Executive Summary

This Housing Study has focused on the growth and changes in the Cities in Aitkin County over the last decade, and the impact of projected growth on future housing opportunities. For each City, a defined market area has been identified that includes the immediately surrounding Townships and Unorganized Territories in Aitkin County.

Most of the demographic tables provide data for the aggregated jurisdictions that include the County’s Townships and Unorganized Areas. While we have focused on the Cities in the County, it is recognized that Townships and Unorganized Areas will also provide many housing opportunities. However, when addressing affordable housing needs, we believe that most future housing development and program creation should occur within the Cities of Aitkin County. Higher density housing, rental units, special needs housing and other similar housing development should be located where there is easy access to public services, employment opportunities, retail, medical and/or professional services, transportation opportunities and other support networks.

This Executive Summary is intended to provide a broad overview of the findings of this Study. Readers should consult the individual sections of this document for a more detailed analysis.


Aitkin County Highlights:

 ►          From a growth perspective, Aitkin County has prospered over the last decade. The County’s population increased by more than 23% between 1990 and 2000, and the number of permanent households increased by nearly 30%. The County’s growth in the 1990s followed population losses and very little household growth during the 1980s.

 ►          Nearly all of this growth was generated by people moving into Aitkin County. The best available estimates indicate that the mortality rate in the County actually exceeded the birth rate in the 1990s. However, domestic in-migration resulted in growth for most of the individual jurisdictions in the County.

 ►          While the County’s population growth occurred among people of all ages, the largest changes in population by age occurred in the age ranges between 45 and 64 years old. This reflected the majority of people who were moving into the County, and also represented the aging of long-time residents who entered these age ranges over the last decade.

 ►          The 2000 Census reported that the median age in Aitkin County was 46.5 years old, compared to 35.4 years old for the entire State of Minnesota. In 1990, the median age in the County was 42.9 years old.

►          In 2000, approximately 23% of the County’s population was age 65 and older. State-wide, approximately 12% of the total population was 65 and older.

►          Aitkin County has a very high rate of owner-occupied housing. In the 2000 Census, over 85% of households owned their housing, up from just under 84% in 1990. An increasing rate of home ownership is consistent with the type of growth the County has been experiencing, generally middle-aged and older adult households who are moving to the County for attractive lake shore or wilderness settings in the rural areas, or for affordable ownership options in the Cities of the County.

 ►          Although both the median household income level and the median family income level increased by more than 50% since 1990, income levels in the County are still relatively low. Households at or near the median levels have limited buying power for housing. However, it should be noted that the large base of senior citizens in the County may have fixed annual incomes that are relatively modest, but may also have an asset base that allows them to purchase higher priced housing despite their relatively low annual income.

 ►          County-wide there is still a large stock of seasonal use housing. The 2000 Census reported that over 47% of all housing units in Aitkin County were only seasonally occupied. This large inventory of units, many of which could easily be converted to year-round occupancy, will allow for substantial household growth without necessarily requiring a commensurate level of new unit construction.

►          Home prices vary greatly around the County depending on location and amenities. County-wide, the median residential sale price in the 12 month period ending October 1, 2000 was $75,000. State-wide, the median sale price was $124,500.

 ►          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 median sale price for houses increased by 133% between 1990 and 2000, our estimates of median household income show an increase of approximately 52% between 1990 and 2001.

 ►          Growth in Aitkin County has been due in part to improved economic conditions. Between 1990 and 2001, the County’s available work force increased in size by 22%, and the employed work force increased by 27%. The annual unemployment rate of 7.1% in 2001 was the lowest rate of the 12 years reviewed by this Study.

 ►          Based on all of the available data, we would expect continued growth over the next five years. Specific growth related projections by community are provided below.


Aitkin Area:

 ►          In the City of Aitkin, we would anticipate the addition of between 50 and 55 households between 2000 and 2006. The geographical area that forms the Aitkin Market Area is projected to add between 450 and 530 households during this same period. While we would expect to see most of the growth occur outside the City limits of Aitkin, along lakes and in other high amenity settings, it is possible that the City can capture a larger share of the growth that is expected in the surrounding area.

►          Aitkin is the strongest market of the Cities in the County for future housing development. This is especially true future rental housing development. In the last decade, new rental units serving different income groups have been constructed and well received in the local market. We have made specific recommendations for future development related to certain segments of the local renter market.

►          There are also opportunities for future single family housing development, although most of the high-priced new construction will occur outside of the City limits. The best market potential within the City will be for more affordable ownership options, and for housing that caters to specific life-cycle housing needs, such as no-maintenance ownership options for empty-nesters and senior citizens.

 ►          Aitkin also has opportunities for rehabilitation and redevelopment to better utilize existing housing which will continue to provide the majority of affordable housing opportunities in the area.


