AFFORDABLE HOUSING MARKET STUDY - TERREBONNE …tpcg.org/files/community_development/workforce...Data from the 2009 American Community Survey (ACS) shows a strong local preference

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AFFORDABLE HOUSING MARKET STUDY - TERREBONNE PARISH

Table of Contents

Executive Summary 5 Employment and Economy 5 Demographic Characteristics 6 Housing Need 6 Real Estate Market 6 Demand for Affordable Homeownership 7 Conclusion 7Employment and Economy 8 Employment Trends 9 Building Permit History 10 Commuting Patterns 11 Transportation Costs 12 Foreclosures 13Demographic Characteristics 14 Tenure Patterns 15 Vacancy Rates 16 Settlement Patterns 17Real Estate Market 19 Homeownership Market 19 Rental Market 19 Rent-Buy Analysis 20 Building Permits 21 Demolitions 21 Marketability 22 Crime 22 Schools 22 Housing Need 23 Housing-RelatedNon-ProfitOrganizations 25Demand for Affordable Homeownership 26 Need 26 MarketSize 26 Scenario Variables 27 OtherIndependentVariables 27 Dependent Variables (Calculations) 27 Credit Scores 30 Demand/Feasibility 30 Market Scenarios 30Conclusion 34

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List of Tables

Table 1 - Need for Affordable Housing in Terrebonne Parish 6

Table2-MajorIndustrySectorsinTerrebonneParish 8

Table 3 - Major Employers in Terrebonne Parish 8

Table4-LocalJobGrowthandDemandbyOccupation 9

Table 5 – Place of Residence for Terrebonne Parish Workers 11

Table 6 - Place of Residence for Lafourche Parish Workers 11

Table 7 - Population 15

Table8–Households(OccupiedHousingUnits) 15

Table 9 – Tenure Patterns 15

Table 10 - Trends in Homeownership 1990 - 2009 16

Table 11 - Vacancy by Tenure 16

Table 12 - Household Growth and Decline in Terrebonne Parish Communities 18

Table 13 - Rent-Buy Cost Comparison 20

Table 14 – Average School Performance Scores (2009 & 2010) 22

Table15-HUDIncomeLimits 23

Table 16 - Estimated Housing Need in Terrebonne Parish (2013) 23

Table17–AnnualProjectedNewHouseholdsbyIncome 24

Table18-HouseholdsbySizeandTenure 24

Table19-RegisteredHousingandShelterNon-ProfitOrganizations in Louisiana and Selected Parishes 25

Table 20 – Listof VariablesIncludedinDemandAnalysis 28

Table 21 - HomeCosts,InterestRates,andSubsidyRequirements 29

Table 22 - Percent of Households in Terrebonne Parish with Credit Scores of 620 or Higher 30

Table 23 - Summary of Market Scenarios for Terrebonne Parish 31

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List of Figures

Figure1-UnemploymentStatistics(2001-2010) 9

Figure2–ResidentialBuildingPermitsIssued2000-2009 9

Figure 3 - Transportation Costs in Terrebonne Parish 12

Figure 4 - Average Monthly Foreclosure Rates (Mar 2010-Feb 2011) 13

Figure 5 - Projected Population Growth Rates 14

Figure 6 - Migration of Households 17

Figure7-SampleRentalUnits 20

Figure 8 - Building Permits for New Construction in Terrebonne Parish (2001 - 2010) 21

Figure 9 – Crime Rates (2004-2009) 22

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Executive Summary

Terrebonne Parish is currently experiencing a period of very low vacancy rates, particularly for owner-occupied housing. These low vacancy rates have been caused primarily by the loss of existing housing;aslowdowninnewconstruction;andstrongpopulationandhouseholdgrowth.Onthesupplyside,thelossof existinghousingislargelyaresultof extensiveflooddamagetohousinginthecoastalareasof theparishandthesubsequentdemolitionof damagedandabandonedhomes.Theslowdown in new construction has been caused by the general economic downturn and more stringent mortgageunderwritingrequirementsatthenationallevel,and—atthelocallevel—bytighteningcodeenforcementanduncertaintysurroundingtheDraftFloodInsuranceRateMaps(DFIRM)whichhave been released to the public, but not yet adopted by the Parish. Additionally, foreclosure rates in TerrebonneParisharesignificantlylowerthanthoseatthestateandnationallevels,meaningmorepeople are staying in their homes and less homes are going on to the market as a result of foreclosures. Onthedemandside,thelocaleconomyisoutperformingthestateandthenationintermsof bothemployment and population growth. Local housing experts claim that rising rents are driving some longtime renters to seek affordable homeownership opportunities. These factors, combined with low interest rates and a strong local preference for homeownership are serving to countervail the downward pressureondemandcausedbymorestringentmortgageunderwritingrequirements.

This report provides a general evaluation of the housing market in Terrebonne Parish, with a particular focus on affordable homeownership, and is divided into six sections: Employment and Economy; Demographic Characteristics; Housing Need; Real Estate Market; Demand for Affordable Homeownership; and Conclusion.

Employment and Economy The local economy has remained strong despite the potential setbacks brought about by the “Great Recession”andhurricanesRitaandIke.WhileunemploymentintheHouma-BayouCane-ThibodauxMSA has increased in recent years, following the general trend of the state and the country, it still remains extremely low at 5.0%, compared to a state rate of 7.4% and a national rate of 9.6% as of December of 2010. Continued growth in the regional economy is also highly dependent on oil and gas drilling and exploration in the Gulf of Mexico resuming at levels comparable to those experienced beforetheDeepwaterHorizonoilspillandthesubsequentdrillingmoratorium.

The Louisiana Workforce Commission estimates that the Houma-Bayou Regional Labor Market Area (RMLA3)—whichincludesAssumption,LafourcheandTerrebonneparishes—willaddanaverageof 1,680 new jobs each year until 2018. According to their estimates, approximately 80% of these new jobswillprovidewagesbelowthecurrentAreaMedianIncome(AMI)of $55,800.

Therateof foreclosureinTerrebonneParish(0.03%)issignificantlylowerthanatthestate(0.09%)ornational (0.23%) rates.

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Demographic Characteristics Terrebonne Parish experienced very strong average annual population and households growth between 2000 and 2010, at 0.70% and 1.14%, respectively . Projections from the leading demographic data providerssignificantlyunderestimatedthe2010populationandhouseholds,andhavepredictedslowrates of growth between 2010 and 2015. Nielsen-Claritas expects annual growth rates of 0.49% and 0.76% in Terrebonne Parish for population and households, respectively. The Environmental Systems ResearchInstitute(ESRI)predictsevenlowerannualgrowthratesof 0.12%and0.29%.Inordertoreconcile the slow growth projections of the leading demographic data providers with the high growth ratesshownbytherecentlyreleased2010DecennialCensusfigures,ahybridgrowthratewasusedcombiningtwoactualgrowthrates—calculatedusingthe10-year(2000to2010)andthe5-year(2005to2010)growthfiguresderivedfromU.S.Censuscountsandestimates—withthetwoprojectedgrowthratesprovidedbyNielsen-ClaritasandESRI.Thishybridannualgrowthrateisusedtoestimatefuturehousehold growth in our demand calculation.

Data from the 2009 American Community Survey (ACS) shows a strong local preference for homeownership.InTerrebonneParish,75%of householdsareowner-occupiedcomparedwith68%inthe State of Louisiana and 66% nationally. The ACS data also shows that homeowner vacancy rates are extremely low in Terrebonne Parish at 0.5% versus 2.0% at the state level and 2.6% at the national level.

Housing Need HousingneediscalculatedusingspecialdataprovidedbytheU.S.Departmentof HousingandUrbanDevelopment and published in the 2010 Housing Needs Assessment published by the Louisiana Housing Finance Agency (LHFA). For the purposes of this study, “need” is comprised of: (1) existing homeowners and renters with housing problems (adjusted to 2013); (2) renters without housing problems (adjusted to 2013) who are expected to be looking for new housing options in any given year; and (3) annual new household growth. Need for affordable housing in Terrebonne Parish is estimated tobe2,397inthe50-80%AMIrangeand1,107inthe80-120%AMIrange.

Table 1 - Need for Affordable Housing in Terrebonne Parish

# Components of Need50-80%

AMI80-120%

AMI50-120%

AMI

1 Homeowners with housing problems 1,250 603 1,853

Renters with housing problems 593 232 825

2 Renters without housing problems seeking new housing 1,449 593 2,042

Annualized based on turnover rate for renters (34.9%) 506 207 713

3 Annual new household growth 48 65 113

TOTALS 2,397 1,107 3,504

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Real Estate Market Low homeowner and rental vacancy rates and the lack of new construction in the area present a generally favorable competitive environment for new residential development. Two major single-family homeownerdevelopments—ParkwoodPlaceinEastHoumaandPeltierPlantationinGray—havebeen proposed but not approved pending a decision from the State as to whether or not Community DevelopmentBlockGrant(CDBG)fundingcanbeusedtosubsidizethecostof theassociatedpublicinfrastructure within each development. The Parkwood Place proposal includes the development of 144 single-family homes and the Peltier Plantation proposal includes the development of 116 single-familyhomes.Eachdevelopmentwouldreserve55%of theunits—79and64,respectively—forlowormoderate income households.

