City of McGrath

 

Section Table of Contents

Page

Demographic Data Overview

M-2

Population Estimates and Trends

M-4

Population Projections

M-5

Population by Age

M-6

Population by Age - Comparison with Minnesota

M-7

Households Estimates and Trends

M-8

Average Household Size

M-9

Household Projections

M-10

Households by Age of Householder

M-11

Household Characteristics

M-12

Households by Tenure

M-13

Income Data

M-14

Existing Housing Inventory

M-15

Permanent and Seasonal Housing

M-16

Home Values

M-17

Home Sales

M-18

Home Sales - Historical Data

M-19

Housing Condition

M-20

Land and Infrastructure Availability

M-21

Rental Housing

M-22

Findings and Recommendations

M-23

 

Demographic Data Overview


Sources of Data

The following pages contain demographic data obtained from a variety of local, state and national sources. During the course of this Study, Census data was being released from the 2000 Census. Whenever data from the Census was available, it has been used in this Study. However, some characteristics, such as income related information, had not been released when this Study was prepared, so estimates from other sources have been used.

Primary data sources, in addition to the 2000 Census, include prior year estimates from the U.S. Census Bureau, the Minnesota State Demographer’s Office, Claritas, Inc., an Arlington, VA based data reporting service, and Woods & Poole Economics, Inc., a Washington, DC based economic forecasting company.

The data that we have obtained from Claritas, Inc. is for the McGrath Market Area, as defined below. Because of the relatively small size of McGrath, estimates and projections are very difficult to make with a reasonable degree of accuracy. Estimates and projections are more reliable when made for a larger area. For this reason, we have only used the Claritas information for the Market Area and the County. Woods & Poole only issues their estimates and projections at the County-wide level.


Market Area Definition

We have provided demographic data on population, households, income and other characteristics for the City of McGrath, and for a primary market area that surrounds the City. The primary market area is referred to in the Study as the McGrath Market Area. This market area includes jurisdictions including the City of McGrath, the Townships of Idun, Millward, Pliny, Seavey, Wagner, White Pine and Williams.

A map showing the McGrath Market Area is provided on the following page.

Although the geographic boundaries of this Market Area represent the Aitkin County jurisdictions immediately surrounding the City, housing in McGrath has the potential to draw from a larger Market Area. The inclusion of a McGrath Market Area definition is intended to represent a primary area that is oriented to the City. The inclusion of demographic data for this area allows for some degree of comparison between the City and the surrounding jurisdictions. For most demographic characteristics, we have also included data for Aitkin County as a whole, to again provide a perspective on broader market conditions in the larger region.

 

McGrath Market Area

 

 


Population Estimates and Trends:

Table 1 Population Trends - 1980-2000

 

1980 Population

1990 Population

% Change 1980-1990

2000 Population

% Change 1990-2000

McGrath

81

62

-23.5%

65

4.8%

McGrath Market Area

963

909

-5.6%

1,060

14.2%

Aitkin County

13,404

12,425

-7.3%

15,301

23.1%

Source: U.S. Census Bureau

 ►          After experiencing a population loss of nearly 24% in the 1980s, McGrath has added population over the last 10 years. According to the Census, McGrath added 3 people, for a population growth rate of nearly 5% between 1990 and 2000. Despite the recent increase, the City’s population in 2000 was still nearly 20% below the population level in 1980.

 ►          The jurisdictions forming the McGrath Market Area had a much lower rate of population loss in the 1980s, and they have had a faster rate of growth since 1990. The McGrath Market Area experienced a population increase of more than 14% from 1990 to 2000. However, the Market Area population level in 2000 is only 10.1% higher than it was in 1980.

 ►          Aitkin County has grown at an even faster rate. After a population loss of more than 7% in the 1980s, the County added population at a rate greater than 23% from 1990 to 2000.

 ►          Although the 2000 Census data released to date does not show the components of population gains and losses, in their 1999 County estimates, the Census Bureau identified the sources of population gains and losses for counties. In Aitkin County, they estimated population decreases for deaths exceeding births, but a significant population gain due to domestic in-migration. While the McGrath Market Area represents only a portion of the entire County, it is probable that the causes of population change are similar to County-wide patterns, with domestic in-migration as the largest component of the population gain that has occurred since 1990.

►          Although we consider the 2000 Census data to be the most reliable indicator of population levels, we have also obtained current-year population estimates from Claritas, Inc., a private data reporting service. The Claritas estimates for 2001 show an estimated population of 15,518 people in Aitkin County, and 1,116 for the McGrath Market Area. These estimates are relatively consistent with the 2000 Census data.

 ►          We have also obtained a 2001 population estimate from Woods & Poole Economics, a private economic forecasting service. They estimate the Aitkin County population to be 14,550 people in 2001, well below the 2000 Census figures.


Population Projections:

The following table presents possible population level projections using four different sources. The 10 year growth trend is based on the rate of change between 1990 and 2000, using the 1990 Census and the 2000 Census, and projects this rate of growth forward between 2000 and 2006. The 20 year growth trend uses the same methodology, but calculates an annual growth rate from 1980 to 2000. The third and fourth projections are provided by Claritas, Inc., and Woods & Poole Economics, private companies that provide demographic data. Woods & Poole only issues data and projections at the County level.

Table 2 Population Projections Through 2006

 

2000 Population

Census

2006 Projection from 10 year growth trends

2006 Projection from 20 year growth trends

2006 Claritas Projection

2006 Woods & Poole Projection

 McGrath

65

67

61

N/A

N/A

 Market Area

1,060

1,151

1,092

1,187

N/A

Aitkin County

15,301

17,426

15,951

16,611

15,190

Source: U.S. Census Bureau; Claritas, Inc.; Woods & Poole Economics, Inc.; Community Partners Research, Inc.

 ►          Population projections calculated from recent trends for the City of McGrath vary depending on the length of time reviewed. The 10 year calculation anticipates growth, while the 20 year calculation forecasts population losses. In our opinion, it is reasonable to assume that during the 6 year period between 2000 and 2006 the City’s population level will change within in range from -4 to +2 people.

