1,300/month 600–1,300 sf $1.15–$1.25 psf MULTI-FAMILY FOR-SALE: MANSION BUILDINGS (4-6 DU PER BUILDING)— Condominiums $70,000–$130,000 650–1,000 sf $108–$130 psf SINGLE-FAMILY ATTACHED FOR-SALE: DUPLEXES; TRIPLEXES; ROWHOUSES; TOWNHOUSES— Triplexes; Rowhouses $80,000–$140,000 750–1,100 sf $107–$127 psf Duplexes; Townhouses $125,000–$195,000 1,200–1,650 sf $104–$118 psf SINGLE-FAMILY DETACHED FOR-SALE: COTTAGES; BUNGALOWS; URBAN HOUSES— Cottages; Bungalows $90,000–$145,000 900–1,400 sf $100–$104 psf Single-Family Houses $150,000–$225,000 1,350–1,750 sf $111–$129 psf SOURCE: Zimmerman/Volk Associates, Inc., 2018. The aforementioned rents and prices are in year 2018 dollars, are exclusive of consumer options and upgrades, or floor or location premiums, and cover a broad range of rents and prices for newly- developed units currently sustainable by the market in Study Area C. As in Study Areas A and B, location will have an impact on rents and prices. A major asset located in this Study Area is Ignition Park, situated between the Westside and Rum Village. The Park, which covers more than 80 acres and was formerly the site of the Studebaker auto-manufacturing complex, currently is home to two new buildings—Catalyst One and Catalyst Two—where the Notre Dame Turbomachinery Laboratory and several other small technology companies are located. There is the AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 32 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. potential for significant growth at Ignition Park, which could have a significant impact on the housing market on the two adjoining neighborhoods. Western Avenue, the northern boundary of the Westside Neighborhood, has been the focus of some new investments on the west side, and any improvement in the retail offerings along the avenue will be a benefit to the Westside. The Ray and Joan Croc Corps Community Center at Western Avenue and Chapin Street is the largest community center in South Bend and provides a wide range of community amenities, including pool, fitness equipment, climbing wall, weight room, among many other public benefits. Although this part of the Westside Neighborhood is crossed by two sets of railroad tracks, Pulaski Park, a small park with a playground, basketball courts, and multi-purpose playing field is located at the intersection of the two tracks. Rum Village Park, directly adjacent to Rum Village Neighborhood to the north, is a 160-acre heavily-wooded park with a nature center, mountain bike and hiking trails, two open-air pavilions and an 18-hole disc golf course, providing numerous outdoor activities. The Armed Forces Reserve Center is located in the middle of the neighborhood. There is significant vacant land north of West Indiana Avenue between Franklin Street and Kemble Avenue. Major new mixed-income development could occur in this area if the land is available for development. The challenge will be to provide units that correspond to the financial capabilities of the potential market for this Study Area, and to provide housing types that accommodate many of the extended families that live here in substandard housing. MARKET CAPTURE: STUDY AREA C How fast will new units lease or sell? In the context of the target market methodology, new multi-family development, both rental and for-sale, in Study Area C should be able to achieve an annual capture of 10 to 12 percent of the annual potential renters and condominium buyers each year over the next five years. New single- family development, both attached and detached, should be able to achieve an annual capture of five to 7.5 percent of the annual potential