Development of market rate rental units has been strong, likely due to the higher rents. The only confirmedaffordableprojectintherentalpipelineistheBaratariaStationproject,currentlyunderconstruction, which will include 57 mixed-income units.

Demand for Affordable Homeownership Due to major changes to the “for sale” housing market in recent years, estimating the potential demand fornewunitsrequiresacarefulandmethodicalanalysisbasedoncurrentmarketconditions,withaparticularfocusonunderwritingrequirements,andthecreditworthinessof thelocalpopulation.

Conclusion Thehighcostof newconstructionortherehabilitationof olderpropertiesplaceshomeownership—particularlyintheformof thetraditionalsingle-familyhome—outof reachof manyfamilies,evenwithsignificantsubsidies.Fortheseincomegroups,therentalmarketstillprovidestheonlypracticaloptionforqualityaffordablehousinginthenearterm.

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Employment and Economy

The local and regional economy is strongly tied to the mining sector, particularly oil and gas production. Retail trade, services, and government jobs tend to arise “downstream” of the purchasing power created by export-oriented jobs in oil and gas extraction and related industries.

Table 2 - Major Industry Sectors in Terrebonne Parish

Table 3 - Major Employers in Terrebonne Parish

Major Industry Sector % of Total Employment

Services 34

Retail Trade 22

Manufacturing 10

Mining 8

Transportation and Communications 6

Construction 6

Wholesale Trade 5

Public Administration 5

Finance, Insurance and Real Estate 4

Agriculture, Forestry and Fishing < 1

Unclassified < 1Source: Terrebonne Economic Development Authority, 2010

Employer Name Employees

Terrebonne Parish School Board 2,764

Pride Offshore (Oil & Gas) 1,519

Gulf Island Fabrication (Oil & Gas) 1,200

Terrebonne General Medical Center 1,130

Houma-Thibodaux Diocese 1,100

Walmart Stores, Inc. 1,044

Leonard Chabert Medical Center 913

Terrebonne Parish Government 759

Rouses Supermarket 687

Weatherford U.S., LLC (Oil & Gas) 525

Source: Terrebonne Economic Development Authority, 2010

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Employment Trends The Louisiana Workforce Commission estimates that the Houma-Bayou Regional Labor Market Area (RMLA3)—whichincludesAssumption,LafourcheandTerrebonneparishes—willaddanaverageof 1,680 new jobs each year until 2018. Table 4 lists the occupations with the highest anticipated growth projected from 2008 to 2018. While the average salary of the highest growth occupational category (captains, mates and pilots of water vessels) is well above the median household income, all of the remaining high-growth occupations have average salaries that would position a single-earner household of fourbelow80%of theAreaMedianIncome.Someof thegrowthoccupations,particularlythoseinfoodserviceandretail,wouldpositiontwo-earnerhouseholdsof fourbelowAreaMedianIncome.This is an indication that the need for affordable housing is likely to grow. When accounting for all 268 occupations included in the Louisiana Workforce Commissions projections for RMLA 3, approximately 80%of allnewjobgrowthwouldprovidewagesbelowtheAreaMedianIncome(AMI)of $55,800.

Table 4 - Local Job Growth and Demand by Occupation

The unemployment rate in Terrebonne and Lafourche parishes (the Houma-Bayou Cane-Thibodaux MSA) has historically been lower than the state and national rates, averaging around 4.3% over the last ten years. While local unemployment has increased in recent years, following the general trend of the state and the country, it still remains extremely low at 5.0%, compared to a state rate of 7.4% and a national rate of 9.6% as of December of 2010.

Occupational TitleAnnual Growth (jobs)

2010 Regional Annual

Average Wage

Captains, Mates, and Pilots of Water Vessels 130 $75,082

Welders, Cutters, Solderers, and Brazers 110 $39,160

Sailors and Marine Oilers 80 $41,115

Elementary School Teachers, Except Special Education 60 $42,847

Truck Drivers, Heavy and Tractor-Trailer 50 $30,855

Waiters and Waitresses 40 $15,675

Food Preparation Workers 40 $17,592

Office Clerks, General 40 $20,672

Janitors and Cleaners, Except Maids and Housekeeping Cleaners 40 $21,150

Retail Salespersons 30 $22,813

80% AMI $44,650Source: Louisiana Workforce Commission, Long Term Total Annual Demand for Top Occupations to the Year 2018 (RMLA 3)

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Figure 1 - Unemployment Statistics (2001-2010)

The regional economy has proven to be extremely resilient in the face of both the storms of 2005 and 2008 and the “Great Recession.” However, due its strong dependence on oil and gas exports, serious concerns about the ability of the regional economy to maintain current levels of employment andgrowthhaveemergedinthewakeof theDeepwaterHorizonoilspillandthesteepreductioninoff-shore permitting activity resulting from both the moratorium and a stricter regulatory environment. Overalleconomicgrowthintheregionwilldependheavilyonthegeneraleconomicrecoverynationwide; the level of oil and gas permitting activity in the Gulf; and the price of oil globally.

Building Permit History As shown in Figure 2, residential construction has fallen substantially in recent years in the area. The number of permits issued spiked in 2006, and has been declining steadily since, with Terrebonne Parish facing a more precipitous decline in residential permitting than neighboring Lafourche Parish.

Figure 2 – Residential Building Permits Issued 2000-2009

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Nation State Houma MSA

Katrina / Rita

Gustav / Ike

Oil Spill

*2010 unemployment rate for Houma MSA is preliminary. Source: U.S. Department of Labor, Bureau of Labor Statistics, 2011; GCR & Associates, Inc.

1200

1000

800

600

400

200

02000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Houma-Thibodaux MSA Terrebonne Parish Lafourche Parish

Source: U.S Bureau of the Census, Manufacturing, Mining, and Construction Statistics

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The South Central Planning and Development Commission took on responsibility for plan review and inspection for its six member parishes (Assumption, Lafourche, St. Charles, St. James, St. John the Baptist, and Terrebonne) starting in 2007. Lafourche Parish pulled out of this arrangement in 2010, and is currently processing its own permits. The foreclosure crisis and decline in home values nationally, combined with stricter building codes and enforcement locally, were likely the key factors contributing to the drop in building permits starting in 2007.

Commuting Patterns Parish-to-parishworkerflowdataindicatesastrongrelationshipbetweenhousingandemploymentinTerrebonne and Lafourche parishes. Approximately 16% of the Terrebonne Parish workforce resides in Lafourche Parish, and 11% of the workforce in Lafourche Parish commutes in from Terrebonne (see Table 5 and Table 6).

Table 5 – Place of Residence for Terrebonne Parish Workers

Table 6 - Place of Residence for Lafourche Parish Workers

Place of Residence (Parish) Number of Workers Percentage

Terrebonne Parish 33,567 75.8%

Lafourche Parish 6,999 15.8%

St. Mary Parish 367 0.8%

Jefferson Parish 363 0.8%

Assumption Parish 269 0.6%

Source: U.S. Census Bureau, County-to-County Worker Flow Files, 2000

Place of Residence (Parish) Number of Workers Percentage

Lafourche Parish 23,641 79.7%

Terrebonne Parish 3,210 10.8%

Assumption Parish 880 3.0%

St. James Parish 347 1.2%

Jefferson Parish 320 1.1%

Source: U.S. Census Bureau, County-to-County Worker Flow Files, 2000

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Transportation Costs By choosing to live in a particular location, a household is also implicitly taking on the transportation costs associated with that location. While the cost of land is generally cheaper in outlying areas, the cost savings can be offset by higher transportation costs, and diminish the overall affordability of housing in the area. However, these transportation costs are rarely considered in the calculation of housing affordability. Housing is generally considered affordable if it accounts for 30% or less of a household’s monthly budget. Broader national or regional consumer expenditure statistics appear to support that 30% ratio of housing cost to total income. These same statistics show that transportation costs typically represent about 15% or less of a household’s net income.1

A more comprehensive housing affordability measure that is gaining acceptance places 45% as the upper threshold for affordability of housing and transportation costs combined. According to the H+T®AffordabilityIndex,householdswithintheHouma-BayouCane-ThibodauxMSAspendanaverage of 29.5% of monthly income on transportation. With transportation costs at this level, the average local household would be able to spend no more than 15.5% on housing to remain within the combinedhousingandtransportationthresholdof affordability.Of course,transportationcostsvarysignificantlywithintheMSAdependingonwherethehousingislocatedinrelationtolocaljobsandservices.Figure3illustrateshowsiteselectioncanhaveasignificantimpactontheoverallaffordabilityof new housing.

