Purpose
This Housing Study serves as an accompaniment to the Rural Housing Readiness Assessment, taking an in-depth look at data and market needs that complement the ideas established in that process. It serves to communicate housing needs to residents, developers, and any other parties interested in the shared housing market of Newton, Iowa.
Acknowledgments
With special thanks to:
The participants who provided feedback to help define the final recommendations of this document.
Prepared for:
City of Newton 101 W. 4th St. S. Newton, IA 50208 (641) 792-2787
Prepared by:
MSA Professional Services, Inc.
1555 SE Delaware Ave., Suite F Ankeny, Iowa 50021
MSA Project Team
•Chris Janson, AICP
•Shannon Gapp, AICP
•Shawn Oshea, AICP
•Claire Michelson, AICP
•Lauren Dietz, AICP
•Emily Huston
Mayor and City Council
•Mayor Michael L. Hansen
•Mark Hallam
•Vicki Wade
•Craig Trotter
•Melissa Dalton
•Evelyn George
•Randy Ervin
City Staff
•Erin Chambers
•Brian Dunkelberger
•Danielle Rogers
Steering Committee
• Mayor Michael Hanson – Elected Official
•Bruce Showalter – Newton Housing Development Corporation/Habitat for Humanity
•Jennifer Cook - Newton Housing Development Corporation/Great Southern Bank
•Tom Messinger - Newton Community
School District Superintendent
•Toni Peska - Heartland Iowa Realty
•Josh Syhlman – General Manager TPI Composites
•Tanya Michener - Newton Development Corporation
•Captain Janelle Cleaveland – Newton Salvation Army
•Craig Armstrong – City of Newton Development Specialist (RHRA Contact Person)
•Jorge Arreloa – Newton Resident
Table of Contents
o1 CHAPTER
ABOUT NEWTON’S HOUSING
•Introduction
•Rural Housing Readiness
•Educational Workshops 1-2
•Community Survey
•Educational Workshop 3
•Educational Workshop 4
•Jasper Housing Statistics
•Study Process
• Age
•Income
•Workforce
•Population Growth
o2 CHAPTER
RENTAL MARKET
•Rental Unit Type
•Renting Housing Size
•Rental Unit Age
•Renting Housing Cost
•Rental Market Tenure
• Affordability Limits in the Market
•Rental Housing Stress
•Rental Stress by income
•Rental Unit Consumption
•Examples
o3 CHAPTER
OWNER OCCUPIED MARKET
•Age of Householder
•Owner Occupied Household
•Owner Occupied Unit Types
•Owner Occupied Housing Size
•Mortgage Status
•Tenure in the Housing Market
•Tenure by Income
• Affordability Limits
•Owner Occupied Housing
•Owner Occupied Stress by Income
•Owner Occupied Unit
• Affordability Trends
•Housing Availability
o4 CHAPTER UNIT DEMAND & RECOMMENDATIONS
•Ownership Recommendations
•Rental Recommendations
•Key Takeaways
NEWTON’S HOUSING Chapter 1
ABOUT
Introduction
Beginning in 2021, the City of Newton requested assistance with a visioning and action planning process focused on improving housing affordability, access, and quality in Newton. Utilizing a partnership with Iowa Economic Development Authority (IEDA), Newton successfully received a matching grant through the Empower Rural Iowa to become involved in the Rural Housing Readiness Assessment (RHRA) program through Iowa State University Extension and Outreach— Community and Economic Development (ISUEO-CED). ISUEO-CED organized and facilitated a process that involved the steps below:
1. Conduct educational workshops with members of a housing steering committee
2. Complete a visioning session
3. Conduct a session on action planning
4. Prepare a Housing Assessment report
Rural Housing Readiness
Steering committee members were asked to fill out a RHRA self-assessment Workbook, including gathering previous housing plans, identifying relevant housing-related sections of the City’s Code, and inventorying housing programs offered in the community. Newton’s completed workbook highlighted the following:
1. Newton has several active housing programs. However, input suggested that there is a need for city staff and the housing steering committee to better inform the public of on-going projects, and further outline the strategic objectives each project strives to address.
2. The Workbook also noted that residents appointed to the Planning and Zoning Commission and to the Board of Adjustment have received training from the City of Newton. Newton is encouraged to consider accessing additional training for its boards and commissions through programs like: Iowa State University Extension, the Iowa League of Cities, local Council of Governments Organization, and other online courses that are easily accessible and affordable.
3. The study also indicated that Newton currently does not utilize a lead abatement program. Newton may benefit from supplemental resources to address potential lead paint in older homes.
4. Furthermore, Newton does not have an established process to investigate housing discrimination. It may be beneficial to develop a process for addressing this type of concern.
5. The committee comments shared during the four RHRA workshops indicated a desire for continued feedback and engagement with Newton’s residents on housing. It may be helpful to develop an ongoing and regular process for obtaining such information.
The City of Newton’s RHRA Workbook, along with the public input gathered, were explored during the planning workshops, and ultimately became part of the overall housing vision created by the steering committee.