►          Projections for the McGrath Market Area and the County of Aitkin also vary depending on a 10 year versus 20 year calculation method. Both the Market Area and the County lost population in the 1980s, but rebounded with larger population gains in the 1990s. These methods anticipate that the Market Area will add between 32 and 91 people from 2000 to 2006. In this same projection period, Aitkin County is expected to add between 651 and 2,125 people.

 ►          Starting from their lower 2001 population estimate of 1,116, Claritas projects that the Market Area will add 71 people and that the County will add 1,093 people between 2001 and 2006. These projections are well within the ranges provided above.

►          Woods & Poole Economics projects that Aitkin County will add 640 people from 2001 to 2006. Again, they start with a lower base year estimate for 2001. While Woods & Poole’s estimates and projections are too low, they do anticipate continued County-wide growth into the foreseeable future.


Population By Age:

The following table compares the City, Market Area and County populations by age in 1990 and 2000, along with the percentage changes. While this table examines the changes over the last 10 years, the table on the following page compares the City, Market Area and County with the State of Minnesota for the distribution of population by age.

Table 3 Persons by Age - 1990 - 2000


Age

City of McGrath

Market Area

Aitkin County

1990

2000

% Change

1990

2000

% Change

1990

2000

% Change

 0-19

20

23

15.0%

271

235

-13.3%

3,197

3,544

10.9%

20-24

3

3

0%

29

37

27.6%

359

486

35.4%

25-44

14

15

7.1%

223

237

6.3%

2,989

3,302

10.5%

45-64

12

15

25.0%

191

341

78.5%

2,952

4,452

50.8%

65-74

6

6

0%

120

129

7.5%

1,730

1,993

15.2%

75-84

4

2

-50.0%

62

61

-1.6%

898

1,130

25.8%

 85+

3

1

-66.7%

13

20

53.8%

300

394

31.3%

Total

62

65

4.8%

909

1,060

14.2%

12,425

15,301

23.1%

Source: U.S. Census; Community Partners Research, Inc.

 ►          With a relatively small population, and with very little population growth in the last decade, the City has experienced only minor changes in the number of people in most age cohorts. The only age ranges that experienced population losses were the older senior groups, age 75 and older. However, this group only declined by 4 people. The City did experience growth in the number of middle-age adults and in the number of children.

 ►          In the McGrath Market Area, most age groups reported an increase in population between 1990 and 2000. The only notable reduction was in the number of children age 19 and younger, which decreased by more than 13%. Large numeric and percentage increases occurred among middle-age adults, age 45 to 64 years old, which increased by nearly 79%.

►          Despite an increase in all age ranges between 20 and 74 years old, the population of children declined in the Market Area.

►          The older senior population, age 85 and older, increased by nearly 54% in the Market Area, but this age cohort is a very small percentage of the total Market Area population, with only 20 people in this age range.


Population By Age - Comparison to Minnesota:

The following table compares the City, Market Area and County populations by age in 2000 to State-wide age distribution patterns.

Table 4 Persons by Age - 1990 - 2000


Age

McGrath

Market Area

Aitkin County

Minnesota

2000

Percent

2000

Percent

2000

Percent

2000 Percent

 0-19

23

35.4%

235

22.2%

3,544

23.2%

29.1%

20-24

3

4.6%

37

3.5%

486

3.2%

6.6%

25-44

15

23.1%

237

22.4%

3,302

21.6%

30.5%

45-64

15

23.1%

341

32.2%

4,452

29.1%

21.7%

65-74

6

9.2%

129

12.2%

1,993

13.0%

6.0%

75-84

2

3.1%

61

5.8%

1,130

7.4%

4.3%

 85+

1

1.5%

20

1.9%

394

2.6%

1.7%

Total

65

100%

1,060

100%

15,301

100%

100%

Source: U.S. Census; Community Partners Research, Inc.

►          The percentage of children in the City was above the State-wide average, but including all of the Market Area, the percentage of children in the population was below the County-wide percentage, and was well below the State-wide percentage.

►          The City’s percentage of population was lower than the comparable State-wide percentages for all age groups 20 to 44 years old. For the age ranges between 45 and 74 years old, the City’s percentages are above the State-wide average.

►          The Market Area’s percentage of people in the age ranges between 45 and 64 years old was well above the State-wide level. However, when looking at senior age groups 75 and older, the Market Area percentages were only slightly above the State-wide average. This implies that older seniors tend to leave the area as they age, probably looking for additional medical and service options in larger neighboring communities.

►          According to the 2000 Census, the median age in the City of McGrath is 39.3 years old and in the County it is 46.5 years old. For the entire State of Minnesota the median age is 35.4 years old.


Household Estimates and Trends:

Table 5 Household Trends - 1980-2000

 

1980 Households

1990 Households

% Change 1980-1990

2000 Households

% Change 1990-2000

McGrath

28

25

-10.7%

26

4.0%

McGrath Market Area

336

351

4.5%

461

31.3%

Aitkin County

5,005

5,126

2.4%

6,644

29.6%

Source: U.S. Census Bureau; Community Partners Research, Inc.

►          The City of McGrath lost nearly 11% of its households in the 1980s. Between 1990 and 2000, the City added 1 new household.

►          Household growth in the McGrath Market Area was very strong over the last decade. >From 1990 to 2000, the Market Area added 110 new households, or a household increase of more than 31%. Although the Market Area had a population loss in the 1980s, the household level increased slightly during that decade. Most of the household growth in the Market Area occurred in Wagner, Idun and Williams Townships, which offer lake shore and rural residential options. These Townships form the southern border of Aitkin County.

►          Aitkin County’s household growth approached 30% in the 1990s. While all regions of the County added households, the majority of the household growth occurred in the jurisdictions that form the Aitkin Market Area.

