Housing Needs Assessments
By Abram Mamet
6 min read
Necessary Tools, Lasting Benefits
Housing Needs Assessment (HNA) is an in-depth study used by a wide range of stakeholders, including developers, local governmental entities, lenders and tenant advocacy organizations. While HNAs often vary in content dependent upon situational needs, these studies typically focus on demographic and economic data—in tandem with housing availability—to determine the current state of a specific housing market’s quality and to predict the current and prospective housing needs within a community, often looking five to ten years in the future.
No matter the precise areas within the study, however, all HNAs have one goal: to inform local housing strategies and bolster the success of resulting projects.
An HNA can be as broad or as granular as is needed by the commissioning entity. Typically, the organization tasked with conducting the study begins with available census data. From there, they will compile a specific mixture of datasets, pulling from existing resources—such as published local economic data from Chambers of Commerce or Housing Authorities, and regional data from the Bureau of Labor Statistics—as well as compiling proprietary, independent research done from surveys, local rental housing data and Multiple Listing Service for-sale housing data.
HNAs are commissioned by a variety of entities. Patrick Bowen, whose company Bowen National Research has performed thousands of HNAs across the United States for over a decade, told Tax Credit Advisor that he estimates “50 percent of these studies are done on behalf of the local government, be it the municipality and/or county. Roughly, another 25 percent are commissioned by economic development organizations, while the remaining share is commissioned by nonprofit organizations or a joint effort between several public and private sector organizations.”
Because of an HNA’s scale and scope, its cost can run from $10,000 to beyond $100,000 and can take up to a year to complete, causing a sometimes broad network of entities to join together to commission the study. Though federal and state grants do exist to defray the costs, Bowen has often found that many communities “will pull money together through a collective of organizations, such as the local board of realtors, employers, economic development organizations, local housing authority, Habitat for Humanity or other philanthropic groups, and other local housing advocacy groups.”
The onus of securing an HNA is not always on a local jurisdiction or regional development group and can sometimes be seen as an overall public good commissioned by a state agency. In 2020, for example, Maryland preemptively commissioned and provided a statewide HNA via its Department of Housing and Community Development to local jurisdictions to use in developing certain required elements of their annual comprehensive plans that relate to housing elements.
Why Commission a Housing Needs Assessment
Some communities are required to undertake an HNA as part of their requirements for securing Community Development Block Grants, Low Income Housing Tax Credits or other funding to address housing. However, when not required, it might seem tempting for a prospective developing agency to skip an HNA due to its initial cost and perceived project delays.
However, HNAs pay invaluable dividends beyond their immediate investment.
Housing markets are incredibly dynamic, and an up-to-date HNA will ensure that interested parties are prepared for both major and subtle shifts in a regional housing landscape. In the last five years alone, market outlooks have fluctuated rapidly, with interest rates reaching record lows in the early part of 2020 before rapidly rising again by the end of 2022. Further, global economic unrest has continued to cause unexpected roadblocks in domestic housing production. Of course, housing is fundamentally local, and the often under-the-radar changes in local communities and markets will tend to have the biggest effect on a proposed development project. A regularly updated HNA, which experts generally suggest commissioning every five to eight years, ensures resilience against the steady change of the market.
Even if an HNA is not used in tandem with an in-progress development opportunity, such studies are valuable resources for small communities attempting to attract large-scale economic development projects. For these often under-resourced jurisdictions, an HNA will “help them promote development opportunities, including demonstrating the depth of support for certain housing product types and identifying potential sites for residential development that they ultimately market to prospective developers and investors,” Bowen says
Current Trends in Housing Needs Assessments
Previously, the use of HNAs was rather stratified. For example, a city may commission one in tandem with a developer to ensure that both public and privately invested funds are well-reasoned but may not necessarily have shared that study with similarly situated communities. However, Bowen says that today, “It has become more frequent to see joint city-county studies or even regional studies that include multiple counties that are linked together geographically, through their community services and assets, culturally or economically.”
This interconnectedness is causing many communities to understand housing as central to pressing social issues, and Bowen says that more and more entities are seeing HNAs as tools to be used proactively to help solve those problems. For example, Bowen says, existing housing stock is serving as a deterrent for high-quality employers to attract and retain high-quality workforces. Thus, these employers team up with communities to commission studies from firms like Bowen’s, in order to “stay ahead of it by getting Housing Needs Assessments done.”
Even socially minded organizations without direct ties to traditional HNA clients, such as local government entities or developers have begun employing HNAs to advance their strategic mission. For example, in December 2022, two California nonprofits—the Corporation for Supportive Housing and California Housing Partnership—published a large-scale HNA aimed specifically at finding a data-oriented solution to solving California’s ever-worsening homelessness crisis. By using traditional HNA metrics and methods, the study approaches a non-traditional goal to declare that “California can put in motion an investment plan, policies and partnerships with local governments that would allow the state to end homelessness by 2035.”
On a granular level, HNAs are trending towards incorporating more community engagement into what had previously been rather dispassionate, data-driven reports. For Bowen, this has included “collecting input, most often in the form of a survey, from area stakeholders, residents, non-resident commuters, local employees and local employers. In just the past two years,” Bowen says, “we have collected invaluable insight from several thousand survey respondents that has provided invaluable input on barriers to residential development, the impact housing has had on local employers, the specific housing challenges residents face, and, maybe most interestingly, the level of interest of non-resident commuters to move to the community in which they work, which is the community we are studying.”