1. Conduct two educational workshops with members of the housing steering committee planning session
4. Preparation of a final report
Educational Workshops 1 & 2
The first workshop presented steering committee members with current housing data in Jasper County and the City of Newton. It also offered steering committee members the opportunity to consider housing through three key lenses: Housing Access, Housing Affordability, and Housing Quality. The second workshop explored decision points in local policy for improving affordability, access, and quality of housing in a community.
These two sessions helped the steering committee understand their current housing situation, reflect on existing housing data, and explore how Newton’s current reality has been shaped by community action. Lastly, the educational workshops set the foundation for the visioning and action planning process that occurs in the following sessions.
Community Survey
Through collaboration with ISUEO-CED, committee members created a community survey to gather input on housing concerns. They also made the survey available to community members through social media and shared the survey on their websites and press releases to the residents.
The public input survey received a total of 511 responses. A few key facts about the survey participants include:
• 86% of respondents were residents of the City of Newton.
• 77% have lived in Newton for over 10 years.
• 85% of participants identified as homeowners and 13% renters.
• Approximately 30% of respondents identified as male and close to 70% as female.
• Over 60% of participants were between the age of 26 – 55.
Key to the survey was asking participants to envision housing improvements in Newton, perceived barriers to progress, and effective actions to improve housing. These responses were organized by the ISUEO-CED team and incorporated into the planning workshops alongside input from the committee.
Educational Workshop 3
Key themes identified in the third workshop relating to desired outcomes included:
Attractive Neighborhoods, Expanded Community Amenities, Effective Communication & Community Leadership, Facilitation of Lot Development, Increased Availability of Housing Options, and Continued Focus on Resident Satisfaction. Key points relating to each are elaborated upon below.
Attractive Neighborhood
• Residents will take care of their properties
• Improved quality and condition of rental properties
Expanded Community Amenities
• Sidewalks and trail access in every neighborhood
• Improved amenities and housing at Legacy Plaza
• Improved curb appeal of residential areas
• Continuation of the Dangerous & Dilapidated (D&D) Program
• People choose to live in Newton even if they don’t work here
Effective Communication & Community Leadership
• Development of committee to study homelessness solutions
• Codes and ordinances enforced diligently
• Interactive Newton housing communication dashboard
Facilitation of Lot Development
• Variety of lots exist – including lots with big yards
• 2 to 4 lot subdivisions created in Newton
• Incentive programs to attract housing developers at needed price range
Increased Availability of Housing Options
• Availability of housing for all income levels
• Variety of good housing options
• More quality market-rate rental housing
• More mid-level housing ($150K –$225K)
Continued Focus on Resident Satisfaction
• Decrease drug and crime activity
• Better jobs will support higher-end housing
• More young families will live in Newton
• Create a Citizen Housing Advisory Board
• City leaders communicate housing strategy more effectively
• Encourage local builders to become more active in new construction instead of small project remodel
• Improved housing caused by increased business development
• More senior housing
• More low-to-middle Income housing options
• Increased number of spec homes built
• Increase number of housing units downtown
• Community pride will improve
• Economy recovered from COVID-19 pandemic
Educational Workshops 4
As part of the process, the group conducted a SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis. The results are summarized below:
STRENGTHS AS A COMMUNITY
• Generally, excellent physical infrastructure
• Community leaders support housing
• Community awareness – residents want an attractive community
• Abundance of land for housing
• Demand identified by residents for housing
• Creative (out-of-the box) thinkers on housing steering committee
• Committees communicate with each other
• Great location
BENEFITS OF SUCCESS
• Development of quality housing for all income levels
• Population growth and economic growth
• Top choice to live and raise a family
• Quality of employees that schools would attract
• Expanded workforce options
WEAKNESSES AS A COMMUNITY
• Limited financial resources in some neighborhoods
• Perception in Des Moines metro that Newton is far away
• Perception that Newton lacks amenities and social activities
• Limited engagement by all sectors of community
DANGERS OF SUCCESS
• Public services will be stretched
• Density can have a negative effect on crime
• Do we have education infrastructure in place to meet larger demand?
• Understand that Newton will need to expand amenities
• Population growth not following growth of housing units would create vacancy issue
Jasper County Housing Statistics
In 2019, there were 16,298 housing units in Jasper County. Of this total, 10,858 were owneroccupied, 3,716 were renter-occupied, and 1,724 were vacant. The median year for which housing was built in Jasper County is 1966. In Jasper County, a majority of owner-occupied
STUDY PROCESS
housing is detached single family homes; for renter-occupied housing, there are more 1-unit structures than any other type Seasonally vacant housing units account for 6.1% of all vacant units.
This study uses a variety of methods and data to better understand Newton’s housing market. Objective, measurable data were collected from the cities, the Multiple Listing Service (real estate listings and sales), real estate aggregators, Jasper County, the State of Iowa, the U.S. Census Bureau, and the U.S. Department of Housing and Urban Development. At times, Newton is compared to other cities (Mitchellville, Colfax, Monroe, Prairie City) in the region, to larger regional entities (Jasper County, Des Moines metro), and to itself in the form of time-series data to reveal housing trends. The study also incorporates interviews with people familiar with the housing market and a community survey of area residents.
