This was a question asked of me:
I am very concerned about overdevelopment in Ankeny....for example, several years ago it seemed like everyone was building townhomes, now the market seems overstocked....how can we have sensible development in Ankeny?
I am still doing some research on this but here is what I know right now. We can look at the future trends and discuss the trends (both nationally and locally) bringing those expectations back to the vision the council and citizens have for the future of Ankeny. I have not visited the P & Z meetings but understand that they do look at trends and in the Ankeny Comprehensive Plan it is also addressed.
There are several multi-family complexes being built within the city and/or are in some state of proposal right now. To your question: why and will that not lead to an over abundance of multi-family housing also?
In reviewing the building reports on the city website, Ankeny continues to grow. While the numbers of new housing starts is down from the 2000-2005 building peak, there were 355 new single family homes and 226 multi-family dwellings permitted in 2011. It is anticipated that those numbers will increase in 2012.
From 2000 to 2005, when both condo and real estate values were much higher, families were opting for the sometimes less expensive townhome/condo which in many cases was priced just under single family dwellings to “share the American dream” of owning a home.
Times change, in a short 7 years, construction costs are up and lending is tight. While homeownership continues to have appeal with low interest rates, the criteria to borrow that money has changed.
Construction of multi-family units is growing faster than construction of single-family homes—a trend confirmed by the Census Bureau’s monthly report on residential construction.
One reason for the boom in multi-family construction is that rents have risen, making new rental projects more attractive to investors. Obviously rents can’t get too high or people will be turned off. In fact, a recent Bloomberg News Chart of the Day said that the financial advantage of owning over renting is the biggest in at least two decades.
On the other hand, it’s hard to qualify for a mortgage. Plus, multi-family units tend to be smaller and cheaper than single-family homes, which is an asset for people who are scaling back. They also tend to be rented, rather than owned. The six-year-long crash in home prices has taken the bloom off the “ownership society”. Renting doesn’t look as foolish as it did in the days when house prices were rising 10 percent a year or more.
True, multi-family units aren’t all rentals; some are condominiums. Conversely, not all single-family homes are owner-occupied; some are rented out. But those are the exceptions. America’s trend toward rental living is confirmed by U.S. Census Bureau data showing that in the fourth quarter of 2011, the home ownership rate was 66 percent—down from a peak of about 69 percent in 2004-06.
This report showed a 60 percent increase over the past year, through February, in construction permits for units in structures with five or more living units. That compares to a still-healthy 24 percent increase in construction permits for single-family homes. Two-thirds of permits issued were for single-family homes.
In reviewing that documentation from the Census Bureau, we could assume that Ankeny is a mirror of national trends.
On the other side, sales of townhomes/condos have changed also. With the single family market tightening, it's not unusual for the condo market to follow, and that's what we see here. Big drop in actives, large rise in sales, and falling market time of “solds” all indicate a better market for sellers.
The number of households that live in an area can increase through household formation or migration. Household formation is driven by three major forces:- Demographics- Social factors, such as divorce rates, student populations, and - Economic factors such as the state of the economy, wages, etc.
I think it is important to recognize that with 45,000+ people now living in the city, we have and will continue to face changing demographics and economic factors.
Ankeny is positioned well to address that and I look forward to working with folks like yourself as we face the future with a vision.
We also have many great real estate agents in town that are a wealth of information and I look forward to working with them and the home builders in the future. I would ask for your vote on August 14th.