NCHMA Guidelines for Housing Needs Assessments

Abstract. A Housing Needs Assessment (HNA) is a type of study that seeks to determine and describe the nature, causes and extent of the current and future need for housing in a specified geographic market. The HNA provides market intelligence to a variety of entities (e.g., local planning and economic development officials, elected officials, chambers of commerce, developers, investors, lenders and other organizations interested in housing) and is often used to help establish housing priorities and action plans, to supplement grant applications, to secure financing for various housing programs and projects, to inform citizens and to market development opportunities to developers and investors. By effectively accomplishing the study’s objectives, users of the HNA can refine their understanding of the subject area’s evolving housing market, modify or implement government housing policies and enhance/expand the housing supply. There are numerous closely related types of market analyses, which may utilize data from an HNA (e.g., a site-specific market feasibility study, a study to create a successful marketing effort, the Department of Housing and Urban Development’s (HUD’s) Consolidated Plan, a land use plan, the Comprehensive Housing Market Analyses published through HUD’s Economic and Market Analysis Division, etc.). Although the emphasis, extensiveness and scope of work in an HNA may vary, certain standards should be expected. This document establishes minimum standards and guidance on the preparation of HNAs.

Introduction

The National Council of Housing Market Analysts (NCHMA) is a membership organization promoting an ethical, unbiased and standardized set of housing market study guidelines for residential market studies. The purpose of this specific document is to establish minimum national standards and to provide guidance on conducting an HNA. In its simplest form, this study is used to determine what housing needs may exist within a specific geography. The terminology, content and analysis requirements standardized through NCHMA’s other published standards are integral to the ensuing guidelines.

Industry members are encouraged to incorporate the following information into their own standards. NCHMA certified analysts conducting Housing Needs Assessments are not expected to adhere to this specific format and/or document nor report on all data elements contained in this guide. This document serves as a foundational best practice guide and is not a prescribed document.

Standard Work Elements

This section defines the minimum applicable requirements for an HNA. In broad terms, a standard HNA should include the following content:

  • Table of Contents
  • Introduction and Scope of Work
  • Executive Summary of Key Findings
  • Study Area Delineation­­­­­­
  • Economics
  • Demographics
  • Housing Supply
  • Other Factors that Influence Housing
  • Housing Gap Estimates
  • Recommendations
  • Appendices

This document does not purport to be all-inclusive in the identification of relevant additional subject matter. Market analysts are expected to include additional information that may be pertinent to the analysis and/or requested by the commissioning entity. Components that are not typical requirements for HNAs but that may influence a housing market’s performance and needs are also listed and briefly described in the relevant sections.

Table of Contents

A table of contents, which outlines the contents and organization of the study, should be provided.

Introduction and Scope of Work

The introduction and scope of work should address:

  1. The purposes and objectives of the report;
  2. The intended use and users of the report;
  3. The steps taken and not taken in completion of the report;
  4. An explanation of methodologies used in the derivation of conclusions;
  5. A physical inspection of the subject market to obtain data not available from other sources and to verify data already obtained; and
  6. Disclosure of the client, the person conducting fieldwork, the date that fieldwork was conducted and the primary analyst reaching conclusions of the report.

In cases in which time or funding is limited or the analyst has experience with the subject market, fieldwork may be done remotely, assuming that such limitations are stated (See: NCHMA’s April 2020 Fieldwork Memo).

Executive Summary of Key Findings

The executive summary typically summarizes salient points from each section of the study and is used to demonstrate key market metrics and the housing needs of the market. The minimum requirements are as follows:

  • Concise description of the Primary Study Area (PSA) and any Secondary Study Area (SSA) or submarket considered;
  • Summaries of economic, demographic and housing supply conditions;
  • Summary of housing gap estimates (units needed);
  • Recommendations to address current and future housing needs, which typically include strategies, policies and initiatives to support new housing development and the preservation of the existing housing stock; and
  • Reconciliation of any conflicting indicators among the various sections of the report.

