NCHMA Establishes Guidelines for Housing Needs Assessments

Given the housing challenges facing much of the nation, there are many communities, regions and even states around the country that are having Housing Needs Assessments (HNA) completed. As part of the National Council of Housing Market Analysts’ (NCHMA) continued efforts to establish standards for housing studies, a White Paper was prepared and adopted by the organization in early 2024 that establishes guidelines on conducting HNAs.

An 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, such as 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, as well as numerous other examples. Although the emphasis, extensiveness and scope of work in an HNA may vary, certain standards should be expected. The Housing Needs Assessment White Paper intends to establish minimum standards and guidance on the preparation of HNAs.

While the White Paper addresses numerous topics, the document primarily focuses on the following core components:

• Study Area Delineation: Discusses study areas by city, county, region or state, and more localized submarkets, such as neighborhoods, school districts, planning districts, etc.
• Economics: Addresses the importance of historical employment and unemployment trends, major industry sectors, commuting patterns and commuter characteristics, job announcements and job growth projections and the relationship between wages and housing affordability.
• Demographics: Outlines historical population and household trends and current demographic characteristics, along with projections of key demographic characteristics and how they could impact housing.
• Housing Supply: Summarizes various rental and for-sale housing alternatives and key data points that should be considered, as well as additional housing research and analysis that may be needed for housing involving second homes, short-term rentals, senior care facilities, student housing, etc.
• Other Factors that Influence Housing: Discusses the research, analysis and resources (if available) for a variety of factors that might influence a local housing market, such as residential blight, potential development opportunities (possible sites), identifying potential development partners, analyzing potential barriers to development, such as land use policy, government fees and development costs, access to public transportation, access to infrastructure, etc. 
• Housing Gap Estimates: Outlines housing demand factors to consider when deriving rental and for-sale housing gap estimates, stratifying housing gap estimates by household income levels.
• Recommendations: While the scope of work and the recommendations for an HNA are often influenced by the requests of the commissioning entity, many recommendations typically focus on strategies to address housing issues, marketing development opportunities, community outreach efforts, housing financing resources and setting housing priorities.

The Housing Needs Assessment White Paper also aims to guide 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 White Paper establishes minimum standards that should be considered when completing an HNA.

This article and the corresponding White Paper on HNAs were prepared by Patrick Bowen, president of Bowen National Research and chair of NCHMA, Housing Needs Assessment White Paper.

The National Council of Housing Market Analysts (NCHMA) is the only professional body dedicated exclusively to enhancing the professionalism and standards surrounding residential rental real estate market analysis. NCHMA’s members are comprised primarily of professionals involved in performing and reviewing residential market studies and underwriting residential real estate.