Figure 3 - Transportation Costs in Terrebonne Parish

Transportation costs and the number of vehicle miles traveled (VMT) are predictably lowest in Houma which serves as the regional commercial and employment hub. Transportation costs generally rise in proportion to an area’s distance from Houma. This discrepancy in transportation costs underscores

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%Houma Bayou Cane Gray Schriever Chauvin/Dulac/

Montegut

Percent of HHs spending28% or more of incomeon transportation

Percent of HHs who drivemore than 18,000 milesper year

Note: Data for Bourg was not available. Source: Center for Neighborhood Technology; GCR & Associates, Inc.

1The 2008-2009 Consumer Expenditure Survey, published by the Bureau of Labor Statistics, indicate that in the Southern United States, consumers spend 26.1% of net annual income on housing and 13.5% of net annual income on transportation.

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theimportanceof developingaffordablehousinginareasclosetojobsandservices.Improvedtransitserviceandthedevelopmentof safeinfrastructureforwalkingandbicyclingcanplayasignificantrolein supporting overall housing affordability.

The transportation cost data in Figure 3 shows that either all or a large majority of households in Gray, Schriever, Chauvin, Dulac and Montegut pay 28% or more of household income on transportation. These high transportation costs suggest that at the maximum housing cost to income ratio of 30%, a typical household in the area would be spending 58% of income or more on housing and transportation costs alone.

Foreclosures

Figure4showsthatthe12-monthaverageforeclosurerateforTerrebonneParishissignificantlylowerthaninnearbyparishes.Itisalsosignificantlylowerthanthestateornationalaverages.Duringthisone-yearperiod(Mar.2010-Feb.2011),TerrebonneParishhadjust175foreclosurefilings.Thatfact that foreclosed homes are not being put back onto the market at rates seen in other areas allows homeowner vacancy rates to remain low. Foreclosure rates are calculated by dividing the total number of foreclosurefilings(defaultnotice,foreclosureauctionnotice,orbankrepossession)bythenumberof households in the area.

Figure 4 - Average Monthly Foreclosure Rates (Mar 2010-Feb 2011)

Source: RealtyTrac; GCR & Associates, Inc.

0.25%

0.20%

0.15%

0.10%

0.05%

0.00%Terrebonne LaFourche St. Charles Louisiana United States

0.23%

0.09%

0.14%

0.08%

0.03%

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Demographic Characteristics

The results of the 2010 Census revealed higher-than-expected population growth in Terrebonne Parish.Infact,the2010Censuspopulationfigureswerehigherthanthe2015projectionsof leadingdemographicdataproviders(ESRIandNielsen-Claritas).Whilemanyof thesurroundingcoastalparisheseitherlostpopulation(St.Bernard,Plaquemines,Jefferson,Cameron)orexperiencedrelativelylowpopulationgrowth(St.Mary),TerrebonneParishexperiencedsignificantgrowthinpopulation(over7%)andhouseholds(over11%)between2000and2010.Inordertoreconcilethehighgrowthrates leading up to the 2010 Census, with the much slower growth rates forecast by the leading demographic data providers, we developed a hybrid growth rate that averages four different growth rates including: the 10-year actual growth rate (2000-2010); the 5-year actual growth rate (2005-2010); andtwo5-yearforecastedgrowthrates(2010-2015)providedbyESRIandNielsen-Claritas.Figure5shows 2015 projections based on GCR’s hybrid growth rate as well as each of its component growth rates.

Figure 5 - Projected Population Growth Rates

Source: U.S. Census Bureau; ESRI; Nielsen-Claritas; GCR & Associates, Inc.

The hybrid growth rate depicted in Figure 5 above was used to generate the population projections for 2013 and 2015 in Table 7 below. Though we anticipate a slower rate of population growth for the immediatefuturethanwhatwasexperiencedoverthelastdecade,growthwillstillgeneratesignificantnewdemandforaffordablehousingoverthenextfiveyears.

118,000

115,000

114,000

112,000

110,000

108,000

106,000

104,0002000 2005 2010 2015

Terrebonne Parish

Census 5-year Growth Rate

Census 10-year Growth Rate

Hybrid Growth Rate (GCR)

Claritas Growth Rate

ESRI Growth Rate

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Table 7 - Population

Geographic Area 2000 2010 2013 projection

2015 projection

Est. Growth

(2010-2015)

Terrebonne Parish 104,503 111,860 113,860 115,193 2.98%

Houma-Bayou Cane-Thibodaux MSA

194,477 208,178 211,737 214,110 2.85%

Note: The 2000 and 2010 population numbers are provided by the U.S. Census Bureau. The projections for 2013 and 2015 are based on a composite of growth rates derived from U.S. Census Bureau counts and estimates, and proprietary growth projections.

Source: U.S. Census Bureau; Nielsen-Claritas; ESRI; GCR & Associates, Inc.

The same methodology was applied to occupied housing units in order to develop projections for the number of households in 2013 and 2015.

Table 8 – Households (Occupied Housing Units)

Geographic Area 2000 2010 2013 projection

2015 projection

Est. Growth

(2010-2015)

Terrebonne Parish 35,997 40,091 41,003 41,674 3.95%

Houma-Bayou Cane-Thi-bodaux MSA

68,054 75,577 76,994 78,966 4.46%

Note: The 2000 and 2010 occupied housing unit numbers are provided by the U.S. Census Bureau. The projections for 2013 and 2015 are based on a composite of growth rates derived from U.S. Census Bureau counts and estimates, and proprietary growth projections.

Source: U.S. Census Bureau; Nielsen-Claritas; ESRI; GCR & Associates, Inc.

Tenure Patterns Ananalysisof tenurepatterns(Table9)indicatesasignificantlystrongermarketpreferenceforhomeownership in the primary and secondary market areas than in the state or the nation.

Table 9 – Tenure Patterns

While homeownership rates in the market area are higher than those at the state or national level, it should be noted that the increase in homeownership rates has generally slowed or reversed in recent years (see Table 10). For example, the rate of homeownership in Terrebonne Parish decreased by 1.1 percentage points between 2000 and 2009. The Houma-Bayou Cane-Thibodaux MSA saw positive growth in homeownership rates (due entirely to strong homeownership growth in Lafourche Parish), but the overall growth rate was slower than that experienced in the previous decade (1990-2010).

Geographic Area2000 2009

Renters % Owners % Renters % Owners %

Terrebonne Parish 8,785 24.4 27,212 75.6 10,173 25.5 29,766 74.5


15,844 23.3 52,210 76.7 16,843 22.5 57,873 77.5

Louisiana 530,918 33.8 1,125,135 66.2 541,467 32.1 1,146,560 67.9

United States 35,664,348 32.1 69,815,753 67.9 38,773,225 34.1 74,843,004 65.9Note: Tenure data is from the 2000 Decennial Census and the 2009 American Community Survey. Tenure data from the 2010 Decennial Census had not been released by the U.S. Census Bureau at the time this report was prepared.

Source: U.S. Census Bureau; GCR & Associates

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Table 10 - Trends in Homeownership 1990 - 2009

Geographic Area 1990 2000 Change (1990-2000)

2009 Change (2000-2009)

Terrebonne Parish 73.2% 75.6% 2.4% 74.5% -1.1%

Houma-Bayou Cane-Thi-bodaux MSA

74.4% 76.7% 2.3% 77.5% 0.7%

Louisiana 65.9% 67.9% 2.0% 67.9% 0.0%

United States 64.2% 66.2% 2.0% 65.9% -0.3%

Note: Tenure data is from the 1990 & 2000 Decennial Censuses and the 2009 American Community Survey. Tenure data from the 2010 Decennial Census had not been released by the U.S. Census Bureau at the time this report was prepared.

Source: U.S. Census Bureau; GCR & Associates

Vacancy Rates Thevacancyrateforowner-occupiedhomesinTerrebonneParishissignificantlylowerthanthevacancy rates at the state and national level (see Table 11). This is an indicator that there is demand for additional owner-occupied housing in the primary market area. Strong household growth between 2000 and 2010, a slowdown in home construction, the damage to and abandonment of homes caused by recenthurricanes,andthesubsequentincreaseinthenumberof demolitionsareallfactorscontributingto the low vacancy rates.2

Table 11 - Vacancy by Tenure

The vacancy rates by tenure shown in Table 11 were calculated using the 2007-2009 American Community Survey 3-Year Estimates (the most recent data available for Terrebonne Parish) according tothefollowingdefinitions:

Homeowner Vacancy Rate The homeowner vacancy rate is the proportion of the homeowner inventory that is vacant “for sale.” It is computed by dividing the number of vacant units “for sale only” by the sum of the owner-occupied units, vacant units that are “for sale only,” and vacant units that have been sold but not yet occupied, and then multiplying by 100. This measure is rounded to the nearest tenth.

2According to the Federal Emergency Management Agency and the Terrebonne Parish Consolidated Government Department of Planning and Zoning, at least 197 owner occupied and 121 rental homes were destroyed beyond repair by the storm surge caused by Hurricane Ike in 2008. A TPCG survey estimates that as many as 800 residential structures have been abandoned due to hurricanes or past flood events.