Study Area Delineation

A PSA is the geographic area that is the focus of an HNA. Given that HNAs are commissioned by an entity seeking a study of a specified geographic area (e.g., neighborhood, town, city, county, multi-county region or state), the PSA is often delineated by the commissioning entity. However, submarkets within the PSA may be requested or warranted. While the commissioning entity may request submarkets be established based on school districts, political boundaries (e.g., city wards or districts), planning districts or other established boundaries, circumstances may exist requiring the market analyst to establish submarkets. In such cases, the market analyst should consider factors, such as socioeconomic characteristics, natural and manmade barriers, topography, major transportation corridors/routes, employment concentrations, commuting patterns, characteristics of the existing housing supply, trends in residential development and land use to establish submarkets. Input from local stakeholders may also be used to help establish submarkets. Ultimately, the market analyst should provide data and rationale behind the establishment of submarkets.

Although HNAs are generally conducted within the confines of existing local boundaries, the functional housing market area may be influenced by or have an interrelationship with a broader market (e.g., adjacent community, the surrounding county, its region). In such cases, an analysis of an SSA may be necessary. The data and rationale used in the establishment of an SSA should be provided to justify the selection of this market area.

Finally, maps of the study’s PSA and any submarkets or SSAs should be provided. The map(s) must be scaled for distance. Demographic theme maps used in the establishment of any market areas should also be provided.

Economics

Evaluating economic characteristics and trends of a market can help explain current housing market conditions or assist in anticipating future housing needs. Income/wages, commuting patterns and employment opportunities influence housing demand through their effect on housing decisions and ultimately household growth. Changes in the economy can have a significant influence on an area’s housing market conditions. To understand the overall economic health and competitiveness of the region and its potential impact on household trends, economic data and analysis should be presented for the PSA, as well as other geographies considered in the report if such data is available. Key economic data should be compared to broader market data, which could include county, Metropolitan Statistical Area (MSA), state and/or nation. As some data sets may not be available for smaller market areas (e.g., wages by industry or occupation,) it may be necessary for the analyst to obtain data from a larger statistical area that encompasses the subject market. In these instances, the statistical area utilized, the relationship to the PSA, and any potential limitations should be conveyed. Most information can be obtained through the U.S. Department of Labor, Bureau of Labor Statistics. Sources of data, projections and estimates should be clearly identified. However, the analyst may also conduct interviews with local stakeholders familiar with employment characteristics and trends of the PSA and other areas affecting the PSA. Additional online research may be necessary to identify any large-scale positive or detrimental economic changes or recent developments. In cases where a large-scale employer is laying off or hiring many employees, an analyst should obtain and evaluate data related to the number of jobs impacted, duration of such changes (long-/short-term, temporary vs. permanent, phases, etc.) and typical wages of impacted workers. The analyst should be cognizant of the area’s economic history, including dominant influences or unique circumstances (e.g., natural disaster impact, influence of tourism, local college impact, etc.). Data sources should be identified, and any assumptions made in the source methodology described.

The economy of the PSA and any other established study areas for which economic data is available must be addressed with a minimum of the following information.

  1. Employment by job sector (total and/or at-place).
  2. Total and at-place employment trends.
  3. Unemployment rate trends.
  4. Wages by industry/occupation.
  5. Major employers, including the type of business and the number of people employed.
  6. Recent or anticipated large-scale job expansions or contractions.
  7. Proposed transportation or infrastructure improvements.
  8. Commuting patterns, such as commute time, home locations and employment destinations. Commuter inflow and outflow data (as provided by sources, such as https://onthemap.ces.census.gov/) illustrating the number of commuters traveling in and out of the subject market on a daily basis should be provided. If deemed appropriate, the market analyst may want to consider providing commuter profile data (e.g., ages and incomes).
  9. Information of employment concentrations and transportation availability should also be considered for their influence on housing.

The U.S. Census Bureau conducts the Household Pulse Survey, which contains various socioeconomic data sets on the impact of the coronavirus pandemic on households, states or selected metropolitan area. This survey, which is conducted on a weekly or bi-weekly basis, includes data on recent employment status, telework and work-from-home status, and other employment characteristics. The U.S. Census Bureau also provides education and employment data through Post-Secondary Employment Outcomes (PSEO) tabulations. This data includes earnings and outcome information of college and university graduates on a national level and for most states. The data from the preceding sources may be considered in an HNA.