Project Oversight
The IEDA provided grant funding for this joint strategy. The project is in coordination with Iowa State University - Extension and its RHRA to help communities create the vision and actionable basis for many items and programs. ISU Extension conducted a series of Housing Assessment workshops, generating significant public input for this report. This project also received funding through Alliant Energy, which assists with regional solutions across local communities. Officials from Newton coordinated to apply for the grant.
Interviews
The planning team met with a variety of residents with knowledge and insight into the local housing market, including those who know it best: real estate agents, lenders, developers, landlords, employers, and employees. Feedback collected through these interviews often naturally gravitated toward similar topics and knowledge, indicating a strong shared understanding of how the local housing market functions. This feedback is used throughout the report.
Community Survey
An online community survey was conducted as part of this process, receiving 511 responses
from individuals that either live, work, or recreate in Newton. The survey was promoted through an extensive community network, as well as through the city’s media and social media channels. Full responses to the survey are provided in the RHRA Report, and relevant findings are discussed throughout this report, including insights from cross-tabulations between various demographics.
Data Notes
All American Community Survey (ACS) data in this report utilizes 5-Year Estimates from the most recent US Census Bureau data release – the 2015-2019 data vintage. The U.S. Department of Housing & Urban Development (HUD) releases custom tabulations of ACS data annually, known as the HUD Comprehensive Housing Affordability Strategy (CHAS) dataset, that better portrays housing statistics and needs. The CHAS dataset is used throughout this report to supplement certain study components in which newer data sources do not provide the necessary level of detail. Due to the custom tabulations, releases are slower than typical for normal US Census data products; therefore, the CHAS data vintage utilized in this report is 2014-2018.
Age
Age trends are used to help predict current and future needs of the community – especially needs related to housing, recreation, education, and service amenities.
As people continue to age or add members to their households, their needs change as well. Since 2010, the City of Newton has seen fluctuations in demographics. All but three age cohorts – pre-teens and teenagers (10 - 19), college-aged and young professionals (20 - 34), and the senior population (65 - 84) –have decreased. The young adult population has had the largest change, decreasing 4% over the last 10 years. These numbers indicate that the City of Newton is getting younger.
The increase in persons aged 20 - 35 and those aged 0 - 9 signifies that there has been growth in the number of young families in the community. While there has been a decrease in teenagers, there will be an equal number of children filling that category within the next few years. As the Baby Boomer generation ages into the 65 - 84 age category, there will be more need for assisted living and nursing care facilities.
Income
Income and earnings are key factors in housing affordability. The more income that a household earns, the more housing options that fall within their affordability threshold. A household that spends more than 30 percent of its income on housing is considered housing cost burdened. While incomes are mobile – meaning that households can move from place to place – the physical structure of a housing unit is stationary. In practice, this typically means that households often commute, choosing to live where they find the acceptable balance of convenience, quality, local amenities, and affordability.
Compared to the other cities in Jasper County, Newton has a lower median income, reflecting the fact that rural households are relatively more affluent than those in urban areas. Prairie City and Colfax surpass the median income for Jasper County by over $10,000, with Newton being the only city below the median income of $59,481 according to the 2020 ACS 5-year estimates.
Workforce
Employment indicators are essential to housing. If there is not lower-cost housing available for workers, they are less likely to stay in Newton or Jasper County. Having suitable housing for these workers is essential to the vitality of Newton’s economy.
Commute times in Jasper County and the study area are fairly low, with the majority of workers commuting under 20 minutes. Newton has the highest percentage of residents that commute less than 15 minutes to work.
Since people will commute if they cannot afford housing in their desired community, this metric demonstrates the strength in quality of housing that Newton currently possesses.
Commute Times to Work
NewtonMitchellvilleColfaxMonroePrairie CityJasper County
Population
Trends in population growth and other demographic data is critical to identify potential future growth patterns and predict future community needs regarding housing, public facilities, and more. The following information is also useful in determining housing needs.
This type of forecasting predicts outcomes of when, where and how much population and household growth Newton can expect in the next 20 years. According to the U.S. Census Bureau, between 2010 and 2020, the population of Newton increased from 15,254 to a total population of 15,760.
Generally, the cumulative average growth rate of the community has been 9.2% every 10 years. Projections can also be made using linear growth calculations and exponential growth calculations as shown in the tables on the following page.
POPULATION TRENDS AND KEY INDICATORS
RENTAL MARKET Chapter
2
Rental Unit Type
Unit types are important to consider because they provide choice in the housing market to meet the needs of current and potential residents.
Overall, Newton and surrounding communities have a good mix of housing unit structure types within the rental market that can serve a wide range of needs. Single-family detached homes often naturally shift from ownership to rental markets as time progresses, creating rental units out of lots that are already developed. With the cost of new construction, it is likely that most new rental housing unit development will occur in 5+ unit structures to make development costs more efficient in serving lower-wage populations.