Homeowner Vacancy Rental Vacancy

Geography Vacant Units All UnitsVacancy

RateVacant Units All Units

Vacancy Rate

Terrebonne Parish 152 29,595 0.5% 473 10,604 4.5%


728 56,752 1.3% 708 18,534 3.8%

Louisiana 22,731 1,159,273 2.0% 46,905 588,035 8.0%

United States 1,982,499 77,727,445 2.6% 3,372,710 41,982,609 8.0%Source: U.S. Census Bureau, American Community Survey, 3-year Estimates (2007-2009); GCR & Associates

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Rental Vacancy Rate The rental vacancy rate is the proportion of the rental inventory that is vacant “for rent.” It is computed by dividing the number of vacant units “for rent” by the sum of the renter-occupied units, vacant units that are “for rent,” and vacant units that have been rented but not yet occupied, and then multiplying by 100. This measure is rounded to the nearest tenth.

Source: Social Explorer; U.S. Census Bureau; American Community Survey 2006 Summary File: Technical Documentation

Settlement Patterns Houmaisthepopulationandemploymentcenterof theParish.Overthepast10years—andparticularlyafterthestormsof 2005and2008—therehasbeenasignificantmigrationawayfromcoastal areas of the parish such as and inland toward Houma and areas to the north, as seen through ananalysisof the2000and2010Censusfigures.Figure6providesavisualrepresentationof thismigration.

Figure 6 - Migration of Households

Source: U.S. Census Bureau ; GCR & Associates, Inc. – 2010 Census Portal [ http://demoweb2.gcr1.com/weborb30/gcr/census2010/]

As shown in Table 12, out migration of households has been strongest in the coastal areas such as Dulac (-36.2%), Montegut (-10.3%), and Chauvin (-9.5%). Household growth has been strongest in Bourg (24.6%), Bayou Cane (20.5%), Shriever (22.0%), and Gray (15.1%). Household growth in

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Houma has been more modest at 7.9%. The greatest number of new households formed in Bayou Cane (1,273) and Houma (934). The greatest number of households were lost in Dulac (278) and and Chauvin (104).

Table 12 - Household Growth and Decline in Terrebonne Parish Communities

Area 2000 2010 Change (#)

Change (%)

Bayou Cane 6,222 7,495 1,273 20.5%

Bourg 714 890 176 24.6%

Chauvin 1,090 986 -104 -9.5%

Dulac 768 490 -278 -36.2%

Gray 1,684 1,938 254 15.1%

Houma 11,817 12,751 934 7.9%

Montegut 592 531 -61 -10.3%

Schriever 2,000 2,440 440 22.0%

Terrebonne Parish 35,997 40,091 4,094 11.4%

Source: U.S. Census Bureau: GCR & Associates, Inc. - 2010 Census Portal

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Real Estate Market

Low homeowner and rental vacancy rates and the lack of new construction in the area present a generally favorable competitive environment for new real estate development in Terrebonne Parish.

Homeownership Market At the national level, more stringent underwriting standards combined with the economic downturn havesignificantlynarrowedthemarketforhomeownershipnationwide.Thecurrentstateof economicuncertainty generally favors the rental market over the for-sale housing market, as households are more comfortable committing to a short-term lease than a long-term mortgage. Recent calls to scale back or eliminate the Federal mortgage interest deduction may reinforce American’s reluctance to purchase homes in the near term.3 Projected interest rate increases in the near future could also hinder demand for homeownership.4

Theonlysignificantdevelopmentinthehomeownershippipelineincludethe116homes(64of whichwouldbereservedforlowtomoderateincomefamilies)proposedforthesubsidizedPeltierPlantation development in Gray, Louisiana; and the 144 homes (79 or which would be reserved for low to moderate income families) in East Houma. Both projects propose the use of Community Development Block Grant (CDBG) funding to develop the public infrastructure (streets, storm drains, etc.) The resulting per lot infrastructure subsidy would be passed along to buyers of the low to moderate income units.

Rental Market Based on interviews with local real estate and housing experts, rising rents are generating interest in homeownership among the low to moderate income population. Rising rents could be caused, in part, by rising insurance rates for small rentals as owners pass these additional costs onto renters.5 However, new apartment construction and the growing number of single family homes being offered for rent duetoslowerhomesales,maycountervailrisingrentsandleadtoareductionorstabilizationof rentalprices in the near future.

TheonlyconfirmedaffordablerentalprojectinthepipelineistheBaratariaStationproject,currentlyunder construction, which will include 57 mixed-income units. The majority of these apartments (72% or 41 units) will have one bedroom and one bathroom. The remaining apartments (28% or 16 units) will have two bedrooms and two bathrooms. The apartments will be available for lease to all adults age 18 and over. Construction is expected to be complete in the fall of 2011.

Rent-Buy Analysis Basedonthetypicalsalesprice($130-150K)of qualitythree-bedroom,twobathroomhomesintheParish,amoderatelevelof subsidy(~$16K),andtheexpectedrangeof potentialinterestrates(4.75-6.30%),lowtomoderateincomebuyerswouldberequiredtomakeamonthlymortgagepaymentof between$950and$1,200(includesprincipal,interest,taxesandinsurance).Marketratebuyerswouldpaybetween$1,000and$1,275permonth.Asurveyof advertisedrentalpropertiesconductedon

3Glaeser, Edward L. “Back off from our housing choices.” Boston Globe. 10 Mar. 2011

4The latest Mortgage Finance Forecast (dated Feb., 18, 2011) from the Mortgage Bankers Association predicts an average mortgage interest rate of 6.3% for 30-year fixed rate mortgages in the fourth quarter of 2012, as compared to the current rate of 4.75% for FHA-backed mortgages.

5Mowbray, Rebecca. “State Farm will raise rates for mom-and-pop landlords, drop their wind coverage.” Times-Picayune. 16 January 2011

20


March14,2011identifiedatotalof 12availablerentalsof comparablesize(minimumof 3BR/2BA)in the market area. The rental properties included both single family homes and traditional apartments andrentsrangedfrom$650to$1,500.

The single family residences typically included fully furnished kitchens with washer and dryer hookups. Onlytwounitsincludedin-unitlaundryfacilities.Manyof theapartmentunitsincludedincreasedamenities such as swimming pools and onsite laundry facilities. That said, all developments including luxuryamenitiessuchasfitnesscenters,businesscentersandin-unitlaundryfacilitieswereatthehighendof therentalcostrange,around$1,200to$1,500.Manyof thethreebedroomapartmentsthatrentforlessthan$1,200areolderdevelopmentswithlimitedamenitiesorotherupdates.

Table 13 - Rent-Buy Cost Comparison

Based on this analysis of the current rental market, homeownership compares favorably with renting. This conclusion is consistent with the opinions of local housing experts who have stated that current rentalpricesareleadinganincreasingnumberof householdstoseekfinancingforhomeownership.6

Figure 7 - Sample Rental Units

Housing TypeMonthly Housing Payment

Monthly Utilities

Est. Annual Income Tax

Savings

Annual Net Housing

Cost

Subsidized Homeownership ($150K, 6.3% APR) $1,215 $195 $2,100 $14,820

Subsidized Homeownership ($130K, 4.75% APR) $950 $195 $1,375 $12,365

Market Rate Homeownership ($150K, 6.3% APR) $1,280 $195 $2,245 $15,455

Market Rate Homeownership ($130K, 4.75% APR) $1,010 $195 $1,480 $12,980

Rent (high) $1,500 $195 - $20,340

Rent (low) $650 $195 - $10,140 Note: Subsidized homeownership cost assumes the infrastructure subsidy of $15,625 and no additional downpayment. Market rate homeownership cost as-sumes a 3.5% downpayment would be made by the homebuyer.

Acadia Apartments: 1300 Laban Avenue Houma, LA 70363 (3BR/1BA $795/mo)

Canterbury House Apartments: 5467 West Park Avenue Houma, LA 70364 (3BR/2BA $840/mo)

6Based on interviews with Susie Boudreaux (Vice President and Mortgage Executive at Iberia Bank) and Paula Ringo (Associate Director, Catholic Housing Services).

21


Building Permits While permitting for new commercial construction has remained relatively constant, permits for new residential construction have decreased sharply since 2006, as shown in Figure 8.

Figure 8 - Building Permits for New Construction in Terrebonne Parish (2001 - 2010)

Source: Terrebonne Parish Consolidated Government Planning and Zoning Department

Only174buildingpermitswereissuedfornewresidentialconstruction(includingsingleandmulti-family units) in Terrebonne Parish in 2010. The foreclosure crisis and decline in home values nationally, combined with stricter building codes and enforcement locally, were likely the key factors contributing to this decline in new residential construction. According to discussions with Terrebonne Parish Consolidated Government Planning Department staff, a much smaller percentage of recent new home constructionisspeculative.Asignificantportionof therecentnewconstructionpermitshavebeenissued to homeowners who have received Road Home funding for their properties in coastal areas and havedecidedtobuildfarthernorthtoavoidfutureflooding.