►          Although the 2000 Census data released to date does not show the components of household gains and losses, in their 1999 County estimates, the Census Bureau identified the sources of population gains and losses for counties. In Aitkin County, they estimated population decreases for deaths exceeding births, but a significant population gain due to domestic in-migration. While the McGrath Market Area represents only a portion of the entire County, it is probable that the causes of household change are similar to County-wide patterns, with domestic in-migration as the largest component of growth.

►          Increasingly, seasonal use structures in northern Minnesota are being converted to year-round residences, as people move into the area to retire, or tele-commute to their employment. While a number of new houses may have been built in the Market Area to house new residents, it is also possible that many new households have occupied an existing unit that was previously a seasonal-use structure.

►          Claritas, Inc., estimates that there are 455 households in the Market Area in 2001, reasonably consistent with 2000 Census data.


Average Household Size:

The following table provides U.S. Census Bureau information on average household size. We have also provided projections by Claritas, Inc., which were prepared prior to the release of any 2000 Census data.


Table 6 Average Number of Persons Per Household 1980-2006

 

1980 Census

1990 Census

2000 Census

2006 Projected Claritas

McGrath

2.89

2.48

2.50

N/A

McGrath Market Area

2.59

2.45

2.30

2.42

Aitkin County

2.65

2.39

2.28

2.21

Source: U.S. Census; Claritas, Inc.

►          In most areas in Minnesota and across the nation, average household size has been decreasing in recent decades. This has been due to household composition changes, such as more single parent families, more senior households due to longer life spans, etc. Although the average household size in McGrath increased slightly between 1990 and 2000, the average size has decreased since 1980. The City’s average household size has decreased from 2.89 persons per household in 1980 to 2.50 persons in 2000. For the State of Minnesota, the average household size was 2.52 people in 2000.

►          Average household sizes for the Market Area and for the County as a whole have continued to decrease in the 1980s and 1990s. McGrath’s average household size is well above the County-wide average.

►          The 2006 projection from Claritas shows that the average household size is expected to decrease over the next five years for the Market Area and the County. Claritas estimates a higher average household size in 2001 of 2.45 persons per household in the Market Area, and expects this to decrease to 2.42 persons by 2006.

►          Woods & Poole projects that the Aitkin County average household size will decline from 2.35 persons per household in 2001 to 2.31 persons in 2006.


Household Projections:

The following table presents possible household level projections using four different sources. The 10 year growth trend is based on the rate of change between 1990 and 2000, using the 1990 Census and the 2000 Census, and projects this rate of growth forward to 2006. The 20 year growth trend uses the same methodology, but calculates an annual growth rate from 1980 to 2000. The third and fourth projections are provided by Claritas, Inc., and Woods & Poole Economics, private companies that provide demographic data. Woods & Poole only issues data and projections at the County level.


Table 7 Household Projections Through 2006

 

2000 Household Estimate

2006 Projection from 10 year growth trends

2006 Projection from 20 year growth trends

2006 Claritas, Inc. Projection

2006 Woods & Poole Projection

 McGrath

26

27

25

N/A

N/A

McGrath Market Area

461

548

512

490

N/A

Aitkin County

6,644

7,825

7,297

7,422

6,480

Source: Community Partners Research, Inc.; Claritas, Inc.

►          Our projections indicate that the household count in the City of McGrath is expected to change very little between 2000 and 2006. Our calculations show a change of -1 to +1 household.

►          Projections for the McGrath Market Area and the County of McGrath vary somewhat depending on a 10 year versus 20 year calculation method. These two methods anticipate that the Market Area will add between 51 and 87 households from 2000 to 2006. In this same projection period, Aitkin County is expected to add between 653 and 1,181 households.

►          The Claritas projection for the McGrath Market Area indicates an increase of 45 households between 2001 and 2006, below the range provided above. Claritas starts with a lower base year (2001) estimate than the 2000 Census. Claritas projects that the County will add 622 households between 2001 and 2006. This projection is near the lower end of the range provided above.

►          Woods & Poole Economics projects that Aitkin County will add 430 households from 2000 to 2006. Woods & Poole’s base year estimate for 2000 is well below the County household count reported by the Census. While their estimates and projections are too low, they do anticipate continued County-wide growth into the foreseeable future.


Households By Age of Householder

The following table compares Market Area households by age of householder in 1990 and 2000, along with the numeric and percentage changes.

Table 8 Market Area Households by Age - 1990 - 2000

Age of Householder

McGrath Market Area

1990

2000

Numeric Change

Percentage Change

15-24

11

6

-5

-45.5%

25-34

38

36

-2

-5.3%

35-44

59

81

22

37.3%

45-54

61

96

35

57.4%

55-64

50

102

52

104.0%

65-74

77

77

0

0%

75-84

47

46

-1

-2.1%

 85+

8

17

9

112.5%

Total

351

461

110

31.3%

Source: U.S. Census; Community Partners Research, Inc.

►          Census data show that the McGrath Market Area has added households in some age ranges since 1990, but has had a net loss or no gain in 4 of the specified ranges. The Market Area had a small loss of households in the 15 to 24 year old age group, the 25 to 34 year old age group, and the 75 to 84 year old age range. There was no growth in the number of households age 65 to 74 years old.

►          The largest numeric gains occurred in the 55 to 64 year old group and the 45 to 54 year old age group.

►          Of the senior citizen age groups, only households in the 85 and older age range experienced growth.


Household Characteristics

The following table presents data on household characteristics from the 2000 Census. Data has been presented as percentages of the total households to allow for comparative analysis between the City, the Market Areas and State.

Table 9 Households by Type - 2000

 

Married Couple Family

Male Householder

No Wife Present

Female Householder No Husband Present

Non-Family Household

With Related Children

W/O Related Children

With Related Children

W/O Related Children

With Related Children

W/O Related Children

1 Person Household

Non-Family Household

McGrath

19.2%

26.9%

0%

0%

3.8%

0%

42.3%

7.7%

Market Area

14.3%

40.8%

3.5%

2.4%

2.2%

1.7%

30.8%

4.3%

Aitkin Co.