As shown in the chart below, there are very few 1-unit attached rental units in the City of Newton. This unit type will likely be a critical component of lower-cost, step-up rental housing options that can serve families earlier in their careers, as this demographic continues to grow. These units also help provide a lower-cost option for renters looking for new construction, as there are some construction efficiencies that lower pass-through rental costs.
A 1-unit attached means a one-unit structure which has one (1) or more walls extending from ground to roof separating it from adjoining structures.
Rental Units - Type, Newton
Rental Units - Type, Jasper County
Source: 2020 American Community Survey 5-Year Estimates
Source: 2020 American Community Survey 5-Year Estimates
Rental Housing Size
Housing unit size aims to balance family size requirements and preferences for additional space. For example, because of the COVID-19 pandemic, the demand for housing with office spaces and other work-from-home accommodations has increased significantly. Newton has an opportunity to increase single person rental units in order to meet the current and growing demand in that market.
In both Jasper County and the City of Newton, the majority of units in the rental market have 1 or 2 bedrooms. When considering new housing options, gaps in both price and unit size should be considered to help attract and retain new residents in Newton.
Rental Units By Bedroom Size
Renter Household Size
Source:
NewtonMitchellvilleColfaxMonroePrairie CityJasper
Rental Unit Age
Unit age in the rental market consists of a variety of housing types with different time periods of construction. Many of the oldest rental units are single-unit structures throughout downtown Newton, consistent with general historic development patterns. There are also some larger-unit attached rental structures and singlefamily structures built in the late 1970s and 80s.
Within Newton, only 229 rental units have been built after 2000 because most new construction is single-family detached ownership housing stock.
Rental Housing Cost
General measures and trends in affordability are a contrast of current incomes compared to current costs. One measure is whether or not the median renter household can afford the median rental unit, which is a measure of choice. If yes, 50% or more of all rental units would be available to that household. If no, choice is restricted and market supply and demand are unbalanced. Newton has historically been affordable to renters who live there and maintains a close correlation between rental rates and affordability for the median renter household.
In the past year and a half, the price of rental units has increased, regardless of size. However, the price of 1 and 3 bedroom units has remained more consistent than any of the other sizes.
Jasper County Rental Unit Cost
Jasper CountyNewton
Rental Market Tenure
Tenure in the housing market refers to the structure of occupancy – ownership or rental. Within Newton, ownership is historically the most common tenure type by a significant margin, meaning that more households own their primary place of residence than rent. However, it is normal for this to shift and change with markets over time. This tendency toward homeownership is consistent with general trends within the region.
There are generally more housing options (rental stock) in other areas of Jasper County that are impacted by higher property acreage or tight housing markets with limited alternative options. Lower-income households nationwide are more likely to rent their residence; this is true in Newton as well, especially for the lowest income households earning under 30% AMI.
There are also renters at all income levels in Newton, which may indicate that households choose to live in the community, but the ownership housing stock available for purchase is insufficient.
Income & Tenure, Jasper County
Income & Tenure, Newton
2,2504,1156,365
Regional peer communities, while part of the commuter shed and larger Jasper County housing market, display different homeownership trends. While these communities have more owner households than renter households and incomes comparable to Newton, they have smaller percentages of renters than Newton. Generally, if a household is lower-income and looking for an appropriately-priced rental unit, they are more likely to find those units in larger municipalities due to historic development patterns.
The pie charts at right do not signify income differences between these communities, but they convey that the built environment has adjusted to market demand. Historically, cities with smaller populations in the region have had a higher share of owner-occupied housing development.
Regional Tenure Comparisons
Mitchellville
Jasper County Newton
Affordability Limits in the Rental Market
Resident income is a principal component of housing affordability. Though the housing market extends outside of Newton, both the City and County have a significant commuter-share working in the larger Des Moines metro region. Using HUD income limits, the table below illustrates the varying incomes of Jasper County households with the greatest housing need, sorted into income categories and persons in the household.
Income Categories
Affordable Rental Limits are calculated based on the incomes above, illustrating the general housing cost a Jasper County household could afford without becoming housing cost burdened. These amounts vary based on family size and Area Median Income (AMI) percentages. As shown in the Rent Limit category, the median income household for Jasper County (100% AMI) could afford about $1,633 monthly in total housing costs (not solely contract rent), while still maintaining “affordable” housing.
Rental “Affordability” Limits
Affordability – what a household can spend on housing costs – is relative to each individual household. Higher-income households can afford more within the market, meaning that there are more options within their spending limit, whether they spend 10% or 30% of their income toward housing costs. Lower-income households are subjected to similar fixed costs but have fewer choices in the market that rent at an affordable level. Sometimes, these households must also compete with higher-income households that are “renting down” in the market, or occupying housing units that fall well below their typical price range.
The workforce housing rental production demand targets for consistent growth are based on resident incomes by tenure – that is, the percentage of renter households who rent at each income level before deciding to transition to the ownership market.
of Bedrooms
Mid-level housing indicates prices that would be affordable to a household earning between 50% and 80% of the median income. They are adjusted to match household/family size, and represent consistency with HUD guidelines.