Demolitions BeginninginFebruary2010,theParishhasidentifiedandbegundemolitiononapproximately740single-familyhomesduetotheirbeingeitherabandonedandderelictorflooddamagedduringHurricaneIke.Themajorityof theseproposeddemolitionsarelocatedintheLowerBayouSpecialFloodHazardArea,asdesignatedbytheFederalEmergencyManagementAgency(FEMA).Asof April 1, 2011, 72 of these structures were under mitigation by their owners, leaving approximately 650 single family homes on the list for demolition. These demolitions are a key element in a population shift from the lower coastal areas of the parish to the north, and have contributed to the low vacancy rates in the area.

435

491

519

526554

625

310 301

265

174

0

100

200

300

400

500

600

700

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Residential

Commercial

22


Marketability The strong local economy will go a long way in enhancing the marketability of housing in Terrebonne Parish. Two other factors that buyers or renters consider when making location decisions are crime ratesandthequalityof localschools.

Crime AccordingtoTPCGstaff,theHoumaPolicehavemadesignificantprogressinrecentyearstoaddresscrimeprobleminthearea.CrimestatisticspublishedbytheU.S.Departmentof Justice(Figure9)seemtoconfirmthis,indicatingthatcrimeinHoumahasbeengenerallytrendingdownwardoverthepastfiveyears.

Figure 9 – Crime Rates (2004-2009)

*Per 1,000 residents Source: U.S. Department of Justice — Federal Bureau of Investigation, Crime in the United States reports (2004 - 2009)

Schools Thequalityof schoolscanbeasignificantfactorinahomepurchasingdecisioninmarketswherethebuyer has a choice. Every year schools receive numerical scores known as School Performance Scores (SPS). Louisiana’s goal is for every school in the state to have an SPS of 120 by the year 2014. School Performance Scores are based factors such as attendance, assessments (testing), graduation rates, and dropoutrates.TheTerreboneParishSchoolDistrictsawsignificantimprovementbetween2009and2010 and has maintained a score comparable to the State average.

Table 14 – Average School Performance Scores (2009 & 2010)

80

75

70

65

60

55

50

45

40

35

302004 2005 2006 2007 2008 2009

Houma

Thibodaux

Louisiana

Houma-Thibodaux MSA

School 2009 2010 Change

Terrebonne School District 90.2 92.3 +2.1

State of Louisiana 91.0 92.5 +1.5

Source: Louisiana Department of Education, Fall 2009 and Fall 2010 School Report Cards and Account-ability Reports

23


Housing Need For the purposes of this study, need is comprised of all existing households (homeowners and renters) with housing problems, existing renters without housing problems who may be seeking new housing options during any given year,7 and new household growth during any given year.8 Table 15 describes theincomelimitsandterminologyusedbytheU.S.Departmentof HousingandUrbanDevelopment(HUD).Table16providesdataonhousingneedbytenureandincomecategory,estimatedto2013.

Table 15 - HUD Income Limits

Table 16 - Estimated Housing Need in Terrebonne Parish (2013)

Table 17 shows need coming from annual household growth which includes new households moving to Terrebonne Parish from other areas, as well as new households forming within the parish due to internal population growth and former dependents becoming heads of household.

Owner Renter Total

Income LevelHousing

Problems

No Housing

ProblemsTotal

Housing Problems

No Housing

ProblemsTotal

Housing Problems

No Housing

ProblemsTotal

30% AMI or less 2,021 674 2,694 1,556 851 2,408 3,577 1,525 5,102

30.1-50% AMI 1,202 1,660 2,861 1,697 603 2,301 2,899 2,263 5,162

50.1-80% AMI 1,250 3,163 4,413 593 1,449 2,042 1,843 4,612 6,455

80.1-95% AMI 318 1,757 2,075 167 593 760 485 2,349 2,834

95.1-120% AMI Estimate 285 3,476 3,761 65 782 847 350 4,259 4,608

120% AMI and above 1,041 12,705 13,746 237 2,860 3,097 1,278 15,564 16,843

Total 6,116 23,433 29,551 4,315 7,139 11,456 10,430 30,572 41,005

Note: The primary source for the data in this table is the 2009 Comprehensive Housing Affordability Strategy data as reported in the Louisiana Affordable Housing Needs Assessment, 2010. The data was adjusted to reflect the increase in the total number of occupied housing units report-ed in the 2010 U.S. Census Redistricting Data, and then projected to 2013 using the methodology illustrated in Figure 5. The 95.1-120% and 120% and above categories were added using household income distributions provided by the 2009 American Community Survey.

Source: U.S. Census Bureau; U.S. Department of Housing and Urban Development; Louisiana Housing Finance Agency; GCR & Associates, Inc.

Income Level Income Limit

Extremely Low Income (up to 30% AMI) $16,750

Very Low Income (30.1-50% AMI) $27,900

Low Income (50.1-80% AMI) $44,650

Moderate Income (80.1-120% AMI) $66,950

Area Median Income (AMI) $55,800

Note: Income limits are based on a household size of four. Limits may not calculate as the exact percentage of AMI as they are adjusted by HUD based on a variety of factors and rounded to the nearest 50. The 80.1-120% range was calculated by GCR.

Source: U.S. Department of Housing and Urban Development, FY 2010 Income Limits; GCR and Associates, Inc.

7According to the U.S. Census Geographic Mobility data, 34.9% of all renters in the South region of the United States had moved in the previous year. This ratio has been adjusted to 52.4% to account for the projected 18-month absorption period.

8 A household with a housing problem is defined as having one or more of the following characteristics: (1) cost burdened (paying more than 30% of income on housing): (2) living in overcrowded conditions (more than one person per room); or (3) lacking adequate plumbing and/or kitchen facilities.

24


Table 17 – Annual Projected New Households by Income

Table18showsthatalmostthreequarters(74%)of allhouseholdshavebetweentwoandsixmembers.Therefore,itisassumedthatthegreatestneedcanbesatisfiedbyhomesthatcancomfortablyprovideshelter for households with two to six members.

Table 18 - Households by Size and Tenure

Terrebonne Parish

HH Size Owner Occupied Renter Occupied Households

# % # % # %

1 person 6,121 21% 4,018 39% 10,139 25%

2 person 10,118 34% 2,164 21% 12,282 31%

3 person 5,211 18% 1,610 16% 6,821 17%

4 person 4,377 15% 1,133 11% 5,510 14%

5 person 2,418 8% 1,014 10% 3,432 9%

6 person 1,162 4% 234 2% 1,396 3%

7+ person 359 1% - 0% 359 1%

Total 29,766 100% 10,173 100% 39,939 100%

Source: U.S. Census Bureau, American Community Survey, 2009

Geographic AreaTotal New HH

30% AMI or

less

30 - 50% AMI

50-80% AMI

80-95% AMI

95-120% AMI

120% AMI +

Terrebonne Parish 304 38 38 48 21 44 115


472 59 60 78 33 62 181

Note: The methodology used for projecting total annual household growth is shown in Figure 5. This growth was distributed across AMI thresholds using the same distributions provided by the HUD CHAS 2009 data.

Source: GCR & Associates, Inc. using data provided by the U.S. Census Bureau; HUD; ESRI; and Nielsen-Claritas

25


Housing-Related Non-Profit Organizations Thelevelof housingrelatednon-profitactivitycanbeusedasageneralindicatorof need—oratleastthelevelof support—foraffordablehousingandrelatedservicesinthearea.Itcanalsoserveas a gauge of the level of support within the community for affordable housing infrastructure and programs.

Table 19 - Registered Housing and Shelter Non-Profit Organizations

in Louisiana and Selected Parishes

ParishRegistered

Organizations

Organizations Filing Form

990 *Reported Revenue

Reported Assets

Terrebonne Parish, LA 11 7 $4,075,303 $5,805,884

Lafourche Parish, LA 5 3 $2,326,291 $5,287,918

Orleans Parish, LA 116 60 $68,792,453 $227,427,731

Jefferson Parish, LA 51 30 $13,750,188 $54,842,675

St. Charles Parish, LA 1 1 $0 $0

St. Mary Parish, LA 3 1 $215,597 $510,721

Plaquemines Parish, LA 4 1 $0 $0

Louisiana Total 593 371 $228,496,333 $914,034,279

* Includes organizations that filed a Form 990, 990-EZ, 990-PF and, since 2008, 990-N ePostcard within 24 months of the BMF release date, as reported in NCCS Core Files and IRS Business Master Files.

Source: Internal Revenue Service, Exempt Organizations Business Master File (2010, Nov); The Urban Institute, National Center for Charitable Statistics, http://nccsdataweb.urban.org/ ©2011

26


Demand for Affordable Homeownership Due to major changes to the “for sale” housing market in recent years, estimating the potential demand fornewunitsrequiresacarefulandmethodicalanalysisbasedoncurrentmarketconditions,withaparticularfocusonunderwritingrequirements,andthecreditworthinessof thelocalpopulation.

Estimatingdemandrequiresfourkeysteps:(1)anestimateof need;(2)anestimateof marketsizebasedonneedandqualifications(basedonincomelevelsandabilitytosecureamortgage);(3)acalculation of what percentage of the market must be captured; and (4) a determination that there is (or isnot)sufficientdemandtocapturethatpercentageof themarket.

