The results of a housing study are in, and they confirm what many already suspected – that there’s a need for more housing in Perham, especially rental housing, as the city continues to grow.
The study, conducted by Community Partners Research, Inc., of Lake Elmo, Minn., analyzes the current housing situation in Perham, including demographics and demand, and makes recommendations about the city’s needs over the next five years.
Scott Knudsen, one of the study’s leading researchers, highlighted some of the major findings at a meeting with city leaders last week.
The study, which also took a look at housing in New York Mills, was half-funded by a grant from the Minnesota Housing Partnership. Only the Perham results were discussed at last week’s meeting.
Due to “growth-generated demand,” Knudsen said, the city will need 8-12 new single family homes and 10-14 new rental units per year over the next five years.
Perham’s population increased by more than 23 percent in the 1990s, and by another 17 percent between 2000 and 2010, the study found. More recent estimates show that this level of growth has continued in the past few years.
The city’s average household size is relatively small, at 2.19 people in 2013, which indicates an older population with fewer children and many one and two person households. The city also has a large number of renters, which tend to be in smaller households.
Currently, 44 percent of all the housing in Perham is rentals, Knudsen said, “higher than you’d normally see in a community of this size,” where there would typically be more homeownership.
Once the surrounding lakes area is counted in, the rate of homeownership goes up significantly, to 79 percent (compared to 56 percent in the city limits).
Trend-based projections revealed in the study show that most of the future population growth around Perham will be due to an increasing number of baby boomers. The number of households with members ages 54 and younger is expected to decrease, as the baby boomers are not being replaced by the younger generation.
Ideally, new rental housing in town will be a mix of market rate and affordable units, including smaller one- and two-bedroom apartments as well as three-bedroom and larger options for families.
Currently, Perham has no family-oriented subsidized housing; 72 of the city’s 73 subsidized units have just one bedroom, a fact Knudsen said was unusual for a city Perham’s size. To create more affordable (income restricted) housing for families, he said, the city should look into federal funding options.
The study recommends that 16-20 new rental units be constructed in phases, every one to two years, to meet ongoing demand.
Developers that are currently building rental units in town “are hitting some of the key market trends,” according to Knudsen. But if vacancy rates stay low even after these new units become available, “it could justify some additional construction.”
As far as single-family homes, the study recommends the addition of 4 to 6 new affordable homes per year for the next five years, as well as 6 to 10 moderately priced homes. The study also projects some increased demand for attached single family homes, such as twin homes and town homes, though rentals could help meet that need.
Perham is unique in its home ownership growth pattern, with 140 new homes constructed in the last decade, but only 77 of those owned by its inhabitants.
“We’ve seen a lot of homes transition into rental properties,” said City Manager Kelcey Klemm at the meeting. “We’ve always suspected that, but these numbers definitely confirm that. I’m not saying it’s a bad thing, because there’s a market for that, but it’s a challenge for us as a city, because...in general, those rental properties are maintained at a different level.”
City councilor James Johnson said one of the city’s goals has always been to have more affordable housing. He wondered whether there were state or federal programs to help cities rehabilitate substandard neighborhoods.
“If we could get rid of some of the blighted properties and replace them with affordable housing, that would be great,” he said.
Knudsen said there were some programs available to help cities with projects of that nature.
“Perham doesn’t have a lot of them (blighted properties),” he said, but there may be other options out there.
The study has not yet been finalized or adopted by the Perham City Council. The results are expected to boost developers’ confidence in the need for more housing in town.
Perham’s last housing study was completed in 2007.