Market rate housing is the last category for recommended cost of new units - and does not have an upper maximum. While households do rent within this category, there is a transition to homeownership that is consistent with increasing household income.
Number of Bedrooms
Number
Rental Housing Stress
Housing stress is measured by cost burden, which is a reflection of the percentage of income a household pays for total housing costs. Generally, municipalities with a larger stock of rental housing and very little vacancy would have higher housing costs and increasing rates of cost burden. This trend is evident in Jasper County’s housing market.
This burden also represents a smaller share of rental housing stock, which is coupled with generally higher renter household incomes (evenly dispersed across incomes). Because Newton has a higher share of renter households with higher incomes than surrounding communities, rental units are relatively more affordable than other areas in the region, particularly metro areas.
Due to income disparities between households in each tenure type, cost burden is more prevalent in renter households, which is typical. This may be an indication of higher owner income and tight lending standards.
Housing Stress - Tenure
Newton
Rates of renter cost burden may be low in Newton overall, but those cost burdened renters are much more likely to be severely cost burdened (spending more than 50% income toward rental costs) than surrounding communities.
This is indicative of higher income households “renting down” within the market, meaning that they occupy units that would otherwise be more affordable for lower income households. This forces the latter group to pay more for the remaining rental stock.
This also indicates a lack of appropriately priced units for the lowest income households already living in the community, highlighting a need to better serve low-income households through incomerestricted or subsidized units.
Cost Burdened Renter Households
Levels of Cost Burden
Source: CHAS
Rental Stress by Income
Rental stress in Newton primarily exists within low-income households. While there are many renter households over 80% AMI within the City, higher-income households benefit from spending a significantly lower percentage of their income on lower-cost housing. This results in gaps in unit availability at appropriate price points to serve all ranges of income, since lower income households no longer have affordable options.
This “renting down” phenomenon may also be caused by a general undersupply of workforce (middle income) and luxury rental options in Newton. These units are typically new construction with higher rents due to construction costs. High-income households have the flexibility to rent units of varying costs, but there may also be tension in the ownership market preventing a switch in tenure.
Rental Unit Mismatch, Newton
Source: 2020 American Community Survey 5-Year Estimates
Rental Unit Mismatch, Jasper County
Source: 2020 American Community Survey 5-Year Estimates
Rental Unit Consumption
Using incomes and rent levels, the US Census and HUD assess the number of households that are over and under-consuming housing.
Within the City of Newton, higher-income households are currently over-consuming housing because there are no rental units that cost enough to be considered in the affordability range for their income level.
While this means that affordable housing options are readily available for moderate and higher-income households (>50% AMI), it also means that low-income households (which are less competitive in the rental market) must sometimes spend more to secure housing. New construction at higher price points can help fill in the middle and high ends of the market, alleviating some of this pressure.
Example - Construction Cost
There is a need for new rental construction in Newton that serves moderate and high-income earners alike. Constructing new units will help alleviate market pressure on lower-income renters by freeing up more affordable units. High-income households can afford rents associated with higher cost of new construction and developers can market increased costs through more amenities.
Construction costs and the requisite rents required to cover debt service, reserves, and operating expenses necessitate costs that would be unaffordable for low-income households.
To ensure expanded opportunities and units that meet the needs of all residents of the City of Newton, subsidies are needed to offset construction costs to make more units affordable. Rehabilitation programs can also ensure continued unit adequacy at affordable costs, especially for existing aging units. For example, even the market rate example above is unaffordable to many 51%-100% AMI households that need housing in Newton.
1-Bedroom Rental (New Construction)
OWNER OCCUPIED MARKET Chapter 3
Age of Householder
Age of householders is one of the aspects that impacts mortgage status, as well as planning for future senior housing needs and turnover of units. While the average householder nationally remains in their home for 7 years, many community members purchase homes to age in them, which offers consistent shelter costs throughout their ownership. Over half of owner households in the City of Newton are over the age of 55.
In Newton and Jasper County, a notable percentage of all owner households are over the age of 75. While the vast majority of older households (over 95% of Medicare enrollees) remain in their homes and age in place, these units will eventually transition as owners seek more individualized care. This is a significant portion of the city’s homeownership market that will potentially turn over by 2042, increasing housing options for younger households and providing capital for older adults to seek specialized, age-accessible services and housing options.
While Newton has a large portion of older homeowners, the pie chart indicates that it also has a relatively young market of homeowners that will likely remain in the City for a significant period of time as they continue to age.
Ownership Market by Age, Jasper County
Owner Occupied Household Size
THE MOST COMMON household size for owner occupied households within Newton is “2-person”. This is largely comprised of younger and older ownership markets – areas where childless young couples look for a “starter home” within their price range, and where older adults are living without their children. Smaller household types (1- and 2-person) make up 73% of all owner households in Newton and 64% of all households in Jasper County.
While the ownership market in Newton and Jasper County is generally comparable to the larger region, the large number of 1-person and 2-person households is slightly atypical.