It is important to note that at-place employment measures the number of jobs located within a specific geography (regardless of residency) and should not be confused with the employed labor force. If applicable, the HNA may evaluate at-place employment and resident employment on a monthly or quarterly basis to determine the impact of seasonal employment on the area economy. This section should conclude by stating the impact of economic conditions on the subject market’s housing needs, as well as housing opportunities.

Demographics

Demographic data should be presented for the PSA and comparison areas, which may include any SSAs and/or submarkets established, the county or MSA and the state. Sources of data, projections and estimates should be clearly identified. Data should reflect the most recent decennial Census, American Community Survey and/or data from nationally recognized providers (e.g., Claritas, ESRI, AGS). Population and household counts should include historical and current year (or most recent available) information, as well as projections (typically a minimum of five years). The analyst should discuss the methodologies used to derive estimates or projections if they deviate from the demographic provider or source. All data tables must include both the numbers and correlating percentages.

The demographics of the PSA and any other established areas for which demographic data is available must be addressed with a minimum of the following information.

  1. Population and household counts that include historical and current year information and projections (typically a minimum of five years).
  2. Population by age and density.
  3. Households by income, age, tenure and size.
  4. Socioeconomic characteristics and trends, including population by educational attainment, race and poverty status.
  5. Migration patterns (both into and out of a market), geographical migration characteristics and the profile of people migrating that considers persons by age and income level.

The analyst should discuss how such migration patterns influence area demographic characteristics and trends, and ultimately, the impact they have on local housing needs. The analyst should pay specific attention to aspects that might be unique to the local market, such as the influence of a local university, seasonal employment or visitors in a tourism-influenced market, an influx of retirees, or an employer adding or removing a large number of jobs in the area. The analyst should summarize any specific demographic trends that positively or negatively affect housing demand or needs. Finally, theme maps of key metrics should be provided, when applicable and appropriate.

Housing Supply

The HNA should include a comprehensive description and analysis of pertinent housing supply market conditions and trends in the PSA and other market area(s), if applicable. The commissioning entity will ultimately select the specific housing product that is the report’s intended focus. While that focus can vary from housing supply by tenure (rentals vs. for-sale), affordability levels, household age groups or specific population groups served (college students, special needs populations, etc.), this document initially addresses minimum housing supply research and analysis standards for the most common rental and for-sale supply alternatives. Supplemental guidance is provided in this document on less common, but relevant, housing supply alternatives that may play a notable role in a particular market.

Housing supply should include the following:

  • Secondary Housing Supply Data: An overview and analysis of housing stock characteristics for all study areas should be provided using static indicators from the U.S. Census, American Community Survey and other secondary sources, including but not limited to housing tenure (renter vs. owner), age of housing by tenure, structure type by tenure, estimated housing values, paid rent levels and vacancy rates. Housing with incomplete kitchens/plumbing, households that are housing cost burdened and households living in overcrowded housing are also fundamental components that should be included. When possible, thematic maps illustrating the geographic concentrations of housing or household attributes should be provided.
  • Inventory of Housing Supply: Inventories should be conducted of the current housing supply for the subject market and other study areas. The type of housing inventory that should be provided is dependent upon the type of housing that is requested by the commissioning entity. This may include an inventory or survey of a representative sample of multifamily rental communities, an inventory of non-conventional rentals (e.g., houses, duplexes, mobile homes, etc.) and for-sale housing data from sources, such as Multiple Listing Services, Realtor.com or the local tax assessor. The inventories and analyses should be sufficient in breadth to evaluate, at a minimum, how the subject housing market is performing (e.g., availability, waitlists, rents/prices, absorption rates, etc.). Data and analysis should consider both current characteristics and historical trends (e.g., changes in rents/prices, available supply, etc. over a two- to five-year period). Depending upon the scope of analysis requested, the analyst should consider other factors of the surveyed/inventoried housing, such as quality, age, location, programmatic restrictions (incomes, ages, etc.) or other pertinent attributes of housing. Unlike a site-specific market study that often focuses on individual project details, particularly of the competitive market, HNAs typically focus on broader aggregated housing data. Such data is often analyzed based on such attributes as affordability levels (rents and prices), age of product, bedroom types, quality levels, location or other attributes determined to be pertinent by the analyst and/or requested by the commissioning entity. Issues associated with topics, such as vacancies, slow absorption or discounted rents or home prices should be discussed along with contributing factors. Maps illustrating the location of inventoried housing should be provided.
  • Residential Development Pipeline: Recently completed (typically in the past 12 months) and planned housing development activity in the study area(s) should be identified and discussed. Estimates should include all developments known to the degree that this is feasible. To estimate proposed additions to the housing supply and to evaluate the local perception of unmet need for additional housing, interviews with local planners, housing and community development officials and market participants are conducted. It is often effective to contact both the planning and building departments for each study area and other municipalities located therein. The inclusion and analysis of recent building permits (both single-family and multifamily), which can be obtained from the HUD Office of Policy Development and Research (PD&R), may also be useful in identifying residential development activity within an area. Depending upon the availability of information, the following should be presented for each project identified in the development pipeline:
  • Separate housing estimates of:
    • The number of units in the planning/development stages that are likely to enter the housing market (i.e., those with approved building permits or firm financial commitments) during the specified forecast period; and
    • Expected completion date/stage of development;
  • Rents/sales prices;
  • Any applicable income restrictions; and
  • Location.
  • The number of units currently under construction