single-family attached and detached buyers each year over the next five years. (Nationally, prior to the housing collapse in 2008, new dwelling units represented 15 AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 33 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. percent of all units sold; over the past several years, new dwelling units have averaged approximately eight percent of all units sold.) Based on a 10 to 12 percent capture of the annual potential market for new multi-family housing, and a five to 7.5 percent capture of the annual potential market for new single-family attached and detached housing units, Study Area C should be able to absorb between 71 and 93 new market-rate and affordable/workforce rental and for-sale housing units each year over the next five years, as shown on the following table (see also Table 10 following the text for greater detail): Annual Capture of Market Potential Study Area C City of South Bend, St. Joseph County, Indiana NUMBER OF CAPTURE NUMBER OF HOUSING TYPE HOUSEHOLDS RATE NEW UNITS Multi-Family For-Rent 390 10 - 12% 39 - 47 (lofts/apartments, leaseholder) Multi-Family For-Sale 100 10 - 12% 10 – 12 (lofts/apartments, condo/co-op ownership) Single-Family Attached For-Sale 116 5 – 7.5% 6 - 9 (rowhouses/townhouses, fee-simple ownership) Single-Family Detached For-Sale 321 5 - 7.5% 16 - 25 (urban houses, fee-simple ownership) Total 927 71 – 93 SOURCE: Zimmerman/Volk Associates, Inc., 2018. Over five years, these capture rates could support the construction and absorption of between 355 and 465 new mixed-income dwelling units within Study Area C. These capture rates are well within the target market methodology’s parameters of feasibility. NOTE: Target market capture rates are a unique and highly-refined measure of feasibility. Target market capture rates are not equivalent to—and should not be confused with—penetration rates or traffic conversion rates. The target market capture rate is derived by dividing the annual forecast absorption—in aggregate and by housing type—by the number of households that have the potential to purchase or rent new housing within a specified area in a given year. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 34 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. The penetration rate is derived by dividing the total number of dwelling units planned for a property by the total number of draw area households, sometimes qualified by income. The traffic conversion rate is derived by dividing the total number of buyers or renters by the total number of prospects that have visited a site. Because the prospective market for a location is more precisely defined, target market capture rates are higher than the more grossly-derived penetration rates. However, the resulting higher capture rates are well within the range of prudent feasibility. STUDY AREA C BUILDING AND UNIT TYPES —MULTI-FAMILY BUILDINGS— • Courtyard Apartment Building: In new construction, an urban, pedestrian-oriented equivalent to conventional garden apartments. An urban courtyard building is three or more stories, often combined with non-residential uses on the ground floor. The building should be built to the sidewalk edge and, to provide privacy and a sense of security, the first floor should be elevated significantly above the sidewalk. • Loft Apartment Building: Either adaptive re-use of older warehouse or manufacturing buildings or a new-construction building type inspired by those buildings. The new- construction version typically has double-loaded corridors. • Mansion Apartment Building: A two- to three-story flexible-use structure with a street façade resembling a large detached or attached house (hence, “mansion”). The attached version of the mansion, typically built to a sidewalk on the front lot line, is most appropriate for downtown locations. The building can accommodate a variety of uses—from rental or for- sale apartments, professional offices, any of these uses over ground-floor retail, a bed and breakfast inn, or a large single-family detached house—and its physical structure complements other buildings within a neighborhood. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 35 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. Parking behind the mansion buildings can be either alley-loaded, or front-loaded served by shared drives. Mansion buildings should be strictly regulated in form, but flexible in use. However, flexibility in use is somewhat constrained by the handicapped accessibility regulations in both the Fair Housing Act and the Americans with Disabilities Act. • Mixed-Use Building: A pedestrian-oriented building, either attached or free-standing, with apartments and/or offices over flexible ground floor uses that can range from retail to office to residential. —MULTI-FAMILY UNIT TYPES— • Lofts: Unit interiors typically have high ceilings, are fully finished and partitioned into individual rooms. Units may also contain architectural elements reminiscent of hard lofts, such as exposed ceiling beams and ductwork, concrete floors and industrial finishes, particularly if the building is an adaptive re-use of an existing industrial structure. • Apartments: More conventionally-finished single-level units, typically with completely- partitioned rooms.—trim, interior doors, kitchens and baths are often fitted out with higher- end finishes and fixtures than in lofts. —SINGLE-FAMILY ATTACHED— • Rowhouses/Townhouses: Similar in form to conventional suburban townhouses except that the garage—either attached or detached—is located to the rear of the unit and accessed from an alley or auto court. Unlike conventional townhouses, urban rowhouses and townhouses conform to the pattern of streets, typically with shallow front-yard setbacks. • Duplexes/Triplexes: Two- or three-unit townhouses with the garages—either attached or detached—located to the rear of the units. Like the rowhouses/townhouses, urban duplexes/triplexes conform to the pattern of streets, typically with shallow front-yard setbacks. In a corner location, duplex units can each front a different street. AN ANALYSIS OF RESIDENTIAL MARKET POTENTIAL Page 36 Study Area C The City of South Bend, St. Joseph County, Indiana March, 2018 ZIMMERMAN/VOLK ASSOCIATES, INC. —SINGLE-FAMILY DETACHED— • Cottages/Bungalows: Small one-, one-and-a-half- or two-story single-family detached houses on small lots, usually with alley-loaded parking. • Two-Story Houses: Single-family detached houses on relatively-small lots, often, but not always with alley-loaded parking. Attached, detached, or open parking—whether alley- loaded or not—is set well back from the front façade. o Table 1 Annual Market Potential For New And Existing Housing Units Distribution Of Annual Average Number Of Draw Area Households With The Potential To Move To Study Area C Each Year Over The Next Five Years Based On Housing Preferences And Income Levels Study Area C City of South Bend, St. Joseph County, Indiana City of South Bend; Balance of St. Joseph County; Regional Draw Area; Balance of U.S. Draw Areas Annual Number Of Households With The Potential To Rent/Purchase Within The City of South Bend 7,565 Annual Number Of Target Market Households With Potential To Rent/Purchase