As these small households continue to undergo expansion, or changes in life circumstance, they may look to move up into other housing options. This includes obtaining 3 - 4 bedroom units as family size grows, or downsizing to something smaller, easier to maintain, and more accessible for senior households.
Owner Occupied Unit Types
OWNERSHIP UNIT TYPE DISTRIBUTION across Newton shows that the majority of owner households live in single-unit detached homes, with the next largest category being single-unit attached. This gives Newton the opportunity to diversify future housing development through townhouses, condos, duplexes, etc.
Condos – an ownership structure type within the market – have never been prevalent in Newton. The lack of 5 - 9 unit structures in the City presents an ownership opportunity for slightly denser redevelopment; construction costs and development efficiencies make these units slightly more affordable than traditional detached homes.
Similarly to Newton, the majority of owner households in Jasper County – over 93% – live in singleunit detached homes. Condos have also never been prevalent on the County-wide scale, presenting an opportunity for denser redevelopment that increases access while still maintaining the “feel” of the community.
Owner Occupied Housing Size
THE MOST COMMON unit size for owner occupied housing in Newton and Jasper County is 2 - 3 bedroom units. Similar to the rental housing market, Newton has generally more bedrooms available in the existing owner occupied housing stock.
Owner-occupied housing units are often larger (contain more bedrooms) than rental units, which partially influences whether families will buy or rent their housing. While smaller-unit ownership housing options are generally more affordable within existing and new-construction markets, a variety of unit sizes helps to accommodate households who wish to remain long-term residents through changes in need and requirements.
Older homes (constructed prior to 1959) likely make up a sizable portion of 1- and 2-bedroom ownership housing units. While there are fewer of these units in Newton than 2- and 3-bedroom units, they are an important component of the housing market, especially for young families and older adults looking to downsize.
Jasper CountyNewton
Mortgage Status
MORTGAGE STATUS begins to shift the longer owners stay in their homes and pay off the mortgage loans on their property. As previously noted, the City and County have a significant share of owners that moved into their unit prior to the year 2000, aged into their homes, and paid off their mortgage debt. In Jasper County and Newton, 39% and 38% of all owner-occupied homes in the community are owned free and clear.
When looking at each market individually, a shift in ownership by age is evident (see bar chart below). As homeowners age in their homes, their loans reach maturity. For that reason, older homeowners are more likely to own their home without a mortgage compared to younger households. This is also beneficial for older households who opt for more specialized care or more accessible housing, as they now have equity they can recapitalize into new housing or rent.
Tenure in the Housing Market
Tenure Impacts Ownership Markets as well as rental markets. Tenure – whether a household owns or rents their property – is important to consider because more owner households in a community increases demand for owner housing stock.
The current percent of ownership households in Newton is lower than other regional peer communities. However, the City has a mix of single-family detached housing units and apartment complexes.
Regional Tenure Comparisons
Tenure by Income
The Majority of owner-occupied homes in both Newton and Jasper County are occupied by households that are above the median income for the County and the Des Moines Metropolitan Statistical Area (communities surrounding Des Moines). This is not an uncommon occurrence, as increased income opens up increased ownership opportunities and eases costs associated with homeownership (down payment, taxes, etc.).
While the largest share of owner households earn more than the County median incomes, there are still large portions of lower-income households who own their housing within the City. These households may be attracted to Newton’s lower cost of housing compared to other areas of the region.
This high number of lower-income homeowners may also represent aging homeowners who have entered retirement and seen significant loss in income, which brings new challenges. Although these owners may own their home free and clear, they may struggle with property tax payments, upkeep, and other factors of homeownership that require continual maintenance funds or physical demands that aging populations sometimes struggle to meet.
Households, Income & Tenure
Households, Income & Tenure Jasper County
Source: 2020 American Community Survey 5-Year Estimates
Affordability Limits in the Owner Occupied Market
Resident Income is a principal component to housing affordability. For ownership opportunities, this largely refers to the “purchasing power” of a given household based on known incomes. Using HUD income limits, the table below illustrates the varying incomes of Jasper County households with the greatest housing need, sorted into income categories and persons in the household.
Using Jasper County’s median income to determine affordability limits – as opposed to those used by the U.S. Department of Housing & Urban Development – results in a slightly lower average income than the Des Moines metro area.
Purchase Limits, based on the incomes above, illustrate the general amount a household could afford in the housing market without becoming housing cost burdened. The median income household in the County could afford a $264,100 home purchase from an annual income of $70,700.
Owner Occupied Housing Stress
Housing Stress is measured by cost burden, which reflects the amount of income a household pays for total housing costs. While the rental housing markets in Newton are marked by somewhat high levels of cost burden (> 30% income toward rental costs), the ownership housing market has significantly reduced levels of burden in comparison.
For households in Newton’s ownership market who do experience cost burden, they are much less likely to experience severe cost burden (> 50% income toward housing costs) since they have the financial resources available to purchase their housing.