16.9%

40.5%

2.1%

1.3%

3.6%

2.6%

28.7%

4.2%

Minnesota

25.2%

28.5%

2.0%

1.6%

5.9%

3.0%

26.9%

6.9%

Source: 2000 Census; Community Partners Research, Inc.

►          According to the Census, McGrath’s percentage of married couples with children was above the Market Area or Aitkin County average, but still lower than the State-wide percentage of married couples with children. The City did have an above average percentage of people living alone.

►          While the Market Area and the County had a below average percentage of married couples with children when compared to the State-wide average, the percentage of married couples without children was well above average. This would be consistent with some of the surrounding township and unorganized area’s popularity as a retirement location.


Households by Tenure:

Table 10 Households by Tenure - 2000

 

Occupied Units

Owner-Occupied Units

% Owner Units

Renter-Occupied Units

% Rented Units

McGrath

26

22

84.6%

4

15.4%

McGrath Market Area

461

418

90.7%

43

9.3%

Aitkin County

6,644

5,676

85.4%

968

14.6%

Minnesota

1,895,127

1,412,865

74.6%

482,262

25.4%

Source: U.S. Census

►          According to the Census, most of McGrath’s housing units are owner-occupied. The Census found only 4 rental units, representing approximately 15% of the occupied housing stock. State-wide, the percentage of rental housing is greater than 25%.

►          The surrounding townships also offer primarily owner-occupied housing. The rate of owner-occupancy in the entire Market Area is more than 90%.


Income Data:

Income data from the 2000 Census is not scheduled for release until 2002. Income data has been presented from a 2001 estimate of income calculated by Claritas, Inc., a national data reporting company. Income includes total money received in the stated calendar year by all household members 15 years old and over. Because of the relatively small size of McGrath, which creates difficulties in accurately estimating income levels, data is only provided for the larger Market Area and the County.

The first table provides a median income estimate for all households, while the second table provides a median income estimate for all families that have more than one related individual living in the same household.

Table 11 Estimated Household Income - 1989 to 2001

 

Household Income

1989 Median

2001 Median

% Change

McGrath Market Area

$15,852

$23,618

49.0%

Aitkin County

$17,487

$26,494

51.5%

Source: Claritas, Inc.

Table 12 Estimated Family Income - 1989 to 2001

 

Family Income

1989 Median

2001 Median

% Change

McGrath Market Area

$20,298

$30,658

51.0%

Aitkin County

$21,836

$33,134

51.7%

Source: Claritas, Inc.

►          Using the commonly accepted standard that 30% of gross income can be applied to housing expenses without experiencing a cost burden, a median income household in the McGrath Market Area could afford approximately $590 per month for housing and a median income family could afford $766 per month.

►          Using the mortgage affordability calculator of the National Association of Realtors, a household earning the Market Area’s median household income of $23,618 can afford to purchase a house at approximately $60,000. This assumes relatively low fixed debt, $3,000 available for a down payment, and a 30 year fixed rate mortgage at 7.25%. A median income family, with identical terms but having higher fixed debt and $5,000 for down payment can afford a $77,274 house. Closing costs have not been included in either calculation.

►          Household income estimates for 2001 indicate that approximately 18.2% of Market Area households have incomes above $50,000. Households in this income range generally have incomes sufficient for the costs associated with new home construction.


Existing Housing Inventory:

Table 13 Occupied Housing Units by Year Built

 

1939 and Earlier

1940-1959

1960-1979

1980-1989

1990-2000*

Owned

Rented

Owned

Rented

Owned

Rented

Owned

Rented

Owned

Rented

McGrath

8

4

2

0

4

3

2

0

0

0

Source: 1990 Census; Building Permits

* The tenure and occupancy status for units constructed since 1990 is not exactly known. This table assumes tenure based on the best available information on structure type, and from the City’s building permit records.

►          The owner-occupied housing stock in McGrath is very old. The 1990 Census identified 50% of the owner-occupied housing units at that time as pre-1940 construction. This was two times greater than the State-wide average for pre-1940 housing of approximately 25%.

►          Over half of the City’s rental housing units reported in the 1990 Census were pre-1940 built housing.

Table 14 McGrath Housing Units By Number of Units and Tenure

 

Total Units - 1990

Owner Occupied 1990

Renter Occupied 1990

Unit changes 1990-2001

Total

Census+new units

1 Unit Detached

30

18

2

0

30

1 Unit Attached

0

0

0

0

0

2 Units

0

0

0

0

0

3-4 Units

0

0

0

0

0

5+ Units

0

0

0

0

0

Mobile Home

9

3

2

3

12

Total

39

21

4

0

42

Source: 1990 Census; Building Permits

►          McGrath has had no new housing in the last decade. Based on a visual count of housing units in the City, it appears that 3 mobile homes have been added to the City since 1990.

►          No information was available on demolished units, but a visual inventory of single family houses in the City found only 27 houses, 3 fewer than reported in the 1990 Census. It is possible that some houses have been removed since 1990. It is also possible that some units at the edges of the City limits were not included in the visual inventory completed for this Study.


Permanent and Seasonal Housing:

Like many areas in northern Minnesota, the area surrounding McGrath has a large number of seasonal use housing units. Increasingly, these seasonal use units are being converted to year-round housing units, to accommodate both retirees who are moving into the area, and also working age households who are looking to take advantage of the lakes, trees and other amenities of a wilderness housing location. The following table provides information on seasonal use housing units.

Table 15 Seasonal Use and Year-Round Occupied Housing Units - 2000

 


Total Units

Year-Round Occupancy Units

Seasonal Use Units

Units

Percent

Units

Percent

McGrath

41

31

75.6%

10

24.4%

McGrath Market Area

1,022

508

49.7%

514

50.3%

Aitkin County

14,168

7,499

52.9%

6,669

47.1%

Source: 2000 Census

►          Although there were only 10 seasonal use housing units identified within the City of McGrath, seasonal use units make up more than 50% of the stock in the Market Area, representing 514 housing units. The largest number of seasonal use units were in Wagner, Idun and Williams Townships. These three jurisdictions have accounted for most of the household growth that has occurred in the McGrath Market Area since 1990.