Within Study Area C 1,250 Annual Market Potential Below 30% to 60% to 80% to Above 30% AMI 60% AMI 80% AMI 100% AMI 100% AMI Subtotal Multi-Family For-Rent:125 84 98 97 111 515 Multi-Family For-Sale:17 13 22 28 50 130 Single-Family Attached For-Sale:19 15 30 29 57 150 Single-Family Detached For-Sale:78 56 67 60 194 455 Total:239 168 217 214 412 1,250 Percent:19.1% 13.4% 17.4% 17.1% 33.0%100.0% Note:For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. SOURCE: Claritas, Inc.; Zimmerman/Volk Associates, Inc. Table 2 Annual Market Potential By Lifestage And Income Derived From Purchase And Rental Propensities Of Draw Area Households With The Potential To Move To Study Area C Each Year Over The Next Five Years Based On Housing Preferences And Income Levels Study Area C City of South Bend, St. Joseph County, Indiana Below 30% to 60% to 80% to Above Total 30% AMI 60% AMI 80% AMI 100% AMI 100% AMI Number of Households:1,250 239 168 217 214 412 Empty Nesters & Retirees 26.0% 23.4% 28.0% 28.1% 26.2% 25.5% Traditional & Non-Traditional Families 45.2% 49.8% 43.5% 45.6% 42.5% 44.4% Younger Singles & Couples 28.8% 26.8% 28.5% 26.3% 31.3% 30.1% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Note: For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. SOURCE: Claritas, Inc.; Zimmerman/Volk Associates, Inc. Table 3 Page 1 of 3 Summary Of Selected Rental Properties City of South Bend, St. Joseph County, Indiana January, 2018 Number Unit Base Avg. Unit Rents per Property of Units Type Rent Sizes Sq. Ft. Amenities Address Belleville Park Apts. (2003) 208 Business center, 4940 Belleville Circle 1br/1ba $478 to 734 to $0.65 to clubhouse, Walk Score: 11 $550 816 $0.67 playground. 2br/1ba $650 939 $0.69 2br/2ba $650 997 $0.65 3br/2ba $750 1,154 $0.65 4br/2ba $709 to 1,366 to $0.52 to $850 1,448 $0.59 Mar-Main Apts (1922) 136 Fitness center, 125 W. Marion Street Studio/1ba $515 to 400 to $1.08 to clubhouse. Walk Score: 74 $595 550 $1.29 1br/1ba $685 675 $1.01 1br/1ba/den $745 775 $0.96 1br/1ba/sunroom $745 775 $0.96 1br/1.5ba $725 780 $0.93 2br/1ba $800 800 $1.00 Washington Dunbar 80 Playground. (Renovated 2010)2br/1ba $525 to 550 $0.95 to 118 N. Walnut Street $661 $1.20 Walk Score: 1 3br/2ba $699 to 1,100 $0.64 to $756 $0.69 Cedar Glen Apts.181 Playground, (1951; Renovated 2013)1br/1ba $555 527 $1.05 courtyard. 425 S. 25th Street 2br/1ba $565 to 664 to $0.78 to Walk Score: 35 $595 763 $0.85 Monroe Park Apts. (1994) 57 Laundry facilities. 526 Fellows Street 1br/1ba $579 700 $0.83 Walk Score: 58 2br/1ba TH $674 900 $0.75 3br/2ba TH $764 1,020 $0.75 Robertson's Apts. (1998)92 Seniors 55+ 211 South Michigan Studio/1ba $582 575 $1.01 Walk Score: 80 1br/1ba $592 750 $0.79 2br/1ba $748 1,050 $0.71 SOURCE: Zimmerman/Volk Associates, Inc. Table 3 Page 2 of 3 Summary Of Selected Rental Properties City of South Bend, St. Joseph County, Indiana January, 2018 Number Unit Base Avg. Unit Rents per Property of Units Type Rent Sizes Sq. Ft. Amenities Address Riverside North Apts. (1966) 145 Fitness center, 1587 Riverside Drive 1br/1ba $610 to 800 to $0.76 to pool, Walk Score: 42 $805 820 $0.98 car wash station, 2br/1ba $700 to 890 to $0.79 to BBQ/picnic area. $880 900 $0.98 2br/2ba $765 to 1,000 to $0.75 to $945 1,255 $0.77 3br/2ba $1,015 to 1,410 $0.72 to $1,065 $0.76 Hurwich Farms 396 Fitness center, 2701 Appaloosa Lane 1br/1ba $720 692 $1.04 clubhouse, pool. Walk Score: 48 2br/2ba $850 932 $0.91 sport courts. Central HS Apts. (1913) 106 Fitness center. 