A prerequisite of that choice is that in order to qualify, potential owner households must meet underwriting standards – an aspect of the market that drastically reduces the cost/ risk associated with owning – since borrowers are more likely to have higher incomes and increased access to credit.
Owner-Occupied Housing Stress
Cost Burdened Owner-Occupied Households Source:
Owner Occupied Stress by Income
Owner Housing Stress in Newton exists almost entirely within low-income households. It is important to consider that for households above this amount - 80% AMI or greater, cost burden is less impactful than for low-income households; they have more flexibility within a monthly budget to handle fixed-cost goods (housing, childcare, healthcare, food, etc. while still maintaining financial stability. For lower-income households, there is less room for increased costs or unexpected expenditure.
In ownership unit mismatch, homes available in the market are generally oversupplied in the lower cost market when considering incomes for the County (secondary/regional market). This is consistent with known lower housing costs in the area but is also reflective of slightly lower incomes in the cities than the County as a whole.
Owner-Occupied Unit Mismatch, Newton
Owner-Occupied Unit Mismatch, Jasper County
Owner Occupied Unit Consumption
The U.S. Department of Housing & Urban Development (HUD) tracks household incomes compared to the cost of the housing unit in which they live. Per HUD data, within the City of Newton, the largest share of ownership homes in the market should be affordable to households earning a lower AMI.
These homes are extremely affordable to higher-income households and provide desirable, affordable, ownership options for high income earners. However, it does provide increased competition that precludes lower-income earners from entering the owner housing market.
Overall, the market at all levels is dominated by households earning over 80% AMI. These households are consuming units in the housing market that are very affordable to them, Less of their income is spent on housing cost than with a more expensive home. While this is beneficial to these households, it strains the market and ultimately increases sales prices in all housing ranges from entry-level homes upward.
Ratio of Home Value to Household Incomes
Newton Jasper County
Affordability Trends
General measures and trends in homeowner affordability are connected to real estate market conditions and prospective buyer incomes at the time of purchase. Historically in Newton and Jasper County, home values peaked pre-Great Recession before seeing a decrease in value through the recession. The lowest home values occurred in the year 2012, with steady gradual increases in value since. All unit types have regained lost value associated with the recession, surpassing previous market highs by 2015 and continuing to rise since.
Within the City and the County, a majority of owner households have remained in their homes for extended periods of time, with many residing in their unit since before 2009. These represent longtenured homeowners who reside in their homes slightly longer than the 7-year national average, increasing equity year-to-year.
Approximate Value of homes in Newton is mapped previously on page 44 using assessment records. While this is not a perfect approximation of sales/cost value within the market, it does offer a baseline for estimation and comparison. This spatial availability of homes by market cost shows where opportunity for affordability exists in the City’s housing market for residents at different income levels, including lower-income households.
This map illustrates the general affordability of smaller and older housing options within the community. Maintaining a range of housing options in any new development is key in ensuring that the area’s affordability remains intact for households at various income levels.
Year Owner Moved Into Unit
Source: 2020 American Community Survey 5-Year Estimates
While unit price is an important factor in housing affordability, it must be compared with incomes and affordability levels to reflect a true measure of housing access. Newton experienced rising resident incomes coming out of the recession and, for a time, these incomes rose at a rate ahead of the real estate market. When single-family units reached the bottom of their market dip in 2012, homes were affordable to many local households based on income. The median home also remained relatively affordable as household income grew through 2016.
Over the past decade, homeownership options have been generally affordable in the community, with the median household able to afford the median ownership value within their affordability limit.
However, since 2015, house value growth has outpaced income growth for the same period. Over this timeframe, recorded income growth has stagnated, which has allowed the housing market to catch up with the post-recession income growth to a point where the median home value has matched the median affordability limit in Newton.
While the median single-unit home is still affordable to the median household in Newton, most recent estimates indicate that home value growth will continue to outpace household incomes.
Median Sales Price
Newton Jasper County
Increasing sales prices of houses in the Des Moines region directly impact monthly owner costs and affordability. While some homes are owned free and clear with monthly costs consisting solely of taxes and insurance, new borrowers are paying increasingly more for housing. Appreciation – as well as the recent drastic cost increase of new construction – places ownership entry costs into higher brackets year to year, and represent many of the higher monthly owner costs recorded.
Even for starter homes, there has been a consistent increase as tracked through home values since market bottom. Starter homes are more costly in Newton than in other regional communities (Mitchellvile, Colfax, Monroe, and Prairie City), though still lower than the County as a whole. Newton is approaching a starter home value that is equal to the median home (overall) in 2012 which was just over $90,000.
Housing Availability
Inventory of houses for sale have been limited as there were 121 active listings in Newton at the time data was pulled in Fall 2022. Annually, the total number of house sales has stayed consistent in Newton, with total sales between 300-360 from 2017 to 2021. At the time data was pulled, 80 homes were sold in Newton in 2022.
UNIT DEMAND & RECOMMENDATIONS
Owner Occupied Recommendations
For residents who live in Newton, there are several key issues. Lower-income residents who previously would have been able to afford homeownership may now be finding themselves being priced out in an increasingly competitive market. There are low numbers of active listings, and potential residents are finding it difficult to find housing without an active market.