►          Information from utility providers in northern Minnesota indicates that in some areas, as many as 5% of the seasonal use units are converted to year-round use on an annual basis. This conversion to year-round use allows for significant, permanent household growth in the area without a commensurate level of new housing construction activity. The availability of these seasonal use units in the surrounding rural areas also helps to explain the significantly higher household growth rates that the Market Areas are experiencing when compared to the Cities in the area.


Home Values:

Table 16 Estimated Owner Occupied House Value - 2001

 

2001 Median Home Value Estimate

McGrath

$31,500

Source: Community Partners Research, Inc.; Aitkin County Assessor

►          Data on median owner-occupied home values is from the Aitkin County Assessor’s Office. Data was reviewed on 21 homesteaded houses. This data may include two and three-unit structures where the owner occupies one of the units in the building.

►          The median value in the Assessor’s data is $30,000, which represents the estimated market value in January 2000. Estimated market values are supposed to be within 95% of actual market value, and generally lag slightly behind true sales values. To adjust this value, we have increased the median value by 5%, bringing the current estimated median home value to $31,500.

County estimated market value data has also been used to analyze the number of homesteaded houses in the City that fall into defined value ranges. The value range identifies the number and percentage of houses compared to $77,540, based on the purchase price limit for first-time home buyer programs available through the Minnesota Housing Finance Agency (MHFA). This value range also represents the approximate purchase amount that is considered affordable at the McGrath Market Area median family income level of $30,658, with a 5% down payment.

Table 17 Owner-Occupied Houses By Specified Value Range - 2001

Value Range

Number of Homesteaded Houses

Percent of Homesteaded Houses

$0 - $77,540

Eligible for first-time buyer

Affordable at median family income


21


100%

$77,540+

Above limits for first-time buyer

Above affordable level at median income


0


0%

Source: Aitkin County Assessor; Community Partners Research, Inc.

►          Based on home value estimates generated from County estimated market values, all of the City’s existing single family housing stock is in a price range that is eligible for first-time home buyer mortgage programs. The same percentage of houses is considered to be affordable to households at the Market Area median family income level of $30,658.


Home Sales:

The previous page examined all owner-occupied houses in the City as an indicator of ownership affordability. This section examines those houses that have been sold within a recent 12 month time period. It is important to note that the number of houses that have sold is relatively small, and may not be an accurate indicator of overall home values. However, this sample does provide some insight into those units that are turning-over in the City.


Table 18 Median Value of Recent Residential Sales -
July 2000 - June 2001

 

Number of Good Sales

Median Sale Price

McGrath

1

$22,500

Source: Community Partners Research, Inc.; Aitkin County Assessor

►          Only one improved residential sale of an owner-occupied house in McGrath has occurred in recent years that is considered to be an “arms length” transaction, according to the County Assessor. Sales that are not “arms length” include, but are not limited to, sales between relatives, forced sales and foreclosures, and estate transfers that are not available on the open market. Only the “arms length” transactions have been reviewed for this study.

►          The sale occurred in July 2000, and the sale price was $22,500.

Table 19 Residential Sales By Specified Value Range -
July 2000 - June 2001

Value Range

Number of Residential Sales

Percent of Residential Sales

$0 - $77,540

Eligible for first-time buyer

Affordable at median family income


1


100%

$77,540+

Above limits for first-time buyer

Above affordable level at median income


0


0%

Source: Aitkin County Assessor; Community Partners Research, Inc.

Note: This table reflects “qualified” sales as determined by the County Assessor. Sales for less than fair market value have not been included.

►          Only one house has been sold in McGrath in recent years. The sale price was $28,500.


County-wide Home Sales - Historical Data:

The Minnesota Demographer’s Office has compiled County-level data on median home sales prices over the last 17 years to analyze price trends for single family houses. This data is only available for all of Aitkin County. The median sales price has been obtained from sales ratio reports submitted by the Aitkin County Assessor’s Office to the Minnesota Department of Revenue. It is important to note that houses sold in a given year may not be a statistically valid sample of all home values in the County. However, this annual sample does provide insight into home values over a number of years and information on those units that are turning-over in the County.

Table 20 Median Value of Residential Sales - 1984/85 to 1999/2000

 

Median Sale Price

Percent Change 1990-2000

Percent Change 1998/99-1999/2000

1984-1985

1989-1990

1995-1996

1998-1999

1999-2000

Aitkin County

$31,000

$32,250

$54,200

$70,000

$75,000

132.6%

7.1%

Minnesota

$64,000

$70,000

$87,500

$112,500

$124,500

77.9%

10.7%

Source: Minnesota State Demographer; Community Partners Research, Inc.

►          The median home sales price in Aitkin County has increased at a rapid rate over the last decade. From the 12 month period ending October 1, 1990 to the 12 month period ending October 1, 2000, the median sales price increased by nearly 133%. This percentage increase was well above the State-wide increase of approximately 80% during the same time period.

►          While the percentage increase is significant, it is explained in part by the relatively low median sales price in the County. The County’s median for the 1989-1990 sales period was $32,250. This was less than half of the State-wide median sales price in that year of $70,000.

►          For the 1989-1990 sales period, Aitkin County had the 31st lowest median sales value of 87 counties analyzed. For the 1999-2000 sales period, the County had the 44th lowest value of 87 counties reviewed.

►          The median income data for Aitkin County provided earlier in this Study estimate that the median household income level and the median family income level have increased by approximately 52% between 1989 and 2001. In this same time period the median home sales price has increased by nearly 133%.


Housing Condition:

In May 2001, Community Partners Research, Inc. representatives conducted a visual ‘windshield’ survey of single family/duplex houses in McGrath. Houses that appeared to contain 3 or more residential units and mobile homes were excluded from the survey. The visual survey looked at 27 single family/duplex structures.