Need For the purposes of evaluating demand, need for affordable homeownership is comprised of three distinctcohorts.Thefirstcohortincludesallhouseholdswithhousingproblems.HUDdefineshousing problems as households that are paying more than 30% of their income towards housing costsand/orhouseholdslivingwithininadequateconditions.Inadequateconditionsaredefinedashouseholdslivingwithoutadequatekitchenorplumbingfacilitiesorhouseholdslivinginovercrowdedconditions (more than one person per room). This cohort is estimated based on a growth projection to April of 2013, assuming three years of household growth on top of the 2010 Census counts.

The second cohort includes existing renter households without housing problems, who may be seeking new housing options during the absorption period. An assumed annual turnover rate of 35% is applied to this cohort to more accurately represent the number of renter households who may actually be seeking new housing options in any given year.9 According to interviews with TPCG staff, a local mortgage broker and an affordable housing advocate, there has been a shift in interest locally from rental housing to homeownership due in part to rising rents and low interest rates. Stronger limitations on access to credit act as a countervailing force to this trend.

The third cohort includes new households forming in the Parish during the absorption period for the homes in the development.

Market Size Noteveryoneinneedof anewhomewillhavethefinancialresourcestobuyone,evenwithavailablesubsidies.Thesecondstepinevaluatingdemandrequiresadeterminationof theproportionof thoseinneedwhowillactuallymeettheincomeandcreditrequirementsnecessarytoobtainamortgagethatwillcoverthesubsidizedcostof thehome.Thisevaluationconsidersavarietyof factorswhichhavebeencategorizedaseither(1)scenariovariables;(2)otherindependentvariables;or(3)dependentvariables (calculations).

9 According to the U.S. Census package: “Geographical Mobility: 2008 to 2009,” over one-third (35 percent) of all people living in renter-occupied housing units in the South Region of the United States in 2009, lived elsewhere a year earlier. The moving rate for people living in owner-occupied housing units was 6 percent.

27


Scenario Variables These are the three primary independent variables in the demand calculation that most directly impact the affordability of homeownership and which have been adjusted to develop four different affordability scenarios. These include home price, subsidy, and the Annual Percentage Rate (APR).

Other Independent Variables The other independent variables have been derived from a variety of sources and remain constant across all scenarios and calculations of demand. These include the loan term, existing debt levels, target debt ratios, the target housing cost to income ratio, income limits, and credit scores.

Dependent Variables (Calculations) The dependent variables encompass a series of calculations that determine the number of income- and credit-eligible buyers (those who have both need and means) within the target low-to-moderate income group.

28


Table20liststhefactorsincludedinthemarketsizeanalysis.Additionalinformationoneachvariableisincluded in parenthesis. For the scenario variables the values will vary based on the market conditions, regulatoryconditions,andpricingof unitsinanyspecificdevelopment.Fortheotherindependentvariablesonlyonelocalizedvalueisprovided,unlessasecondvalueisneededtoreflectadjustmentsmade in the market rate demand analysis. For the dependent variables, values are not provided, since their value is dependent on the result of calculations involving other variables.

Table 20 - List of Variables Included in Demand Analysis

Table 21 presents calculations showing the relationship between home costs, interest rates and the requiredlevelsof subsidyforhouseholdsof differentincomelevels.Thedatainthistableillustratesthedifficultyinprovidingaffordablehomeownershiptofamilieswithincomesbelow80%of AMI,particularlygiventhehighcost($130,000-$150,000)of newsingle-familyconstruction.

Scenario Variables & Value Assumptions (Low, High,

Market Rate)

Other Independent Variables & Value Assumptions

(General, Market Rate)Dependent Variables

(Calculations)

Home price Area Median Income

($55,800)Property taxes

Down payment assistance / subsidy for affordable units

Primary Market Area

(Terrebonne Parish)Flood insurance

Interest rate / APR

Loan term

(30 years)

Down payment percentage

Income limit for affordable units

Existing monthly debt

($400)Mortgage insurance

Est. monthly utilities

($125.32)Required loan amount

Housing cost to income ratio for affordable units

(30%)

Income required to achieve target housing cost to income ratio (for affordable units only)

Front end debt ratio

(29%)

Income required to satisfy front & back end debt ratios

Back end debt ratio

(41%)Minimum qualifying income

Credit scores

(varies by income)

29


Table 21 – Home Costs, Interest Rates, and Subsidy Requirements

Sce

nari

o

Ass

um

pti

on

sS

ub

sid

y r

eq

uir

ed

to

qu

ali

fy f

or

aff

ord

ab

le m

ort

gag

e @

No

su

bsi

dy w

ou

ld b

e

req

uir

ed

at

or

ab

ove

: H

om

e

Co

stIn

tere

st

Rate

50

%

AM

I6

0%

A

MI

70

% A

MI

80

% A

MI

90

% A

MI

100

%

AM

I11

0%

A

MI

120

%

AM

I

1a$

150

,00

0

7.0

0%

$11

1,0

00

$

87,0

00

$

66

,00

0

$4

5,0

00

$

30

,00

0

$17

,00

0

$0

$

0

$6

0,0

00

(10

8%

AM

I)

1b$

150

,00

0

6.0

0%

$10

7,0

00

$

81,

00

0

$5

7,0

00

$

35

,00

0

$25

,00

0

$3

,00

0

$0

$

0

$5

7,0

00

(10

1% A

MI)

1c$

150

,00

0

5.0

0%

$10

2,0

00

$

72,0

00

$

46

,00

0

$3

0,0

00

$

11,0

00

$

0

$0

$

0

$5

3,0

00

(9

5%

AM

I)

1d$

150

,00

0

4.0

0%

$9

6,0

00

$

63

,00

0

$3

3,0

00

$

23

,00

0

$0

$

0

$0

$

0

$4

9,0

00

(8

8%

AM

I)

2a

$14

0,0

00

7.0

0%

$10

0,0

00

$

76

,00

0

$5

4,0

00

$

34

,00

0

$26

,00

0

$5

,00

0

$0

$

0

$5

7,0

00

(10

2%

AM

I)

2b

$14

0,0

00

6

.00

%$

95

,00

0

$6

9,0

00

$

46

,00

0

$28

,00

0

$13

,00

0

$0

$

0

$0

$

53

,00

0 (

96

% A

MI)

2c

$14

0,0

00

5

.00

%$

90

,00

0

$6

1,0

00

$

35

,00

0

$24

,00

0

$0

$

0

$0

$

0

$5

0,0

00

(8

9%

AM

I)

2d

$14

0,0

00

4

.00

%$

84

,00

0

$5

1,0

00

$

28

,00

0

$10

,00

0

$0

$

0

$0

$

0

$4

7,0

00

(8

3%

AM

I)

3a

$13

0,0

00

7.0

0%

$8

9,0

00

$

65

,00

0

$4

4,0

00

$

26

,00

0

$14

,00

0

$0

$

0

$0

$

54

,00

0 (

96

% A

MI)

3b

$13

0,0

00

6

.00

%$

84

,00

0

$5

8,0

00

$

34

,00

0

$24

,00

0

$1,

00

0

$0

$

0

$0

$

51,

00

0 (

91%

AM

I)

3c

$13

0,0

00

5

.00

%$

78

,00

0

$4

9,0

00

$

26

,00

0

$12

,00

0

$0

$

0

$0

$

0

$4

7,0

00

(8

4%

AM

I)

3d

$13

0,0

00

4

.00

%$

72,0

00

$

39

,00

0

$25

,00

0

$0

$

0

$0

$

0

$0

$

44

,00

0 (

79

% A

MI)

4a

$12

0,0

00

7.0

0%

$77,0

00

$

53

,00

0

$3

2,0

00

$

22,0

00

$

1,0

00

$

0

$0

$

0

$5

1,0

00

(9

1% A

MI)

4b

$12

0,0

00

6

.00

%$

72,0

00

$

46

,00

0

$24

,00

0

$12

,00

0

$0

$

0

$0

$

0

$4

8,0

00

(8

5%

AM

I)

4c

$12

0,0

00

5

.00

%$

67,0

00

$

37,0

00

$

24

,00

0

$0

$

0

$0

$

0

$0

$

44

,00

0 (

79

% A

MI)

4d

$12

0,0

00

4

.00

%$

60

,00

0

$27,0

00

$

13,0

00

$

0

$0

$

0

$0

$

0

$4

2,0

00

(75

% A

MI)

5a

$11

0,0

00

7.0

0%

$6

6,0

00

$

42,0

00

$

22,0

00

$

10,0

00

$

0

$0

$

0

$0

$

47,0

00

(8

4%

AM

I)

5b

$11

0,0

00

6

.00

%$

61,

00

0

$3

5,0

00

$

22,0

00

$

0

$0

$

0

$0

$

0

$4

4,0

00

(79

% A

MI)