The pipeline estimates described above should be considered in aggregate as part of the housing gap estimates (discussed later in these guidelines).

Other Housing Supply Considerations: While an inventory and analysis of common rental and for-sale housing alternatives are often part of a typical HNA, there may be circumstances where the housing inventory is expanded to include other less traditional housing alternatives. Whether specifically requested by the commissioning entity or due to the influence a particular housing segment has on the local housing market, it may be necessary that other housing alternatives are inventoried or evaluated as part of an HNA. While the following housing alternatives do not consider all possible housing alternatives, the corresponding summaries attempt to give guidance on the research and analysis expected for some housing alternatives that affect a particular housing market.

  • Special Needs Population Housing. Special needs populations typically include but are not limited to people experiencing homelessness, veterans, persons with a disability and/or frail/elderly, persons with HIV/AIDS, children aging out of foster care, survivors of domestic violence, recently released convicts, refugees and migrant farm workers. A socioeconomic analysis of the special needs population, an inventory of relevant housing alternatives and stakeholder input from those familiar with these groups are general requirements. The housing inventory should account for, if available, the number of units or beds provided to the special needs population(s) being evaluated, associated housing costs and service fees (if any), occupancy and waitlist information, location and quality of such housing, and other data the analyst deems pertinent.
  • Senior Care Housing. The classifications or designations for housing that provide different levels of resident care for seniors vary from state to state, but they typically include independent living/congregate care, assisted living and nursing care in some form. Most licensed senior care facilities can be found at corresponding state health departments. When applicable, the analysis should include a representative sample survey of the typical housing choices available to seniors requiring special care housing. The number of units or beds, vacancy rates, length of waitlists (if any) and the base monthly fees for the surveyed facilities by property type should be displayed and analyzed. Local vacancy rates should be compared to state/national vacancy rate benchmarks. National vacancy rate data of senior care facilities can be obtained from The State of Seniors Housing published by the American Seniors Housing Association.
  • College Student Housing. Whether specifically requested by the commissioning entity or simply due to the influence of college students, student-oriented housing may need to be evaluated in terms of its impact on the local housing market and/or the specific need for such housing. Since student-oriented housing comes in a variety of forms, including on-campus dormitory or apartment housing and off-campus apartments, houses, duplexes, etc., the analyst should provide some level of accounting of these housing alternatives. At a minimum, housing data related to vacancies, waitlists and housing costs should be collected and analyzed. It is recommended that the analyst focuses attention on lease and rent structures for units rented on a per unit basis versus a per bed basis, as this can affect how student rentals are compared with the overall housing market. The analyst should also consider presenting and evaluating college enrollment statistics, such as historical enrollment trends (at least three years), full-time vs. part-time enrollment and local vs. out-of-state residency. Enrollment data for many institutions of higher learning can be found at the National Center for Education Statistics. College housing policies, such as requiring first-year students to live on campus, should be considered and discussed in terms of their impact on the local housing market.