The visual survey also identified and rated 12 mobile homes in the City. The ratings for mobile homes are provided separately in the following table.

Houses were categorized in one of four levels of physical condition, Sound, Minor Repair, Major Repair, and Dilapidated as defined below. The visual survey analyzed only the physical condition of the visible exterior of each structure. Exterior condition is assumed to be a reasonable indicator of the structure’s interior quality.

Dilapidated houses need major renovation to become decent, safe and sanitary housing. Some Dilapidated properties may be abandoned and may be candidates for demolition and clearance. Major Rehabilitation is defined as a house needing multiple major improvements such as roof, windows, sidings, structural/foundation, etc. Houses in this condition category may or may not be economically feasible to rehabilitate. Minor Repair houses are judged to be generally in good condition and require less extensive repair, such as one major improvement. Houses in this condition category will generally be good candidates for rehabilitation programs because they are in a salable price range and are economically feasible to repair. Sound houses are judged to be in good, ‘move-in’ condition. Sound houses may contain minor code violations and still be considered Sound.

Table 21 Windshield Survey Condition Estimate - 2001

 

Sound

Minor Repair

Major Repair

Dilapidated

Total

Single Family/Duplex

2

12

9

4

27

Mobile Homes

0

3

8

1

12

McGrath Total

2

15

17

5

39

Source: Community Partners Research, Inc.

►          The visual condition survey identified most of the houses in the City as needing repair. The survey identified 9 single family/duplex structures and 8 mobile homes as needing major repair.

►          The analysis rated 4 single family/duplex homes and 1 mobile home as dilapidated. These structures may be beyond repair, and could be candidates for demolition and clearance.


Land and Infrastructure Availability:

In order to accommodate future housing development activity, the City will need adequate land suitable for residential development, and will need sewer and water capacity sufficient to support additional residential units. While this study did not obtain independent verification of land or services availability, it did attempt to collect general information on the City’s physical ability to accommodate future residential growth. This information was most often obtained from either City staff or elected officials.

Land Availability - Single Family Development

McGrath has had almost no new housing construction over the last 40 years. Information contained in the 1990 Census indicates that only 9 houses have been added to the City since 1960. That Census also listed 9 mobile homes in the City, which would probably represent most of the post-1960 housing units.

In 2002, the City will construct a municipal sewer system to replace on-site septic systems. This should make some in-fill parcels available for future housing construction. With limited potential demand for new housing, we believe that most new construction can occur on in-fill parcels.


Municipal Services:

According to City officials, construction will begin in 2002 on a municipal sewer system. The City has recently received grant and loan funding through USDA Rural Development to construct the sewer.

Water will continue to be provided through private wells.


Rental Housing:

At the time of the 2000 Census, only 4 units, or approximately 15.4% of the occupied housing stock in McGrath, was renter occupied. McGrath’s percentage of rental housing was lower than the State-wide rate of renter occupancy in 2000 of 25.4%.

At the time of the 1990 Census, the City had 4 occupied renter households. The 2000 Census also reported only 4 renter households. At the time of the 1990 Census, all of the City’s rental housing was in single family homes or mobile homes.


Rental Housing Survey:

There are no multifamily rental buildings in McGrath, and only 4 single family rental units exist. No rental survey was conducted in McGrath.


City of McGrath


Findings and Recommendations:


Key Statistics:

The first number represents the City of McGrath/the second number, when provided, is for the McGrath Market Area which includes the City of McGrath and the Townships of Idun, Millward, Pliny, Seavey, Wagner, White Pine and Williams.

2000 Population = 65/1,060

2000 Households = 26/461

Projected household changes from 2000 to 2006 = -1 to +1 households in McGrath

Projected household changes from 2000 to 2006 = 51 to 87 households Market Area

2000 tenure rates = 84.6% owner, 15.4% renter

2001 Median owner-occupied house value = $31,500

Median value of recent sales = $22,500 (1 sales)

2001 Median Household Income = $23,618 Market Area

2001 Median Family Income = $30,658 Market Area

2000 Average number of persons per household = 2.50/2.30

Monthly rent payment ability (Market Area median income household) = $590

Affordable rent payment ability (50%of Market Area median income) = $295

Affordable ownership (Market Area median income household) = $60,000

Affordable Ownership (Market Area median income family) = $77,274


Growth Projections:

Both the City of McGrath and the surrounding rural areas that form the McGrath Market Area, as defined in this Study, have grown over the last decade. After experiencing population and household losses during the 1980s, the City of McGrath has had a slight increase in population and households. However, both population and household levels are lower in 2000 than they were in 1980. Part of the growth in the last 10 years can probably be attributed to vacant housing units that existed in the community following the departure of residents in the 1980s.

Growth patterns in the Townships that form the Market Area have been a bit more stable. While the Market Area lost population in the 1980s, there was slight household growth during that decade. Since 1990, growth of population and households has occurred. All of the Townships except White Pine added households between 1990 and 2000. White Pine’s household level was unchanged. It total, the jurisdictions that form the Market Area added 110 new households in the 1990s. The largest numeric household growth occurred in Wagner Township, with 36 new households. Other Townships that added 10 or more households include Idun, Williams, Millward, and Pliny. Wagner and Idun Townships, that together accounted for more than half of all household growth, both have lake shore residential development options.

Much of the growth in the Townships around McGrath can be attributed to the popularity of lake shore living. The Market Area still contains more than 500 seasonal use residential units. This inventory of seasonal use housing still offers significant potential for conversion or re-use as year-round housing, and the prospect that an increase in permanent residents can be expected for the foreseeable future.

Our traditional projection methods yield some variation in the growth potential for the City and the Market Area through 2006. The 1990s were extremely strong economic years for the nation, and part of the population rebound in Aitkin County and much of Greater Minnesota can be attributed to strong growth in employment, wages and wealth. A prolonged economic slow-down or recession could alter the growth patterns that became established in the area in the 1990s.