330 West Colfax Avenue 1br/1ba $835 to 590 to $1.12 to Walk Score: 84 $865 774 $1.42 2br/1ba $915 to 803 to $0.89 to $1,050 1,181 $1.14 1br/1.5ba $950 957 $0.99 2br/1.5ba $1,085 to 1,059 $1.02 to $1,395 1,579 $1.32 2br/1ba $1,320 to 1,453 to $0.82 to $1,520 1,856 $0.91 3br/1ba $1,510 1,856 $0.81 Aurum (2014)60 Clubhouse, 825 Sorin Street 1br/1ba $899 to 596 to $1.51 to putting green, Walk Score: 72 $920 602 $1.53 business center. 2br/2ba $1,299 to 1,139 to $1.14 to $1,549 1,299 $1.19 Stephenson Mills 40 Laundry facility. 332 West Colfax Avenue 1br/1ba $909 to 619 to $1.13 to (rental office address)$995 883 $1.47 Walk Score: 77 2br/1ba $1,155 to 1,094 to $0.89 to $1,325 1,489 $1.06 2br/2ba $1,290 to 1,132 to $0.95 to $1,425 1,500 $1.14 SOURCE: Zimmerman/Volk Associates, Inc. Table 3 Page 3 of 3 Summary Of Selected Rental Properties City of South Bend, St. Joseph County, Indiana January, 2018 Number Unit Base Avg. Unit Rents per Property of Units Type Rent Sizes Sq. Ft. Amenities Address Pointe at St. Joseph 79 Fitness center, 307 East Lasalle Avenue 1br/1ba $925 to 784 to $1.18 to business center, Walk Score: 78 $955 700 $1.36 clubhouse, pool. 2br/1.5ba $1,120 to 1,020 $1.10 to $1,195 $1.17 2br/2ba $1,130 to 1,032 to $1.09 to $1,235 1,151 $1.07 2br/2ba/den $1,225 to 1,076 $1.14 to $1,300 $1.21 The Foundry Lofts (2009) 266 Fitness center, 1233 North Eddy Street 1br/1ba $1,337 to 625 to $2.14 to business center, Walk Score: 70 $1,685 776 $2.17 clubhouse, 2br/2ba $1,827 to 866 to $1.88 to rooftop deck. $2,107 1,123 $2.11 3br/2.5ba $2,053 to 1,189 to $1.73 to $3,606 1,528 $2.36 SOURCE: Zimmerman/Volk Associates, Inc. Table 4 Summary Of For-Sale Multi-Family And Single-Family Attached Listings City of South Bend, St. Joseph County, Indiana January, 2018 Unit Beds/ Unit Price Unit Size Price Per Total Total Development (Date Opened) Type Baths Range Range Sq. Ft. Units Sales Address/Developer . . . . . . . . . . New Construction . . . . . . . . . . Corby Lawrence TH (2017)TH 4br/3.5ba $365,000 3,303 $111 9 6 East Corby Boulevard 3br/2.5ba End Unit $379,900 2,270 $167 4br/3.5ba $424,945 2,993 $142 . . . . . . . . . . Resales . . . . . . . . . . 2500 Topsfield Rd (1964)CO 1br/1ba $47,500 800 $59 1br/1ba $59,900 800 $75 Cornwall Court (1983)TH 2br/1.5ba $85,000 1,054 $81 Lansdown Blvd (1982)TH 3br/1.5ba $99,900 2,162 $46 Coventry Trail (1973)TH 2br/2.5ba $145,000 1,616 $90 River Race (2012)TH 4br/4.5ba $724,900 3,096 $234 Ivy Quad (2015)CO 4br/3.5ba $749,000 2,375 $315 SOURCE: Zimmerman/Volk Associates, Inc. Multiple Listing Service, Table 5 Page 1 of 2 Summary of Selected Single-Family Listings New Construction Priced Under $300,000 City of South Bend, St. Joseph County, Indiana January, 2018 Lot Unit List Unit Subdivision/Area Size Year Built Price Size Price psf Configuration Jade Crossings 0.47 2006-2018 . . . Available floorplans . . . Allen Edwin Homes $176,900 1,458 $121 3br/2ba $190,900 1,743 $110 3br/2ba $193,900 2,040 $95 3br/2ba $199,900 2,174 $92 3br/2ba $207,900 1,702 $122 3br/2.5ba $208,900 1,412 $148 3br/2ba $211,900 1,870 $113 3br/2.5ba $213,900 1,600 $134 3br/2ba $220,900 2,075 $106 3br/2.5ba $220,900 2,121 $104 3br/2.5ba $223,900 2,246 $100 3br/2.5ba $232,900 2,393 $97 3br/2.5ba $237,900 2,410 $99 4br/2.5ba $237,900 2,626 $91 4br/2.5ba $241,900 1,658 $146 3br/2ba $245,900 2,244 $110 3br/2.5ba $253,900 2,340 $109 3br/2.5ba Laurel Creek . . . Available floorplans . . . Allen Edwin Homes $197,900 1,743 $114 3br/2ba $206,900 2,174 $95 3br/2ba $214,900 1,702 $126 3br/2.5ba $214,900 1,682 $128 3br/2.5ba $218,900 1,870 $117 3br/2.5ba $227,900 2,075 $110 3br/2.5ba $239,900 2,393 $100 3br/2.5ba Lafayette Falls 0.24 2004-2018 . . . Available floorplans . . . Allen Edwin Homes $211,900 1,682 $126 3br/2.5ba $211,900 1,702 $125 3br/2ba $212,900 