Continue to Encourage New Development.
While construction activity and population growth have lagged the past decade, there is a large need for housing to accommodate growth in the larger region to draw new developers to the community.
Deliver a Mix of Housing Options.
Considering incomes and preference to live in the cities, smaller towns, or Des Moines, smalllot and shared-wall development will continue to provide comparatively cost-effective options for new construction that utilize serviced vacant lots. Subdivision development should integrate a mix of housing types (attached/detached, small unit rental, etc.) to allow more choices within the housing market. This will encourage more natural community design and strengthen the portions of Newton that are already built out.
Assess Requirements, Minimum Lot Sizes, and Consider Averaged Minimums.
As started in the RHRA process, continue to consider new housing designs that can slowly add density and accommodate households with different needs and preferences.
Continue to Actively Promote Repair Assistance.
Enforcing codes and ordinances is one component of reinvestment, but homeowners may need additional funding to help them rehabilitate their homes. Tax Increment Financing, Community Development Block Grants, and other State
funding sources ensure that residents are aware of options and able to access them.
Keep in Mind Aging Homeowners.
There is a substantial share of senior households projected through 2040 – a minor but critical component of the local housing market. Whether promoting accessibility programs to retrofit homes for aging-in-place or developing zeroentry and ranch-style condo options in infill or greenfield development, this demographic will require specialized housing moving forward.
Continue the Housing Committees Started in the RHRA.
The RHRA process identified a community vision, priorities, and community members who can work to increase housing access. Use this document to communicate the needs identified in that process and continue holding group meetings. There is competition for development and specific housing improvements within the region; the more data and engagement there is on the issue, the more results will begin to emerge. It will also be important to task the Newton Housing Development Corporation with continuing these efforts.
Renter Occupied Recommendations
Households in the rental market, as well as those who work in housing locally, have identified a regional need for new options that serve employees of all income levels. Due to a large share of older rental housing stock, there are more affordable options than in other areas. However, many local residents’ incomes cannot meet new construction housing costs. Employers are seeing that their growth and employment base needs a middle-ground in the rental market that serves a range of incomes.
Take Advantage of Opportunities for Tax Credits & Subsidized Development.
Referred to as “affordable housing,” tax credit developments offer new construction at rents that fit within community income limits and demand. Local incomes and unit availability show a need for housing at 50% - 80% AMI, which is within the range supported by tax credit developments. These developments guarantee unit quality through new construction or preservation, and could also be utilized for mixed-use developments that provide amenities in central areas.
The City can also directly encourage more affordable rental costs through programs such as Tax Increment Financing, and consider partnering with developers to jointly secure tax credits, as scattered-site workforce housing can be funded as long as all housing units are within 20 miles of each other.
Focus on Universal Design and Attached Units in Central Areas.
Reinvestment and infill in downtown Newton will encourage residents to stay in place. With many residents wanting to continue aging in the community, providing a range of options that emphasize accessibility and universal design will promote healthy neighborhoods and residents. Many homeowners who downsize, as well as those with differing ability levels, live in private market units and prefer walkable areas with access to amenities. Therefore, this recommendation is especially crucial in centralized areas of Newton.
Encourage Rehabilitation, Redevelopment, and Reinvestment.
Maintaining housing affordability across a range of incomes is vital for community health. However, aging housing stock (which is primarily single-family units) often requires costly upkeep in order to maintain desirability. Many rehabilitation programs offer deferredloan assistance to landlords of small properties; promoting and marketing these funding sources to landlords and property owners should be continued. However, these incentivized loans often come with income restrictions.
Maintain and Expand a Mix of Bedroom Sizes in New Development.
Household size is expected to stay the same in coming years in both ownership and rental markets. When looking at the rental market, there are key unit sizes missing in Newton. Encouraging the development of unit types that balance the market ensures that all household sizes have access to appropriate accommodations.
Encourage Missing Middle Housing.
Vacant lots in the community can be used to decrease the pass-through costs of new construction by focusing on attached-unit or duplex development – a development type that is lacking in Newton and Jasper County. Structures with 2 - 19 units offer more options for residents and reduce construction costs for development compared to single-unit detached structures. Unit design should fit well among existing and new structures.
Key Takeaways
• Newton should continue Rental Inspections, as required by State Code, to ensure safe, clean, quality rental units.
• Newton's population is stratifying more to the young/old demographic and needs more affordable/size-appropriate housing options.
• Renting-down is a threat to housing affordability and therefore more housing options are necessary to alleviate this strain.
• Newton should strive for balanced neighborhoods with a mix of housing types and price points to provide suitable housing for everyone.
• It will be important for Newton to maintain qualityhousing options as part of safe and healthy neighborhoods for all residents.
• Newton should look into crafting housing policies that will complement economic development goals of the City, growing business and population in tandem.
• Newton can strengthen community character by encouraging maintenance and improvements of the existing housing stock and residential properties throughout the community.
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