  • Seasonal, Recreational and Short-Term Housing. In highly seasonal and tourism-influenced markets, the analyst should consider accounting for seasonal, recreational and short-term housing alternatives offered. Data sources to consider include American Community Survey, U.S. Census Bureau, Airbnb.com, Vrbo.com and Alltherooms.com. Given that some local entities (e.g., government, visitors’ bureau, chamber of commerce, Realtors’ organization) may track short-term rentals within a market, the analyst is encouraged to identify such organizations to obtain additional short-term housing data. Specifically, data to be presented and evaluated in an HNA should at least include the estimated total number of short-term rentals, seasonal rental and occupancy trends and the costs of such housing relative to the more permanent housing stock. The analyst may need to present and evaluate short-term housing on a specific geographic basis, as such housing may only impact a specific area of a particular community. Interviews with local stakeholders knowledgeable of the short-term housing market should be conducted to gain input on the role such housing plays in the overall housing market. The analyst is encouraged to provide information on the tourism market, such as tourism dollars spent in the market annually, a discussion of the seasonality of tourism, primary attractions and other pertinent data that provide additional insight on the tourism market.
  • Accessory Dwelling Units, Tiny Houses and Naturally Occurring Affordable Housing. Accessory dwelling units (ADUs), tiny houses, and other forms of naturally occurring affordable housing (NOAH) development are thought to provide some communities with an affordable means by which to help ease housing market pressures. The analyst may want to consider attempting to identify whether such housing is provided in the subject market. The analyst should attempt to quantify such housing, determine typical housing costs and establish the number of vacancies for these alternatives. It may be possible to obtain data through tenant registries maintained by local municipalities, contacting local realtors or checking online resources, such as Craigslist or Facebook Marketplace. The analyst might consider including questions in a survey or interviews of real estate professionals, stakeholders or residents, inquiring about the existence of such housing, typical rents or prices of these units and the role they play in the local housing market. The analyst could also consider researching local zoning ordinances to see if such housing is permitted and to determine if such housing should be included in local land use planning efforts.
  • Military Housing. Some markets have a notable influence from a local military base. In such cases, the analyst should understand the military installation’s public and private sector workforce, on-base housing alternatives (including occupancy rates and fees), off-base housing stipends (financial assistance) and typical deployment schedules. Interviews with off-base property management companies and leasing agents should be conducted to determine the influence military personnel and contractors have on the local housing market, with emphasis on housing availability and costs. An analyst can find some data on military bases at miltaryonesource.mil.

Other Factors that Influence Housing

There are numerous factors that influence the housing needs of a market beyond the demographics, economics and existing housing supply. While such factors can be extensive, the following focuses on some of the most common factors that influence local housing markets that could be part of an HNA.