1,412 $151 3br/2ba $215,900 1,870 $115 3br/2.5ba $217,900 1,600 $136 3br/2ba $224,900 2,075 $108 3br/2.5ba $224,900 2,121 $106 3br/2.5ba $227,900 2,246 $101 3br/2.5ba $236,900 2,393 $99 3br/2.5ba $241,900 2,626 $92 4br/2.5ba $241,900 2,410 $100 4br/2.5ba $245,900 1,658 $148 3br/2ba $249,900 2,244 $111 3br/2.5ba SOURCE: Multiple Listing Service; Zimmerman/Volk Associates, Inc. Table 5 Page 2 of 2 Summary of Selected Single-Family Listings New Construction Priced Under $300,000 City of South Bend, St. Joseph County, Indiana January, 2018 Lot Unit List Unit Subdivision/Area Size Year Built Price Size Price psf Configuration Blue Winged Trail 0.23 2017 $183,900 1,312 $140 3br/2ba Cherry Pointe Drive 0.17 2017 $186,900 1,743 $107 3br/2.5ba Blue Winged Trail 0.26 2017 $188,900 1,321 $143 3br/2ba Common Elder Trail 0.26 2017 $193,900 1,453 $133 3br/2.5ba Sapphire Drive 0.16 2017 $202,900 2,040 $99 3br/2.5ba Kiefer Way 0.20 2017 $209,900 3,166 $66 3br/2.5ba St. Charles Avenue 0.15 2016 $267,500 1,634 $164 3br/2ba SOURCE: Multiple Listing Service; Zimmerman/Volk Associates, Inc. Table 6 Page 1 of 2 Target Groups For New Multi-Family For Rent Study Area C City of South Bend, St. Joseph County, Indiana . . . . . Number of Households . . . . . Empty Nesters 30% to Above Percent of & Retirees**80% AMI† 80% AMI†Total Total Mainstream Empty Nesters 3 7 10 2.6% Middle-American Retirees 2 3 5 1.3% Country Couples 1 3 4 1.0% Blue-Collar Retirees 3 6 9 2.3% Middle-Class Move-Downs 2 3 5 1.3% Village Elders 1 2 3 0.8% Small-Town Seniors 2 2 4 1.0% Hometown Seniors 3 1 4 1.0% Second City Seniors 30 10 40 10.3% Subtotal:47 37 84 21.5% Traditional & Non-Traditional Families†† Small-Town Families 1 4 5 1.3% Multi-Ethnic Families 4 5 9 2.3% Four-by-Four Families 2 3 5 1.3% Uptown Families 9 19 28 7.2% Hometown Families 6 8 14 3.6% In-Town Families 30 20 50 12.8% New American Strivers 21 6 27 6.9% Subtotal:73 65 138 35.4% † For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. **Predominantly one- and two-person households. SOURCE: Claritas, Inc. Zimmerman/Volk Associates, Inc. Table 6 Page 2 of 2 Target Groups For New Multi-Family For Rent Study Area C City of South Bend, St. Joseph County, Indiana . . . . . Number of Households . . . . . Younger 30% to Above Percent of Singles & Couples**80% AMI†80% AMI†Total Total The VIPs 2 13 15 3.8% Fast-Track Professionals 1 9 10 2.6% Suburban Achievers 1 4 5 1.3% Suburban Strivers 11 19 30 7.7% Small-City Singles 10 18 28 7.2% Twentysomethings 12 19 31 7.9% Second-City Strivers 10 12 22 5.6% Multi-Ethnic Singles 15 12 27 6.9% Subtotal:62 106 168 43.1% Total Households:182 208 390 100.0% Percent of Total:46.7%53.3%100.0% † For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. **Predominantly one- and two-person households. SOURCE: Claritas, Inc. Zimmerman/Volk Associates, Inc. Table 7 Target Groups For New Multi-Family For Sale Study Area C City of South Bend, St. Joseph County, Indiana . . . . . Number of Households . . . . . Empty Nesters 60% to Above & Retirees**100% AMI† 100% AMI†Total Percent Mainstream Empty Nesters 3 6 9 9.0% Middle-American Retirees 2 3 5 5.0% Blue-Collar Retirees 5 5 10 10.0% Middle-Class Move-Downs 2 3 5 5.0% Second City Seniors 4 0 4 4.0% Subtotal:16 17 33 33.0% Traditional & Non-Traditional Families†† Small-Town Families 1 4 5 5.0% Uptown Families 5 5 10 10.0% Hometown Failies 3 0 3 3.0% In-Town Families 2 1 3 3.0% New American Strivers 2 0 2 2.0% Subtotal:13 10 23 23.0% Younger Singles & Couples** The VIPs 1 4 5 5.0% Fast-Track Professionals 1 4 5 5.0% Suburban Achievers 2 2 4 4.0% Suburban Strivers 2 0 2 2.0% Small-City Singles 7 6 