Agenda - 03-10-1987 - Laserfiche WebLink

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3 sized lot prices vary widely within separate regions of the Rural Buffer. The correlation is strongest in the University Lake Watershed, with a correlation coefficient of about 0.9 (a coefficient r=-1 .0 is the strongest possible negative relationship, r=0 .0 indicates no apparent relationship, r=+1 .0 is the strongest possible positive correlation) . For the Northside, the correlation coefficient of 0.66, while still strong, is significantly lower than University Lake. In the Southern Triangle r=0.096, indicating almost no relationship between parcel price and size. This suggests that variables other than maximum allowable density and lot size impact lot price. Anecdotal evidence points to a strong demand component unrelated to Rural Buffer classification . One particular 40,000 square foot tract in the Southern Triangle was sold three times in a fourteen month period prior to the creation of the Rural Buffer . Each sale was approximately 20% higher than the prior sale. The average cost for a unimproved lot of minimum allowable acreage also varies within the buffer. An average 40,000 square foot parcel would cost $21 ,400 in the Southern Triangle and $20,200 in the University Lake PW- II but only $11 ,050 on the Northside. If parcel size was the only major variable then the equations and correlations would be similar for all areas. FINDINGS : AFFORDABILITY Implicit in the assertion that lower density requirements are inhibiting the building of affordable housing in the Rural Buffer are two claims. The first is that affordable housing was being built prior to the imposition of larger required lots and second is that raw land prices are the major culprit behind overly expensive housing. With a few notable exceptions, such as Habitat for Humanity ' s subdivision in Bingham Township, neither claim can be substantiated. Construction costs, not raw land prices, are the major inhibitor to site built affordable housing in the Rural Buffer . These construction costs seem to indicate that developers have targeted upper income consumers for housing in the Rural Buffer regardless of availability of land, negating the first claim. For the last quarter of 1986 the average construction costs for a site built home in Chapel Hill Township for which the county issued a permit was $105,000. This is almost five times the cost of the necessary raw land . When put on an average 40,000 square foot lot such a home would cost approximately $122,000. This would increase to about $127,000 if sited on an average two acre lot. Assuming interest rates of 10% and a rule of thumb that says a family can afford to spend thirty percent of its gross income on housing, it would require a family income of over $49,000 to afford that house. For an interest rate of 12% the required income Jumps to $56,000 and for an interest rate of 13% income requirements reach $60,000.