5c

$11

0,0

00

5

.00

%$

55

,00

0

$26

,00

0

$12

,00

0

$0

$

0

$0

$

0

$0

$

42,0

00

(75

% A

MI)

5d

$11

0,0

00

4

.00

%$

48

,00

0

$22,0

00

$

0

$0

$

0

$0

$

0

$0

$

39

,00

0 (

70

% A

MI)

6a

$10

0,0

00

7.0

0%

$5

4,0

00

$

31,

00

0

$19

,00

0

$0

$

0

$0

$

0

$0

$

44

,00

0 (

79

% A

MI)

6b

$10

0,0

00

6

.00

%$

49

,00

0

$23

,00

0

$10

,00

0

$0

$

0

$0

$

0

$0

$

41,

00

0 (

74

% A

MI)

6c

$10

0,0

00

5

.00

%$

43

,00

0

$20

,00

0

$0

$

0

$0

$

0

$0

$

0

$3

9,0

00

(70

% A

MI)

6d

$10

0,0

00

4

.00

%$

36

,00

0

$16

,00

0

$0

$

0

$0

$

0

$0

$

0

$3

6,0

00

(6

6%

AM

I)

No

te: F

igu

res

are

ro

ug

h e

stim

ate

s b

ase

d o

n t

he a

ssu

mp

tio

ns

desc

rib

ed

in

Tab

le 1

9. S

cen

ari

os

in ita

lics

req

uir

e m

ort

gag

e in

sura

nce, d

ue t

o a

do

wn

paym

en

t o

f le

ss t

han

20

%. If

no

su

bsi

dy is

giv

en

, b

uyers

wo

uld

be r

eq

uir

ed

to

make t

he m

inim

um

do

wn

paym

en

t o

f 3

.5%

fo

r F

HA

lo

an

s.

So

urc

e: G

CR

& A

sso

cia

tes,

In

c.

30


Credit Scores Creditscoresareakeyfactorintranslatingneedintoanestimateof marketsize.Thepercentageof householdsinneedwithacreditscoresufficienttosecurealoanisakeyfactorinestimatingthemarketsize.Inordertodevelopthisfilter,creditscoredatabyincomebracketfortheparishwasobtainedby one of the leading credit reporting agencies. The data illustrates the challenges of providing homeownershipopportunitiesforhouseholdswithannualincomesbelow$40,000(~70%AMI),asonlyafractionof thesehouseholdshavecreditscoressufficienttoqualifythemforevenaFederalHousing Administration (FHA) backed mortgages.

Table 22 - Percent of Households in Terrebonne Parish with Credit Scores of 620 or Higher

Demand/Feasibility The ultimate determination of demand is based on the preferences of the individuals who form the householdsinthetargetmarket,andanswersthequestion:Howmanyincomeandcreditqualifiedhouseholds will actually choose to buy a home in any given location? Because human behavior within themarketplaceisdifficulttopredictorquantify,thefinalstepinthecalculationof demandrequirestheuseof professionaljudgment—basedonsitevisits,dataanalysis,andinterviewswithlocalexperts—todeterminewhetherornotaparticulardevelopmentwillbeabletocaptureenoughof themarkettofillthe planned units.

Market Scenarios The twelve sample market scenarios in Table 23 show how changes to the interest rate and sales price of homesimpactthesizeof themarket.Inparticular,itillustratesthediminishingreturnsachievedbyreducing the costs to the homeowner beyond a certain point. For example, a comparison of scenarios 4and6revealsthata$10,000reductioninthesalespriceof ahome,from$140,000to$130,000,yields271additionalincomeandcreditqualifiedbuyerswithintheParish.However,a$10,000reductioninsalespricefrom$110,000to$100,000—asseenincomparingscenarios10and12—yieldjustsix(6)additionalincomeandcreditqualifiedbuyers.Thisisdueinlargeparttothesteepdeclineincreditscoresasincomelevelsdropbelow70%of AMI.

Income Group %

$28,000 to $38,999 (~50-70% AMI) 27.9

$39,000 to $44,999 (~70-80% AMI) 50.7

$45,000 to $52,999 (~80-95% AMI) 71.9

$53,000 to $66,999 (~95-120% AMI) 89.1

$67,000 or more (~120% + AMI) 91.1

Source: GCR & Associates, Inc. using localized data from one of the three major credit reporting agencies

31


Table 23 - Summary of Market Scenarios for Terrebonne Parish

Source: GCR & Associates, Inc.

Assumptions 50-80% AMI [Need = 3,742]

80-120% AMI [Need = 2,247]

Scenario Home Cost Subsidy Interest Rate Market Size Market Size

Lowest Income Level

Served

1 $150,000 $25,000 7.00% 0 435 87%

2 $150,000 $25,000 5.00% 0 712 84%

3 $140,000 $25,000 7.00% 0 567 90%

4 $140,000 $25,000 5.00% 26 812 79%

5 $130,000 $25,000 7.00% 0 713 84%

6 $130,000 $25,000 5.00% 171 812 74%

7 $120,000 $25,000 7.00% 54 812 78%

8 $120,000 $25,000 5.00% 311 812 69%

9 $110,000 $25,000 7.00% 227 812 72%

10 $110,000 $25,000 5.00% 427 812 65%

11 $100,000 $25,000 7.00% 386 812 67%

12 $100,000 $25,000 5.00% 430 812 60%

32


Figure 10 and Figure 11 provide an example of a demand analysis worksheet (in two parts) and illustrate the relationships between each of the variables described in Table 20.

Figure 10 - Sample Demand Analysis Worksheet (Factors Influencing Demand)

Scen

ario

Var

iabl

es

DEM

AN

D A

NA

LYSI

S W

ORK

SHEE

TO

ther

Inde

pend

ent

Vari

able

s (r

emai

n co

nsta

nt a

cros

s al

l sce

nari

os)

Terr

ebon

ne P

aris

h, L

AD

epen

dent

Var

iabl

es (C

alcu

lati

ons)

FACT

OR

S IN

FLU

ENCI

NG

DEM

AN

DM

arke

t A

reas

� L

oan

Type

s

Prim

ary

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ket

Are

a (P

MA

)TB

TBTe

rreb

onne

Par

ish

Loan

Typ

eFH

AM

SAH

oum

a-Ba

you

Cane

-Thi

boda

ux M

SAA

rea

Med

ian

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me

(AM

I)55

,800

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FH

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dera

l Hou

sing

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inis

trat

ion

29%

41%

4.75

0%H

ome

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e15

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0$

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SDA

U

.S. D

ept.

of A

gric

ultu

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ural

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t Pr

ogra

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875%

Ann

ual P

rope

rty

Taxe

s71

6$

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ces

/ As

sum

ptio

ns

Ann

ual H

omeo

wne

rs In

sura

nce

1,80

0$

Ba

sed

on q

uote

s pr

ovid

ed b

y lo

cal i

nsur

ance

bro

ker,

Paul

Cle

men

t.

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ual F

lood

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ranc

e90

0$

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d on

rate

s pa

id b

y TP

CG F

irst-

Tim

e H

omeb

uyer

Pro

gram

par

ticip

ants

resi

ding

in fl

ood

zone

s.

Avg

. Ann

ual M

ortg

age

Insu

ranc

e Co

st (a

pplie

s on

ly t

o do

wnp

aym

ents

< 2

0%)

1,08

6$

D

ownp

aym

ent

Perc

enta

ge (P

MI T

est)

20.2

%=

Dow

npay

men

t Ass

ista

nce

+ In

fras

truc

ture

Sub

sidy

+ B

uyer

Dow

npay

men

t ÷

Hom

e Pr

ice

Dow

n Pa

ymen

t A

ssis

tanc

e-

$

In

fras

truc

ture

Sub

sidy

(Sof

t Se

cond

Mor

tgag

e)25

,000

$

=

$2.2

5 M

CD

BG in

fras

truc

ture

fund

ing

÷ 11

6 lo

ts

Buye

r D

ownp

aym

ent

5,25

0$

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an11

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sum

es a

ll cl

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g co

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ld e

ither

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r pai

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ler.

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rest

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e7.

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(yea

rs)

30Pa

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er Y

ear

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tal P

aym

ents

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t$7

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0M

ortg

age

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idy

-$

Mon

thly

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ranc

e +

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erty

Tax

284.

69$

Mon

thly

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e In

sura

nce

-$

Hom

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ner

Mon

thly

Pay

men

t -

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tere

st +

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es +

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ranc

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1,08

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thly

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t (C

ar, s

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nt lo

ans,

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dit

card

s, e

tc.)

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00$

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cal m

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brok

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400

is a

com

mon

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stin

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bt b

urde

n fo

r low

to m

oder

ate

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me

appl

ican

ts.