The near-term projections for household growth that we have used for this Study anticipate that growth will continue to occur, although at a slower pace than experienced over the last decade. We believe that household growth in the City of McGrath will be approximately -1 to +1 household between 2000 and 2006. There does not appear to be very many vacant housing units in the City that would allow for household growth, and past building patterns would not indicate that many new houses will be added to the City. The most realistic prospect would be for one or more mobile homes to moved into the City for new residents.

For the McGrath Market Area, we would expect between 51 and 87 permanent households to be added between 2000 and 2006, with the most realistic projection near the middle to slightly below the middle of this range. This equates to an annual average of between 9 and 15 new households per year. Growth at the higher end of this range would only occur if a number of lake shore options exist that can attract people to the area for permanent residence. We would expect that some of this household growth will utilize existing, seasonal-use housing units, and this growth will not require a commensurate level of new unit construction.

We are projecting slower household growth in the near-future for three primary reasons. First, some of the household gains over the last decade were due to the availability of lower-cost housing units. After population and household losses in the 1980s, there were housing units available for sale or rent in the early part of the last decade. These units were available and affordable to new households that were looking to move into the McGrath area. With household growth since the early 1990s, the supply of good quality vacant units has decreased, and many households will find it more difficult to move into the area in an affordable housing unit.

Second, the availability of prime lakeshore sites continues to decline in Aitkin County. The availability of high-amenity sites in the townships surrounding McGrath has been one of the primary factors generating strong household growth over the last decade. As the number of prime sites decreases, and the price of sites increases, there will be fewer opportunities in the immediate area to attract new residents.

The third reason for slightly reduced growth rates is the economy, both locally and regionally. The 1990s represented one of the strongest periods of economic growth in our nation’s history. As documented in the Employment and Local Economic Trends section of this Study, Aitkin County shared in this economic growth through job creation and gains in average wages. With a slowing economy in recent years, we would expect less growth in the near-term generated by employment opportunities in the immediate area.

With relatively limited household growth projected through 2006 for the area forming the McGrath Market Area, we would expect to see only slight movement in the number of households in most of the age ranges. The age ranges that are expected to show the greatest amount of growth are between 55 years old and 64 years old, which represent a large portion of the Area’s current population. Households in these age ranges tend to be predominantly home owners and will probably be looking for high amenity housing locations, such as lake shore sites. The growth expected in these age ranges will primarily demand owner-occupied housing production.

There is also some projected increase among older senior citizens, age 75 and older, reflecting longer average life-spans. However, growth in these age ranges is not expected to be as large as in some other parts of the County. There are relatively few services in the McGrath area that cater to the needs of older seniors, such as a hospital or senior life-cycle housing. As a result, while there is an above average number of younger senior citizens, there is a below average number of older seniors in the area.

These growth projections will be incorporated into the specific housing recommendations that follow.


Strengths For Housing Development:

The following strengths of the community were identified through statistical data, local interviews, previous research and on-site review of the local housing stock.

►          McGrath benefits from natural amenities - The area around McGrath contains lake shore and wilderness residential options. This has attracted new people to the area as a permanent place to live. The City is also reasonably close to Lake Mille Lacs, which accounts for some of the seasonal residents in the City. These high-amenity locations not only attract residents, but they also add to the quality of life for all local residents.

►          Attractive location for seniors and retirees - With its nearby lakes and natural amenities, the area around McGrath has been a popular location for retired and semi-retired households. The percentage of empty-nesters and seniors in the in the age ranges between 55 and 74 years old is above the State-wide average.

►          Commuting distance to Mora and Hinckley - McGrath approximately ½ hour from both Mora and Hinckley. Some residents commute to these Cities for employment. Some residents even commute to the Twin Cities area for work.

►          Affordable existing housing stock - A large majority of the existing single-family houses in McGrath are very affordable, priced at $50,000 or less. However, some of these houses are older, and may need maintenance and rehabilitation to remain desirable options.

►          Municipal sewer system planned - The City has secured grant and loan funds for the construction of a municipal sewer system. Construction is scheduled to begin in 2002.


Barriers or Limitations to Housing Activities:

Our research also identified the following barriers, or limitations, that hinder or prevent certain housing activities in the City of McGrath.

►          Competition with other jurisdictions - Although the area has grown over the last 10 years, most of this growth has occurred outside of the City limits, in the surrounding townships. This is especially true of higher valued homes and higher income households. While McGrath still benefits economically, the City does not capture the expanded tax base resulting from this rural growth.

►          Value Gap Deters New Owner-Occupied Construction - Based on market values for property taxes and recent residential sales, we estimate that the median priced home in McGrath is valued at $23,000 to $32,000. This is well below the comparable cost for new housing construction, which will generally be well above $100,000.00 for a stick-built house with commonly expected amenities. This creates a significant “value gap” between new construction and existing homes. This is an obvious disincentive for any type of speculative building, but also serves to deter customized construction, unless the owner is willing to accept a potential loss on their investment.

►          Condition of the Housing Stock - While the existing stock is very affordable, much of it is old and may need substantial improvement to meet expectations of potential buyers. Units lost to deterioration or obsolescence cannot be replaced in a similar price range. Our survey of housing conditions rated a majority of houses and mobile homes in the City as needing repair, although most of these structures only required minor repair.

►          Staff Capacity Limitations - The City operates with limited personnel. It is very difficult for existing staff with current responsibilities to develop new housing initiatives. The County HRA is also available to assist the City but also has limited staff availability to initiate new projects.

►          Economic difficulties - Although the City’s economy has improved over much of the last decade, the County’s unemployment rate was more than double the State-wide rate in 2000.

►          Lower incomes limit housing choices - Income estimates for McGrath and the surrounding market areas indicate that incomes are relatively low. The Market Area’s estimated median household income for 2001, $23,618, translates into an approximate ownership affordability level of $60,000, and an affordable rent level between $295 and $590 per month. While these affordability levels match up well with prices for existing housing in the City, they are generally not well matched to the prices for new housing construction.

