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Salina Housing Market Analysis I el the : f SALINA , KANSAS HOUSING MARKET as of March 1 , 1967 (A supplement to the October 1 , 1965 analysis) A Report by the DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FEDERAL HOUSING ADMINISTRATION WASHINGTON, D. C. 20411 December 1967 ANALYSIS OF THE SALINA, KANSAS, HOUSING MARKET AS OF MARCH 1 , 1967 (A supplement to the October 1 , 1965 analysis) Field Market Analysis Service Federal Housing Administration Department of Housing and Urban Development Foreword As a public service to assist local housing activities through • clearer understanding of local housing market conditions, FHA initiated publication of its comprehensive housing market analyses early in 1965. While each report is designed specifically for FHA use in administering its mortgage insurance operations, it is expected that the factual information and the findings and conclusions of these reports will be generally useful also to builders, mortgagees, and others concerned with local housing problems and to others having an.interest in local economic con- ditions and trends. Since market analysis is not an exact science, the judgmental factor is important in the development of findings and conclusions. There will be differences of opinion, of course, in the inter- pretation of available factual information in determining the absorptive capacity of the market and the requirements for main- tenance of a reasonable balance in demand-supply relationships. The factual framework for each analysis is developed as thoroughly as possible on the basis of information available from both local and national sources. Unless specifically identified by source reference, all estimates and judgments in the analysis are those of the authoring analyst and the FHA Market Analysis and Research Section. • Table of Contents Page Summary and Conclusions i Housing Market Area 1 - Map of Area 2 Economy of the Area Character and History 3 Work Force 3 Employment 3 Unemployment 6 Future Employment Prospects 7 Income 7 Demographic Factors Population 8 Households 9 Housing Market Factors Housing Supply 11 Residential Building Activity 11 Tenure of Occupancy 12 Vacancy 12 Sales Market 14 Rental Market 16 Urban Renewal 16 Demand for Housing Quantitative Demand 18 ANALYSIS OF THE SALINA, KANSAS, HOUSING MARKET AS OF MARCH 1 , 1967 (A supplement to the October 1 , 1965 analysis) Summary and Conclusions The Salina HMA has passed the critical stage of the slump caused by the deactivation of Schilling AFB. The downward trends in employment and population have been halted, and the number of vacancies has declined during the past year. Since the closing of the base, the community has successfully attracted new industry, and the addition of several new plants has formed the basis of a more diversified manufacturing economy. The outlook is for continued gradual improvement during the next two years. 1 . In January 1967, nonagricultural wage and salary employment to- taled 13,450, or 100 jobs above the January 1966 level . The in- crease was comprised of a gain of 625 manufacturing jobs and a de- cline of 525 nonmanufacturing workers. The small gain in employ- ment was significant only because it represented the first increase since the closing of the Air Force base in 1965. Average employ- ment in 1966 was 1 ,225 workers below the 1964 average and 225 be- low the 1965 average. It is anticipated that expansion of new in- dustries that have located in the area since 1965 will continue and that during the forecast period from March 1 , 1967 to March 1 , 1969, nonagricultural wage and salary employment will increase by about 300 jobs annually. 2. The estimated population of the Salina HMA as of March 1967 was 50,100 persons, up 3,000 from October 1, 1965. During 1966, de- pendents of military personnel assigned to duty in southeast Asia were offered housing at Schilling AFB and about 3,000 persons now occupy a portion of on-base housing units. These persons account for all of the population gain since October 1965. By 1969, the population of the HMA is expected to reach 51,500, an increase of 700 annually over the March 1967 total. 3. As of March 1967, there were an estimated 15,700 households in the HMA, a gain of about 950 since October 1965. Included in the total are about 735 households representing the 3,000 dependents of military personnel stationed in southeast Asia. The number of households is expected to increase by 200 annually over the next two years. 