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thly

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litie

s12

5.32

$

Ba

sed

on H

UD

Allo

wan

ces

for 3

BR

unit

in T

erre

bonn

e Pa

rish

(avg

of h

igh

and

low

)

Max

imum

hou

sing

cos

t to

inco

me

rati

o (P

ITI +

Uti

litie

s)30

%M

ax. Q

ualif

ying

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t to

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me

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o - F

ront

End

(PIT

I)29

%M

ax. Q

ualif

ying

Deb

t to

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me

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o - B

ack

End

(PIT

I + O

ther

Deb

t)41

%FH

A St

anda

rd g

uide

line

is o

ffic

ially

41%

. Ac

cord

ing

to a

loca

l mor

tgag

e br

oker

, up

to 4

5% is

per

mis

sibl

e.

Mon

thly

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sing

Cos

t (P

ITI +

Uti

litie

s)1,

206.

71$

To

tal M

onth

ly D

ebt

Paym

ent

(PIT

I + O

ther

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t)1,

481.

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In

com

e re

quir

ed t

o ac

hiev

e ta

rget

hou

sing

cos

t to

inco

me

rati

o48

,268

.29

$

@

30%

Hou

sing

Cos

t to

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me

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(inc

ludi

ng u

tiliti

es)

Min

imum

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lifyi

ng In

com

e - F

ront

End

44,7

47.0

6$

@29

%H

ousi

ng D

ebt (

PITI

) to

Inco

me

Ratio

(util

ities

not

incl

uded

)

Min

imum

Qua

lifyi

ng In

com

e - B

ack

End

43,3

57.6

8$

@41

%To

tal D

ebt t

o In

com

e Ra

tio

Min

imum

Qua

lifyi

ng In

com

e (G

reat

er o

f Abo

ve)

48,2

68.2

9$

Min

imum

Qua

lifyi

ng In

com

e as

Per

cent

age

of A

MI

86.5

%

Fron

t En

d Ra

tio

Back

En

d Ra

tio

Assu

med

Ann

ual P

erce

ntag

e Ra

te (A

PR) -

The

late

st M

ortg

age

Fina

nce

Fore

cast

(dat

ed F

eb.,

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011)

from

the

Mor

tgag

e Ba

nker

s As

soci

atio

n pr

edic

ts a

n in

tere

st ra

te o

f 6.3

% fo

r 30-

year

fixe

d ra

te m

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ages

in th

e fo

urth

qua

rter

of 2

012.

Curr

ent

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Est.

201

3 Ra

te

6.30

0%

33


Figure 11 - Sample Demand Analysis Worksheet (Need & Market Size)

ESTI

MA

TED

NEE

DCo

hort

1: 5

0-80

% A

MI r

ente

r an

d ow

ner

HH

s w

ith

hous

ing

prob

lem

s 1,

843

Coho

rt 2

: 50-

80%

AM

I ren

ter

HH

s w

/o h

ousi

ng p

robl

ems

x TU

RNO

VER

RATE

506

Co

hort

3: 5

0-80

% A

MI p

roje

cted

ann

ual H

H g

row

th48

Co

hort

4: 8

0-95

% A

MI r

ente

r an

d ow

ner

HH

s w

ith

hous

ing

prob

lem

s 48

5

Coho

rt 5

: 80-

95%

AM

I ren

ter

HH

s w

/o h

ousi

ng p

robl

ems

x TU

RNO

VER

RATE

207

Co

hort

6: 8

0-95

% A

MI p

roje

cted

ann

ual H

H g

row

th21

Co

hort

7: 9

5-12

0% A

MI r

ente

r an

d ow

ner

HH

s w

ith

hous

ing

prob

lem

s35

0

Coho

rt 8

: 95-

120%

AM

I ren

ter

HH

s w

/o h

ousi

ng p

robl

ems

x TU

RNO

VER

RATE

273

Co

hort

9: 9

5-12

0% A

MI p

roje

cted

ann

ual H

H g

row

th

44

Coho

rt 1

0: 1

20%

+ A

MI r

ente

r an

d ow

ner

HH

s w

ith

hous

ing

prob

lem

s1,

278

Coho

rt 1

1: 1

20%

+ A

MI r

ente

r H

Hs

w/o

hou

sing

pro

blem

s X

TURN

OVE

R RA

TE99

8

Coho

rt 1

2: 1

20%

+ A

MI p

roje

cted

ann

ual H

H g

row

th

115

TU

RNO

VER

RATE

for

rent

als

34.9

%Ba

sed

on U

.S. C

ensu

s G

eogr

aphi

c M

obili

ty (2

008-

2009

) dat

a fo

r the

Sou

th re

gion

.

ESTI

MA

TED

MA

RKE

T SI

ZEEs

tim

ated

HH

s in

NEE

D (5

0-80

% A

MI)

-

=[C

ohor

t 1 +

Coh

ort 2

+ C

ohor

t 3]

Esti

mat

ed %

of H

Hs

in N

EED

wit

h qu

alify

ing

annu

al in

com

e (5

0-80

% A

MI)

0%=

(80%

-86

.5%

) ÷ (8

0%-5

0%) A

ssum

es e

qual

dis

trib

utio

n of

inco

mes

with

in th

e 50

%-8

0% A

MI g

roup

Esti

mat

ed %

of H

H in

NEE

D w

ith

qual

ifyin

g cr

edit

sco

res

(50-

80%

AM

I)50

.7%

Base

d on

dat

a pr

ovid

ed b

y on

e of

the

maj

or c

redi

t rep

ortin

g ag

enci

es.

Esti

mat

ed #

of i

ncom

e/cr

edit

elig

ible

hou

seho

lds

(50-

80%

AM

I)-

Es

tim

ated

HH

s in

NEE

D (8

0-95

% A

MI)

-

=[C

ohor

t 4 +

Coh

ort 5

+ C

ohor

t 6]

Esti

mat

ed %

of H

Hs

in N

EED

wit

h qu

alify

ing

annu

al in

com

e (8

0-95

% A

MI)

57%

Esti

mat

ed %

of H

H in

NEE

D w

ith

qual

ifyin

g cr

edit

sco

res

(80-

95%

AM

I)71

.9%

Base

d on

dat

a pr

ovid

ed b

y on

e of

the

maj

or c

redi

t rep

ortin

g ag

enci

es.

Esti

mat

ed #

of i

ncom

e/cr

edit

elig

ible

hou

seho

lds

(80-

95%

AM

I)-

Es

tim

ated

HH

s in

NEE

D (9

5-12

0% A

MI)

-

=[C

ohor

t 7 +

Coh

ort 8

+ C

ohor

t 9]

Esti

mat

ed %

of H

Hs

in N

EED

wit

h qu

alify

ing

annu

al in

com

e (9

5-12

0% A

MI)

100%

Esti

mat

ed %

of H

H in

NEE

D w

ith

qual

ifyin

g cr

edit

sco

res

(95-

120%

AM

I)88

.4%

Base

d on

dat

a pr

ovid

ed b

y on

e of

the

maj

or c

redi

t rep

ortin

g ag

enci

es.

Esti

mat

ed #

of i

ncom

e/cr

edit

elig

ible

hou

seho

lds

(95-

120%

AM

I)-

Es

tim

ated

HH

s in

NEE

D (1

20%

+ A

MI)

-

=[C

ohor

t 13

+ Co

hort

14

+ Co

hort

15]

Esti

mat

ed %

of H

Hs

in N

EED

wit

h qu

alify

ing

annu

al in

com

e (1

20%

+ A

MI)

100%

Esti

mat

ed %

of H

H in

NEE

D w

ith

qual

ifyin

g cr

edit

sco

res

(120

%+

AM

I)91

.1%

Base

d on

dat

a pr

ovid

ed b

y on

e of

the

maj

or c

redi

t rep

ortin

g ag

enci

es.

Esti

mat

ed #

of i

ncom

e/cr

edit

elig

ible

hou

seho

lds

(120

%+

AM

I)-

=N

eed

@

120%

+

=N

eed

@

50-8

0%

=N

eed

@

95-1

20%

=N

eed

@

80-9

5%

34


Conclusion

Low vacancy rates and strong population growth in Terrebonne Parish indicate a clear need for new housing options in Terrebonne Parish. While there is a strong preference for homeownership inTerrebonneParish,itmaybeimpracticalandinefficientasapolicytopromotehomeownershipforhouseholdsearningbelow75%of AreaMedianIncome(AMI).Themarketforaffordablehomeownershipunderexpectedmarketconditionsinthenearfutureisstrongestinthe75-120%AMIrange.RentalprogramssuchastheSection8voucherprogramandtheLowIncomeHousingTaxCreditprogramwilltypicallybebetteroptionsforhouseholdswithincomesbelow75%of AMI,ashomeownership—particularlysingle-familyhomeownership—attheseincomelevelswillrequireveryhighsubsidiesandthesehouseholdsaremorelikelytofaceseriousfinancialchallengesif majorhomerepairsarerequired.Optionsforhomeownershipaffordabilityatlowerincomelevelssuchassingle-family attached housing, allowing/promoting the use of accessory dwelling units, shared ownership through community land trusts, and other creative options could be explored for households with incomesinthe60-75%AMIrange.

Documents

AFFORDABLE HOUSING MARKET STUDY - TERREBONNE …tpcg.org/files/community_development/workforce...Data from the 2009 American Community Survey (ACS) shows a strong local preference