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<br />afford (income/mortgage ratio) and then further qualified on likelihood of home <br />purchase using "capture factors" applicable to their income-appropriate household <br />base. The capture factors are a product of ratios experienced in similar markets, <br />including actual ratios in the Fargo-Moorhead area. <br />Households were qualified assuming a 7% fixed rate 30-year mortgage with 25% <br />to 27% of household income set aside to pay principal and interest. <br /> <br />The capture factor is established based on the number of new sales in the single- <br />family housing market in the MSA for homes priced between $150,000 and <br />$199,000. This is because with the variety of products at this price point, the <br />demand potential of this market has likely been realized. The remaining capture <br />factors were based on the relationship ofthis price market ($150-199,000) to <br />established capture factors of well-developed markets; these factors include growth <br />rates, household size, income levels and employment profiles. <br /> <br />This annual estimated demand is compared to average annual home sales to <br />detennine whether there is an under supply or oversupply. For homes priced <br />below $110,000, only 39% of the demand is being met through average annual <br />new home sales. For homes priced between $100-124,999,84% of the demand is <br />being met through average annual new home sales. For homes between $125,000- <br />149,999 the percentage is 90%. For homes priced between $150-299,999 it is 91 % <br />and for homes priced above $300,000 average annual sales are 25% of the <br />estimated demand. <br /> <br />The Danter Company's analysis shows an undersupp1y of homes priced below <br />$150,000, especially at the lower end, while the market for homes priced above <br />$150,000 to $299,000 is nearly met. There is an unmet demand for homes above <br />$300,000. <br /> <br />The potential annual support is a "statistical" calculation based on "best case" <br />scenarios. In reality, the submarket cannot meet these projections without a <br />substantial increase in the supply of product alternatives and extensive marketing. <br /> <br />SUMMARY OF HOUSING DEVELOPMENT NEEDS <br /> <br />Below are the recommendations of The Danter Company regarding what is needed <br />to provide a balanced housing market in tenns of costs and continuum of housing <br />types. Households typically journey through a variety of stages in the housing <br /> <br />14 <br /> <br />Linda S. Donnelly. A.Ley. <br /> <br />;\ ugllsl 2()06 <br />