  1. Governmental Assistance and Regulatory Controls. This involves the examination of how the subject municipality, township or county influences its housing market through residential land use or building restrictions or through programs and incentives offered to both producers/operators (developers/landlords) and end-users (resident households). This may include, for example, funding sources for new housing development or preservation of existing housing, government fees or processes, availability of or assistance with infrastructure, the identification of any policies that may serve as barriers to development, or the availability of government assistance to help residents secure housing and/or mitigate existing housing issues (e.g., quality, weatherization or accessibility). The analyst may need to review and analyze local building codes, zoning ordinances, property maintenance codes, local housing programs and other published documents and compare these with those of other communities to establish best practices that may benefit the local community.
  2. Development Costs. An analysis of development costs may be applicable to determine if costs represent a significant challenge or opportunity to the development of housing in a market, particularly for affordable housing alternatives. Factors, such as land costs, labor costs, construction costs, utility installation charges and fees, taxes and assessments can all affect development costs and should be evaluated. Some level of data collection on surrounding communities or counties should be provided to serve as a base of comparison to determine if local costs serve as a deterrent or asset/incentive to residential development in the local market.
  3. Infrastructure Access and Availability. While not often requested as part of a standard HNA, some commissioning entities may require some level of analysis of existing public infrastructure (e.g., water service, sewer service and other utilities), as the accessibility to infrastructure can have a significant impact on development decisions and opportunities. At a minimum, depending upon the availability of information, the analyst will want to review and comment on communities that provide typical public utilities that support residential development and communities that do not. The analyst should include maps illustrating utility coverage areas and comment on how the inclusion or exclusion of pertinent utilities impact residential development opportunities.
  4. Community Attributes. An evaluation of community attributes (both services and amenities) and the accessibility of those attributes may need to be provided to determine how the location, type and number of community attributes factor into housing market performance and the ability of the market to support existing and future residential development. Aspects that should be considered are walkability, parking availability, access to most community services, availability and accessibility to a public transit system and access to public recreation venues. The location of community amenities (e.g., schools, fire and police stations, medical facilities, grocery stores, parks and roads) can affect housing choices and should be given some consideration. Since data and marketplace conditions change constantly, this overview should not be considered an exhaustive evaluation of attributes offered within the PSA but should enable a proper assessment as to the sufficiency of the area to provide essential community services to current and future residents. The analyst should include maps illustrating the locations of key community services and comment on the impact community services have on the local housing market and residential development opportunities.
  5. Public Transportation, Walkability and Resident Connectivity. The ability of residents to traverse in and around a market, whether by foot or vehicle, can have a significant influence on their satisfaction with their current housing situation and future housing decisions. This can also influence where developers choose to build housing. Therefore, there may be circumstances that require an analyst to assess local drive times and modes of transportation, the extensiveness and cost of public transportation alternatives, the walkability of certain areas and other factors that impact resident connectivity to employment and community services. In areas with fixed-route public transportation, the analyst should include maps of the transit routes and include an overview of the schedule of the routes and corresponding transit costs. In more rural areas that only provide on-call transit services, the analyst should provide an overview of the transit scheduling process, schedule of operations and corresponding transit costs. In areas without public transportation, the HNA should address the arterial roads that provide access to employment opportunities and neighborhood amenities/services. In cases where the market has a significant number or percentage of very low-income households who are less likely to own a car, the HNA should address the ability of residents to access these services. Walk Scores and/or Bike Scores, which can be found at walkscore.com, are often used to measure residents’ ability to commute, perform errands or recreate affordably and conveniently by walking or biking. The analyst should provide conclusions on how various resident connectivity factors impact local housing needs and development opportunities.
  6. Crime. Crime risk, whether perceived or real, can influence a person’s decision to move to or from a particular location and could affect where developers of housing choose to develop. An analysis of crime should present data, identify the source, explain the methodology used, comment on the impact of crime on the growth potential of the market and provide a map of crime risk across the study area(s). Analysts are encouraged to use published secondary crime data sources, such as the FBI Crime Data Explorer (cde.ucr.cjis.gov or ucr.fbi.gov) or to contact local law enforcement offices to obtain market-specific crime data. Interviews with local government representatives or real estate professionals on the perception of crime and how it may be impacting the local housing market should be considered.