13 13.0% Twentysomethings 4 5 9 9.0% Second-City Strivers 3 1 4 4.0% Multi-Ethnic Singles 1 1 2 2.0% Subtotal:21 23 44 44.0% Total Households:50 50 100 100.0% Percent of Total: 50.0%50.0%100.0% † For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. **Predominantly one- and two-person households. †† Predominantly three -to five-person households. SOURCE: Claritas, Inc. Zimmerman/Volk Associates, Inc. Table 8 Page 1 of 2 Target Groups For New Single-Family Attached For Sale Study Area C City of South Bend, St. Joseph County, Indiana . . . . . Number of Households . . . . . Empty Nesters 60% to Above & Retirees**100% AMI† 100% AMI†Total Percent Mainstream Empty Nesters 5 5 10 8.6% Middle-American Retirees 2 2 4 3.4% Blue-Collar Retirees 2 3 5 4.3% Small-Town Seniors 1 1 2 1.7% Hometown Seniors 2 2 4 3.4% Seond City Seniors 3 0 3 2.6% Subtotal:15 13 28 24.1% Traditional & Non-Traditional Families†† Kids 'r' Us 0 5 5 4.3% Small-Town Families 3 1 4 3.4% Multi-Ethnic Families 2 3 5 4.3% Uptown Families 7 8 15 12.9% Hometown Families 4 0 4 3.4% In-Town Families 7 2 9 7.8% New American Strivers 5 1 6 5.2% Subtotal:28 20 48 41.4% † For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. **Predominantly one- and two-person households. †† Predominantly three -to five-person households. SOURCE: Claritas, Inc. Zimmerman/Volk Associates, Inc. Table 8 Page 2 of 2 Target Groups For New Single-Family Attached For Sale Study Area C City of South Bend, St. Joseph County, Indiana . . . . . Number of Households . . . . . Younger 60% to Above Singles & Couples**100% AMI†100% AMI†Total Percent The VIPs 1 4 5 4.3% Fast-Track Professionals 2 3 5 4.3% Suburban Achievers 2 2 4 3.4% Suburban Strivers 1 2 3 2.6% Small-City Singles 3 7 10 8.6% Twentysomethings 2 6 8 6.9% Second-City Strivers 3 0 3 2.6% Multi-Ethnic Singles 2 0 2 1.7% Subtotal:16 24 40 34.5% Total Households:59 57 116 100.0% Percent of Total: 50.9%49.1%100.0% † For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. **Predominantly one- and two-person households. SOURCE: Claritas, Inc. Zimmerman/Volk Associates, Inc. Table 9 Target Groups For New Single-Family Detached For Sale Study Area C City of South Bend, St. Joseph County, Indiana . . . . . Number of Households . . . . . Empty Nesters 60% to Above & Retirees**100% AMI† 100% AMI†Total Percent Traditional Couples 2 8 10 3.1% Mainstream Empty Nesters 5 9 14 4.4% Middle-American Retirees 7 13 20 6.2% Country Couples 7 7 14 4.4% Village Elders 4 3 7 2.2% Blue-Collar Retirees 3 14 17 5.3% Small-Town Seniors 5 1 6 1.9% Hometown Seniors 3 5 8 2.5% Second City Seniors 4 0 4 1.2% Subtotal:40 60 100 31.2% Traditional & Non-Traditional Families†† Button-Down Families 3 16 19 5.9% New Town Families 2 18 20 6.2% Kids 'r' Us 12 16 28 8.7% Traditional Families 2 17 19 5.9% Small-Town Families 4 5 9 2.8% Multi-Ethnic Families 4 6 10 3.1% Four-By-Four Families 6 9 15 4.7% Uptown Families 12 24 36 11.2% Hometown Families 0 4 4 1.2% In-Town Families 23 5 28 8.7% New American Strivers 7 2 9 2.8% Subtotal:75 122 197 61.4% Younger Singles & Couples** Suburban Achievers 2 3 5 1.6% Suburban Strivers 5 4 9 2.8% Small-City Singles 0 5 5 1.6% Second-City Strivers 3 0 3 0.9% Multi-Ethnic Singles 2 0 2 0.6% Subtotal:12 12 24 7.5% Total Households:127 194 321 100.0% Percent of Total: 39.6%60.4%100.0% † For fiscal year 2017,South Bend-Mishawaka, In Metro FMR Area Median Family Income for a family of four is $61,500. **Predominantly one- and two-person households. †† Predominantly three -to five-person households. SOURCE: Claritas, Inc. Zimmerman/Volk Associates, Inc. Table 10 Optimum Market Position--Affordable/Workforce, and Market-Rate Dwelling Units Mixed-Income Development Study Area C City of South Bend, St. Joseph County, Indiana March, 2018 Base Base Base Annual Percent of Rent/Price Unit Size Rent/Price Market Households Housing Type Range*Range Per Sq. Ft.