►          Limited employment and services - Very few employment opportunities are provided in or around McGrath. Most residents must commute a half hour or more to their places of work. The City also lacks basic retail/commercial services, again requiring residents to commute as far as Mora for groceries, medicines, medical clinics, etc.


Recommendations, Strategies and Housing Market Opportunities:

Based on the research contained in this study, and the housing strengths and barriers identified above, we believe that the following recommendations are realistic options for the City of McGrath. They are based on the following strategies:

►          Focus heavily on the preservation, maintenance and improvement of the housing stock that already exists in the City - While some housing construction may occur in coming years, most of the housing opportunities will continue to be provided by the housing stock that is already on the ground. This is especially important for affordable housing opportunities, as it will almost always be less expensive to offer an affordable unit through rehabilitation versus new construction. Units that are lost due to deterioration and obsolescence cannot be replaced for a similar price.

►          Be realistic in expectations for new housing development - Residential growth has not occurred in the recent past, and is not likely to occur in the near future. It appears that mobile homes have been the only housing units added to the City in many years. While the City has not had a sewer system which may have hampered new construction, it is doubtful that new housing development will occur in the near future.


Recommendations:

1.         Rehabilitate the existing housing stock


Findings: The City’s existing housing stock will provide the large majority of the affordably priced housing, both now and into the future. Existing houses generally sell at a discount to their replacement value. It will be impossible to replace affordable, existing units that are lost to deterioration.

Our analysis of housing condition found that nearly all of McGrath’s housing units need repair. While many of these houses only require minor repairs, which makes rehabilitation programs economically feasible, we did rate 9 houses and 8 mobile homes as needing major repair. With low home values in the City, it can be difficult to cost-effectively rehabilitate older housing.

Recommendation: On-going rehabilitation efforts are recommended for owner-occupied homes. The City should pursue the housing rehabilitation funds through the Lakes and Pines CAC, and other local program providers.

2.         Acquire and clear dilapidated properties as needed

Findings: The City may contain houses that are too deteriorated to rehabilitate. The windshield condition survey rated 4 houses and 1 mobile home as dilapidated and possibly beyond repair. To improve the appearance of the community, a program should be developed to acquire and demolish dilapidated structures as needed.

Recommendations: The City should look for resources to acquire and demolish severely dilapidated structures, with affordable home redevelopment on the available lots.

Some communities have been able to offer affordable home ownership through modular homes on lower priced lots. In-fill building sites created through acquisition and clearance activities may provide appropriate sites for modular homes or other lower priced options.

Habitat for Humanity has been active in creating housing in Aitkin. Acquired properties could be donated to Habitat for the development lower priced homes.

3.         Utilize the MURL Program

Findings: McGrath has an older, lower valued housing stock, with many homes in need of repair. Our analysis of estimated market values for property taxes, and recent sales activity indicates that the median priced home in the City is valued between $23,000 and $32,000. As homes below the median price come up for sale, they may not be attractive options for potential home buyers because of the amount of repair work that is required.

The Minnesota Urban and Rural Homesteading (MURL) Program is funded by the Legislature through the Minnesota Housing Finance Agency. Under the program, the City or a housing agency purchases an existing home that needs rehabilitation, rehabilitates the home, sells the home to a low income family and provides a mortgage with no down payment, no interest and a monthly payment that is affordable for the family. The MURL Program accomplishes many community goals, including the promotion of home ownership for lower income people, and the repair of substandard housing units.

In many cases, the cost of acquisition and rehab will exceed the house’s after rehab value. Although a public subsidy may be involved, the costs to rehab and sell an existing housing unit are generally lower than the subsidy required to provide an equally affordable unit through new construction.

Recommendations: As part of rehabilitation efforts, we recommend that the City promote and utilize the availability of MURL Program funds through MHFA to purchase, repair and re-sell lower valued houses to low and moderate income people. In addition to MURL funds, other possible funding sources include SCDP and other MHFA programs.

4.         Promote and access all programs that assist with home ownership

Findings: Home ownership is generally the preferred housing option for most households and most communities. Home ownership provides for community stability, improves housing quality and strengthens the tax base. The affordable home prices in McGrath are conducive to the promotion of home ownership. Part of the reason that the City has grown in recent years has been the availability of affordable ownership options.

Recommendation: While very few houses come up for sale in McGrath, potential home buyers should be made aware of assistance programs that may be available for first time home buyers. The Central Minnesota Housing Partnership has worked with many of the innovative ownership programs, and can help potential buyers access the programs that are available.

5.         Limited demand for rental housing

Findings: The City of McGrath has no multifamily rental units. The only rental housing in the southeastern portion of Aitkin County is provided in single family homes and mobile homes. Despite the absence of apartment units, we see very little potential for rental unit construction in this area of the County.

Any multifamily development that does occur, should be within the City limits to allow for municipal services. However, we do not view McGrath as a self-supporting community. There are no retail/commercial services and very few employment options. Most households must commute as far as 30 miles for basic services, such as groceries.

Recommendation: Although this portion of Aitkin County is under-served by rental housing, we do not believe that a large capital investment in new housing construction is justified. Households looking to rent their unit will continue to have single family options available. Multifamily rental needs should continue to be met by housing in Mora, Hinckley, Isle, Aitkin and McGregor.


6.         Develop a staff relationship with area housing agencies


Findings: The community will need staff resources to plan and implement many of the housing ideas advanced in this study. The City has an active County Housing and Redevelopment Authority (HRA), Lakes and Pines CAC, the Central Minnesota Housing Partnership (CMHP) and the Arrowhead Economic Opportunity Agency (AEOA), all providing housing programs and technical assistance. These agencies all have proven track-records with housing program development and delivery.

Recommendation: While the City is fortunate to have multiple agencies for housing activities, this arrangement could result in no single agency having responsibility to coordinate and implement the housing initiatives recommended in this Study. While there has traditionally been a good degree of staff interaction between these agencies, it will be important that a coordinated approach be used to prioritize and assign responsibility for certain housing programs.