  7. Education. Education quality, whether perceived or real, can influence a person’s decision to move to, leave or remain at, a location and could influence residential development or investment decisions. The desirability of a housing market is often judged by its public school system and post-secondary educational offerings. Stronger housing markets normally enjoy better performing school districts, while weaker housing markets may suffer from under-performing schools. There may be circumstances that warrant an evaluation of local school districts, possibly including the number of Pre-K schools, elementary schools, middle schools, high schools and charter or alternative schools, district maps showing school locations, and information for each individual school, such as the enrollment, percent of students by economic status (participating in free school lunch programs) and performance metrics (e.g., high school/graduation rates or school ratings). The analyst should consider location-specific issues, such as school districts that are undergoing redistricting or consolidation, which may occur to populate new schools to maximize efficient use of classroom space due to class size reduction mandates, to reduce school overcrowding or to plan for future growth. The analyst may want to consider providing a map(s) that illustrates certain aspects of schools or school districts (e.g., school performance measure, socioeconomic characteristics of students, etc.) and attributes of the local housing market (e.g., types and affordability of housing). Ultimately, the analyst should provide overall conclusions on the role the local schools play in the area’s housing market and how they may impact resident and developer housing decisions.
  8. Residential Blight. The upkeep and aesthetic appeal of an area’s existing housing inventory often affects its market drawing power and market value. The decline in the physical soundness/habitability of housing and/or its functionality can significantly impact local housing markets. Residential blight, which is generally considered the visible decline of property, may be analyzed based on city code violation data, tax assessor ratings and/or by conducting a windshield survey (in-person evaluation) within the market. A locality’s definition of blight is often elusive and the types of data available to measure blight vary from place to place. As a result, the analyst and commissioning entity should reach a mutual understanding on the definition of blight for the purposes of the study. At a minimum, the analyst should provide the blighted properties’ locations, a notation of the observed blight (e.g., fire damage, missing or damaged roof or siding, boarded up windows, etc.) and property type (e.g., single-family home, duplex, mobile home, etc.). An inventory of blight allows the analyst to determine the degree to which blight exists in the market and whether there are areas that have greater concentrations of such properties. Typically, a map showing residential blight within the PSA is provided.
  9. Development Opportunities. Some communities seek to understand the availability of sites (land or existing buildings capable of delivering new housing units) for potential residential development. For a given market to grow, households must find acceptable and available units (either newly created or pre-existing). For newly created units to be available, land and/or existing buildings (suitable for residential use) must be readily available, properly zoned and feasibly sized. Therefore, the analyst may need to evaluate the availability of sites to determine if development capacity is an obstacle to increasing the housing supply. Commonly identified site characteristics include: the current use, size (acreage of land or square footage of buildings), parcel number and/or address, current zoning and possible barriers (e.g., in flood zone). The analyst may comment on the suitability of the site(s) for a variety of potential uses, if applicable. Common resources used to identify potential sites include online sources, such as realtor.com or loopnet.com, local assessors’ websites, area realtors or real estate brokers, local building departments, community land trusts and on-site observations of marketed properties. A map of the identified site(s) is typically provided.
  10. Community Engagement. The HNA should include primary research that is both quantitative and qualitative in nature. Supplemental qualitative insights from community stakeholders, residents, non-resident commuters and/or employers are often used to either confirm or explain unique local trends in the initial quantitative data, further refining an understanding of market issues. The nature of the questions and the budget for the analysis will often determine the depth of research that is conducted. Targeted phone interviews or online surveys of various groups may be conducted with questions customized to solicit specific information relative to each segment of the market surveyed. Focus groups structured to illicit input from specific groups (e.g., government officials, employers, social service providers, economic development representatives, housing professionals and other stakeholders) can be a useful tool to collect community input. Surveys/interviews generally inquire about current housing conditions and trends, anticipated housing needs, any barriers that may limit residential development in the market, and what housing products or markets should be a priority for the area. Surveys/interviews can also be customized to address the specific challenges a community faces, such as university influence, special needs housing, short-term rental housing, community services, neighborhood disinvestment, public transportation, etc. Results may help to establish or refine recommendations.
  11. Residential Foreclosures and Evictions. Residential foreclosures and evictions are important factors to consider when assessing the health of a local housing market. In addition to state or local sources that may track residential foreclosures and evictions, annual estimates of residential evictions on a county level can be obtained by accessing evictionlab.org, while residential foreclosure data can be found at Finmasters.com. A rising trend in evictions and/or foreclosures above the baseline level may serve as indicators of certain deficiencies or issues with the local housing market. The volume, location and other qualitative aspects of evictions and foreclosures, as well as the volume of delinquent mortgages (Source: Consumer Financial Protection Bureau) should be determined so far as possible. The availability of mortgage funding and applicant success in obtaining it are sometimes evaluated to assess market volatility. The trend in loan applications and approval/denial rates could be compared to the trend in home sales volumes and/or residential foreclosures. The 90–day (severe) delinquency rate on mortgages, a leading indicator of the volume of foreclosures to come, may serve to reinforce foreclosure trends.
  12. Previously Completed Studies and Plans. Previously completed studies and plans that involve or impact housing within the subject market can be a helpful starting point. This may include previous housing studies, comprehensive or consolidated plans, land use plans, community surveys and other public or private sector studies that provide insight on housing. At a minimum, the analyst should take into consideration data, findings and resources used in such studies to better inform their own data collection and approaches when studying a specific market.