*Capture Number 42.0%Multi-Family For-Rent: Courtyard Buildings 39 to 47 200 Lofts $600 to 550 to $1.09 to 20 to 24 Studio/1ba and 1br/1ba $900 750 $1.20 190 Apartments $750 to 600 to $1.15 to 19 to 23 1br/1ba to 3br/2ba $1,500 1,300 $1.25 10.8% Multi-Family For-Sale: Mansion Buildings (4-6 du per building)10 to 12 100 Condominiums $70,000 to 650 to $108 to 10 to 12 1br/1ba and 2br/2ba $130,000 1,000 $130 12.5% Single-Family Attached For-Sale: Duplexes; Triplexes; Rowhouses; Townhouses 6 to 9 46 Triplexes; Rowhouses $80,000 to 750 to $107 to 2 to 4 1br/1.5ba to 2br/1.5ba $140,000 1,100 $127 70 Duplexes; Townhouses $125,000 to 1,200 to $104 to 4 to 5 3br/2.5ba to 4br/2.5ba $195,000 1,650 $118 34.7% Single-Family Detached For-Sale: Cottages; Bungalows; Two-Story Houses 16 to 25 100 Cottages/Bungalows $90,000 to 900 to $100 to 5 to 8 2br/1ba and 3br/1.5ba $145,000 1,400 $104 221 Houses $150,000 to 1,350 to $111 to 11 to 17 Three- to Four-Bedrooms $225,000 1,750 $129 100.0% 71 to 93 927 target households new units/year 32 to 46 NOTE:Base rents/prices in year 2018 dollars and exclude floor and view premiums, new ownership options and upgrades.units/year SOURCE: Zimmerman/Volk Associates, Inc. ZIMMERMAN/VOLK ASSOCIATES, INC. Post Office Box 4907 Clinton, New Jersey 08809 908 735-6336 info@ZVA.cc • www.ZVA.cc Residential Market Analysis Across the Urban-to-Rural Transect ASSUMPTIONS AND LIMITATIONS— Every effort has been made to insure the accuracy of the data contained within this analysis. Demographic and economic estimates and projections have been obtained from government agencies at the national, state, and county levels. Market information has been obtained from sources presumed to be reliable, including developers, owners, and/or sales agents. However, this information cannot be warranted by Zimmerman/Volk Associates, Inc. While the proprietary residential target market methodology™ employed in this analysis allows for a margin of error in base data, it is assumed that the market data and government estimates and projections are substantially accurate. Absorption scenarios are based upon the assumption that a normal economic environment will prevail in a relatively steady state during development of the subject property. Absorption paces are likely to be slower during recessionary periods and faster during periods of recovery and high growth. Absorption scenarios are also predicated on the assumption that the product recommendations will be implemented generally as outlined in this report and that the developer will apply high-caliber design, construction, marketing, and management techniques to the development of the property. Recommendations are subject to compliance with all applicable regulations. Relevant accounting, tax, and legal matters should be substantiated by appropriate counsel. o ZIMMERMAN/VOLK ASSOCIATES, INC. Post Office Box 4907 Clinton, New Jersey 08809 908 735-6336 info@ZVA.cc • www.ZVA.cc Residential Market Analysis Across the Urban-to-Rural Transect RIGHTS AND STUDY OWNERSHIP— Zimmerman/Volk Associates, Inc. retains all rights, title and interest in the ZVA residential target market methodology™ and target market descriptions contained within this study. The specific findings of the analysis are the property of the client and can be distributed at the client’s discretion. © Zimmerman/Volk Associates, Inc., 2018 o