There is demand for 144 owner-occupied homes, 90 more rental units and over 300 affordable senior housing units in Luverne and surrounding area.
That’s according to the latest housing study reviewed Monday at the Luverne Economic Development Authority.
“It’s a snapshot of the city’s housing that we can use as we move forward into the next few years of housing development,” said EDA director Holly Sammons.
Joe Hollman of Maxfield Research and Consulting, Roseville, presented key highlights of the study.
“The area is missing out on potential population and household growth as some buyers choose to move elsewhere if they can’t find suitable housing,” he said.
“A historically tight labor market is making it difficult for employers to find workers, and additional housing will be needed to support economic development.”
The study shows there’s a housing shortage in Luverne, with the greatest need for middle-market “move-up” single-family homes in the $300,000 to $350,000 range and starter homes under $200,000.
“All the realtors I’ve talked to have emphasized that need,” Hollman said.
Because it’s difficult to build a new home for $200,ooo the study suggests that construction of move-up housing could generate faster turnover of entry-level housing.
With demand from older buyers for maintenance-free products (like twin homes), more construction of those will create turnover for new households to move into the area.
At the same time, there is opportunity for more new rental housing, notably workforce rental housing to accommodate 70 to 80 additional workers for Lineage Cold Storage when it comes online this spring.
Luverne imports 66 percent of its workers from up to 50 miles away
The study considered demographic and employment trends.
Luverne has an opportunity to continue growing, but that will be based largely on employers’ ability to hire and the availability of housing.
“A community can’t grow if there’s nowhere for people to move into,” Hollman said. “Additional housing is needed to achieve growth.”
Rock County hit record low employment in 2021-22 and wasn’t significantly impacted by Covid, the study showed.
“Luverne and surrounding areas have experienced strong recovery from Covid, and solid growth is projected over the next 10 to 12 years,” Hollman said.
He said lack of labor and housing for workers can restrain job growth.
“Right now, Luverne is importing workers who are commuting into the city,” he said.
“About 66 percent of jobs are filled by workers commuting into the community, many who come from over 50 miles away.”
The study shows that Luverne is bucking census trends, with some of its strongest growth in married couples with children.
This increases demand for move-up, single-family, owner-occupied housing, and in Luverne resale prices in this category are rising over 6 percent annually.
The median home sold in 2021 for $157,000. New construction homes are selling at an average price of $355,077.
“So, there’s a pretty big price gap between new construction and resale of existing housing,” Hollman said.
Luverne has 31 lots available for construction plus 33 more pending in preliminary platting.
“I think your lot supply is really right where you want it now,” Hollman said.
He said the rental housing market in Luverne is tight, with most affordable rental units occupied with waiting lists, and market rate rentals at just over 4 percent vacancies.
The study shows that newly constructed rental units cost occupants an average of $1,189 per month compared to existing older rental units that average $660 per month.
In terms of senior housing, the study shows a large and growing senior population in Luverne living independently, but that growth is expected to flatten in coming years.
In Luverne’s 106 senior housing units, nearly 4 percent are vacant.
In the 74 units outside of Luverne (such as Hills and Adrian), more than 28 percent are vacant, mostly in assisted living and memory care units and likely affected by Covid 19.
Planning for growth
Sammons said the updated study will be useful for planning purposes.
“We’ll continue to look at opportunities for single family as far as lots and prices and incentivizing the private sector. We’ll continue to look at opportunities for more multi-family rentals in both private and public sectors,” she said.
“We’ll use this information to strategically plan what housing looks like parallel to day care. Tackling both at once is really going to be critical. They really do go hand in hand. … That coupled with job growth will create a lot of new opportunities.”
Mayor Pat Baustian said the study will be useful if the city pursues spec homes to fill a shortage of new starter homes.
“This is great data for our council and EDA to look at. We need to make sure the backing is there for spec homes to be built,” he said.
“We know we have a housing shortage, but when we have data to back it up it helps boards and commissions and bankers to see that we need it.”
Specifically, according to the study, the city may need to encourage rental townhomes that would be affordable for families earning $50,000 renting for $1,300 per month.
Baustian said that when the Veterans Home was built in Luverne in 1992, the city built spec homes to fill a need where private developers had fallen short.
Now with Lineage Logistics opening soon, he said Luverne should consider meeting housing demand for those workers.
“This report shows if we don’t get those spec homes built, we’re going to lose opportunity,” Baustian said.
“And housing and day care need to pair up together. We have to keep moving in every lane in order to make it happen.”
Three years of change
Luverne’s last housing study was completed in 2019, and since that time, the Uithoven Addition was added to include 15 single-family and twin home lots.
Also, 54 market rate rental units (PrairiE Loft) were built, and four luxury-size lots north of town were annexed into the city limits in the Schmuck Addition.
In addition to the Lopau Addition’s 19 single-family and five multi-family lots, another lot or two may be added to the Reisch Addition, which is on the stub of Walnut Avenue north of RCO and Mary Jane Brown.
The city paid Maxfield Research$10,000 to update Luverne’s housing study.
The entire report can be found on the city’s website, cityofluverne.org under the drop-down menus “business,” “economic development” and “studies and reports.”