Housing Gap Estimates (Quantified Housing Needs)

The housing gap estimates attempt to quantify the number of housing units that are needed to address local housing issues. The housing “gap” should be determined by some level of reconciliation of current household estimates and projections by income and tenure with the existing housing stock and confirmed pipeline development in the market. While the specific demand components can vary, the housing gap analysis of an HNA typically quantifies the number of housing units needed in the market by tenure (rentals vs. for-sale) and rent/price point. The housing gap often considers demand from existing and new households, replacing units lost (demolitions or conversions) or units that should be removed (substandard housing) from the housing stock and allows for an acceptable level of vacant units to ensure balanced housing market conditions. In some cases, it may be appropriate for the analyst to consider housing cost burdened households (paying over 30 percent of income toward housing costs) or severely housing cost burdened households (paying over 50 percent of income toward housing costs) as a metric used to quantify housing needs. Lastly, there may be circumstances that warrant some consideration of potential housing needs generated from people living outside the subject market that commute to the subject market for work, who would choose to live in the subject market if sufficient and affordable housing was available. In such cases, the analyst should consider commuter data sources, such as https://onthemap.ces.census.gov/. HNAs can also quantify housing needs by bedroom type, structure type, market segment (e.g., families, seniors, etc.) and geography (e.g., submarkets). The analyst should explain their rationale for assumptions used in the determination of demand. The calculations and assumptions used to compute housing needs estimates should be transparent in the HNA and supporting data should be easily identifiable in the report.

It is important that the analyst gives consideration to housing product in the development pipeline as part of the housing gap estimates. Product that is under construction or has secured commitments, such as building permits or financing, for example, should be considered. Meanwhile, the analyst should exclude projects that have not secured financing, are under preliminary review or have not established a specific project concept (e.g., number of units, rents, target market, etc.).

Virtually all housing gap estimates are conducted at various levels of income stratifications (aka income bands). While the income levels used in the analysis may be specifically requested by the commissioning entity, the analyst may have the opportunity to select or suggest the income levels used in the housing gap estimates. Typically, housing gap estimates are conducted on income bands that correspond to various federal and state financing programs to quantify demand that may ultimately be used to secure government funding tied to specific programmatic household income restrictions. As a result, it is not uncommon for housing gap estimates to be structured using windows of affordability levels up to 50 percent of Area Median Income (AMI), between 51 to 80 percent, 81 to 120 percent, and above 120 percent.

Recommendations

The recommendations included in an HNA vary greatly, ranging from broad recommendations to detailed action plans. Most recommendations are associated with policy considerations, development incentives, resident assistance programs, housing outreach and education efforts, marketing to prospective developers and investors, capacity building efforts, organizational considerations and partnership building. The content and scope of the recommendations are most often requested by the commissioning entity. As a result, the analyst is encouraged to talk with the commissioning entity to determine the level of detail required as part of the recommendations portion of the study.

Appendices

Appendices (aka Addendums) of supplemental or supporting information should be included. The appendices may include such items as rental and for-sale housing data, public survey documents, photographs, maps, terms and definitions, the analyst’s qualifications or certifications (such as current certified NCHMA membership) and other pertinent information.

Conclusion. The intent of this document is to provide guidance on the possible content, organization, end uses/users and resources that should be considered as part of an HNA. A unique and critical factor that ultimately affects the study’s scope of work, level of detail of research and analysis, and the focus of key findings is that these items are often established by the commissioning entity. Limits such as the budget and duration of the assignment, the geographic scope and the primary intended use/users of the study, all determined by the commissioning entity, will provide some direction on the content of the study. Regardless, the preceding guidelines establish minimum standards that should be considered when completing an HNA.