Hill City Area:

 ►          Based on recent trends, we would project very little household growth in the City of Hill City. We anticipate the addition of only 1 to 10 households between 2000 and 2006. Because of some housing vacancies that currently exist, it is possible that the City may exceed our household projections, but this would be the result of the availability of affordable, existing units, and would not create demand for additional housing construction. During the same time period, we would expect the township jurisdictions immediately around Hill City to add between 23 and 84 new households, although this will again be heavily oriented to lake shore housing opportunities.

 ►          Because of limited demand, we have made very few recommendations for additional housing development in Hill City. We believe that the greatest emphasis should be placed of the maintenance and improvement of the existing housing stock. In some instances, acquisition and clearance of substandard structures may be an appropriate part of neighborhood revitalization strategies.

►          Any new housing that is constructed on a speculative basis will be price sensitive. With older, affordable housing available for sale and for rent, new units will generally need to remain in a modest price range to be successful in the market.


McGrath Area:

 ►          Based on recent trends, we would project no household growth and possible household losses in the City of McGrath. We anticipate a change of +1 to -1 households between 2000 and 2006. During the same time period, we would expect the township jurisdictions immediately around McGrath to add between 51 and 87 new households, although this will again be heavily oriented to wilderness or lake shore housing opportunities.

 ►          While McGrath has no true rental housing, we see very few development opportunities because of limited growth potential of the City and due to the lack of services and amenities. Households living in McGrath will need to commute for basic necessities, such as groceries, and probably for employment opportunities. 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.

 ►          We believe that the greatest emphasis should be placed of the maintenance and improvement of the existing housing stock in the City. In some instances, acquisition and clearance of substandard structures may be an appropriate part of a community revitalization strategy.


McGregor Area:

►          Based on recent trends, we would project only limited household growth in the City of McGregor. We anticipate the addition of 0 to 13 households between 2000 and 2006. However, the City is located in the second fastest growth area in Aitkin County. During the same time period, we would expect the township jurisdictions in the Big Sandy area to add between 162 and 261 new households.

►          We consider McGregor to be the second best market of the Cities in Aitkin County for future rental housing development. With the growth that has occurred in the surrounding lakes region, there is potential for market rate rental housing development to serve both residents of the City and residents of the surrounding area who wish to move off of the lake, but remain in the McGregor area. However, price will be an issue. The prevailing rental rates in McGregor are well below the rental rates that will be required to support newly constructed units. While many area households can afford these higher rent levels, some market resistence should be anticipated.

 ►          As with all of the Cities in the County, maintenance and improvement of the existing housing stock is a high priority housing need. In McGregor, there is a large supply of mobile homes that also may need to be included in a rehabilitation/revitalization plan.


Palisade Area:

 ►          Based on recent trends, we would project no household growth and possible household losses in the City of Palisade. We anticipate a change of -3 to -4 households between 2000 and 2006. These projections are based on Census data, which are being disputed by the City. It is possible that our projections are overly pessimistic because of Census under counts. During the same time period, we would expect the township jurisdictions immediately around Palisade to add between 65 and 131 new households, although this will again be heavily oriented to high amenity or lake shore housing opportunities.

 ►          Palisade has no true rental housing. Unlike some of the other small cities in Aitkin County, Palisade represents a more “self-contained” community, with some services available, including a grocery/convenience store, restaurants, and an elementary school. For these reasons, we believe a small rental development project is worth further exploration. However, if the Census data are correct, it must be recognized that new rental housing development would be occurring in a small community that has had an out-flow of people and households over at least the last 20 years, and an active public ownership role in housing development would probably be required.

►          As with all of the Cities in the County, maintenance and improvement of the existing housing stock is a high priority housing need. In Palisade, we identified over 31% of the housing stock as needing major repair, or as dilapidated housing that may need to be demolished.


Tamarack Area:

 ►          Tamarack is a very small City, with only 59 residents at the time of the 2000 Census. Based on recent trends, we would project no household growth and possible household losses in the City of Tamarack. We anticipate a change of +1 to -1 households between 2000 and 2006. As part of the market area that includes McGregor and the Big Sandy lakes region, we would expect the township jurisdictions around Palisade to add between 162 and 261 new households, although this will again be heavily oriented to wilderness or lake shore housing opportunities.

►          Tamarack has already taken significant steps to address its most pressing needs. The City has recently secured federal grant and loan funds for the construction of a municipal sewer system and for a concentrated housing rehabilitation program. On-going maintenance and improvement of the existing housing stock should be the City’s highest priority housing activity. With a large percentage of severely deteriorated structures, future efforts may also require a component for acquisition and clearance.


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