Item A: Core Campus - Application for MUPTE for 505 East Broadway

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ATTACHMENT A Housing Market Analysis Key Observations: • Community -wide rental vacancy has historically been low and stable, putting pressure on price • Eugene rental housing costs are unaffordable for a very high percentage of tenants • Demand by large numbers of off - campus students impacts rents and neighborhoods • Large projects on transit corridors give students more opportunities to move and live in housing close to campus, while preserving neighborhood livability • Rentals in the campus area submarket have had nearly zero percent vacancy for many years, which pressures rents to rise; as supply and vacancy rates increase, rent prices may flatten • Student housing supply is still catching up to university enrollment increases of recent years Impact on Overall Vacancy Rates For the past decade, Eugene's vacancy rate has ranged between 3 % -5 %. Local sources estimate the current vacancy rate at 4 %. A good rule of thumb for what is considered a "natural vacancy rate," or the level representing the market's equilibrium, is traditionally placed at 5 %. A low vacancy rate is indicative of upward pressure on prices. However, housing markets with younger populations, or college age populations, may be assumed to have more mobility, greater turnover, and, therefore, higher vacancy rates. Rental properties will typically try to absorb higher vacancy rates and greater turnover volume without lowering their prices. Therefore, metro areas with more mobile populations, like an above - average concentration of students, can be expected to function normally with higher vacancy rates. The low vacancy in Eugene is an indication of market tightness for apartment rentals — especially within the close -to- campus student submarket area where vacancy is known to be lower. Construction of additional bedrooms will likely improve the vacancy rate balance in the student submarket and could contribute to the flattening of rental rates community -wide. Impact on Housing Cost Burden "Housing cost burden" is defined as households paying more than 30% of household income for housing and utilities. In the cities of Eugene and Springfield nearly half (47 %) of all renters have a housing cost burden (2010 Consolidated Plan). Average rents for a Eugene one - bedroom unit are currently around $630, and for a two - bedroom unit around $860. While the Core Campus project's additions of 197 units is unlikely to have a significant impact on overall vacancy, in combination with other student housing construction there could be a short -term impact on student housing vacancy and present a medium -term, general leveling influence for rental housing rates. The Eugene area housing market, like most other urban housing markets, is comprised of numerous submarkets for products of varying quality, locations, and different levels of demand. Rent levels in the campus area range from $650 to $725 per bedroom, with the highest rents ($750 to $800+ per bedroom) in the newest complexes completed for the 2012 -13 school year.