4. As of March 1967, . there were approximately 18,800 housing units in the Salina HMA, an increase of only about 100 since October 1965. There were about 20 housing units under construction in the HMA in March 1967, of which 13 were single-family units and seven were apartment units. ANALYSIS OF THE SALINA, KANSAS, HOUSING MARKET AREA AS OF MARCH 1, 1967 (A supplement to the October 1, 1965 analysis) Housing Market Area • The Salina, Kansas, Housing Market Area (HMA) is coextensive with Saline County, Kansas. Saline County had a 1960 population of about 54,70014 approximately four-fifths of whom resided in the central city of Salina. Salina,is a trade, service, and distribution center for the predominant- ly agricultural region of central and northwestern Kansas. The city is located 110 miles west of Topeka and 90 miles north of Wichita, near the geographic center of the contiguous 48 states. Transportation service in the HMA is good. Interstate Highways 35 W and 70 and U.S. Highways .40 and 81 provide transcontinental highway accessibility. ' The completion of the Interstate Highway System will improve the position of Salina as a distribution center, and growth in the trucking industry currently is in evidence. Four railroads oper- ate freight yards in Salina and one, the Union Pacific, provides daily passenger service. The Salina Municipal Airport has been relocated at the ,deactivated Schilling AFB, greatly expanding the potential for handling commercial air traffic. Central Airlines currently has nine daily scheduled flights connecting with major airlines in Kansas City, Denver, and Oklahoma. 1/ Inasmuch as the rural farm population of the Salina HMA consti- tuted only five percent of the total population in 1960, all de- mographic and housing data used in the analysis refer to the total of rural farm and nonfarm data. - 3 - Economy of the Area Character and Recent History. In November 1964, the Department of De- fense announced that Schilling AFB would be deactivated by June of 1965. At the time of the base closing, military and military-connected per- sonnel and their dependents comprised nearly one-fourth of the popula- tion of Saline County. The loss of a segment of the community which had been a mainstay of business activity was felt severely. Since the base closing, the community has sought new industry, with some success. The addition of a Beech Aircraft plant, a Westinghouse fluorescent light bulb plant and several smaller establishments has formed a more diver- sified manufacturing base. Work Force During 1966, the civilian work force in the Salina HMA (Saline County) averaged 16,650 persons, reflecting a decline of 575 since 1965 and continuing the downward trend which resulted in a reduction in the work force of 2,600 persons since 1961.1 Withdrawals from the work force from 1961 through 1964 occurred, principally, because of the out-migration of construction workers and technicians on completion of their work at the Atlas missile sites. The work force average for 1965 of 17,225 was 1,375 below that of 1964, indicating that the large decline occurred at the time of the closing of Schilling AFB. Employment Current Estimate. In January 1967, nonagricultural wage and salary employment totaled 13,450, or 100 jobs above the January 1966 level (see table I). The current level of wage and salary employment re- flects a gain of 625 manufacturing jobs and a decline of 525 in non- manufacturing since January 1966. The increase in manufacturing em- ployment resulted from new industries which have entered the HMA in the past year. The largest firm is the Salina Division of the Beech Aircraft Corporation; there also are several new firms employing fewer persons. Partially offsetting these gains, there was a decline of 50 workers in food and kindred products manufacturing. Most of the decline in nonmanufacturing employment from January 1966 to January 1967 was in contract construction. The decline in building activity is temporary; there are several commercial and public building projects scheduled to begin in the spring of 1967. Services declined 125 from January 1966 to January 1967. 1/ Work force and employment data are available on a comparable basis only since 1961. - 5 - The average of 11,925 nonmanufacturing workers in 1966 is the lowest in the past three years. Average nonmanufacturing employment has de- clined each year since 1964. Government employment averaged 2,200 in 1964 but declined by 425 in 1965 and by 275 in 1966. The major part of the decline represented federal employees working at the air base. Most were assigned to other areas and have left the Salina HMA. The loss of these workers in the past two years has not resulted in job losses in trade and services. The 1966 average of 4,150 jobs in trade is down only 75 from the 1964 total. Employment in services increased by 50 jobs to a 1966 average of 2,900. Jobs in contract construction declined from 1,575 in 1964 to 1,400; most of the decrease resulted from cutbacks in residential construction. The transportation, commu- nications and utilities industries lost jobs between 1964 and 1966, while employment in the other nonmanufacturing categories has remained relatively stable since 1964. In January 1967, as compared with January 1966 and 1966 averages, modest changes were recorded upward for govern- ment employment and downward for both trade and services. A sharp re- duction in construction employment may partly be a reflection of weather conditions but also reflects continued low levels of residential build- ing. Principal Employment Sources The major share of the industrial growth in the past year has occurred at the air base. The Salina Airport Authority was formed to manage the base facilities and to lease industrial sites. The authority current- ly is utilizing the runways and hangars for a municipal airport. A number of buildings have been converted to educational uses and should be beneficial to future community development. Schilling Institute, with an enrollment of 90 students, is providing training on an ad- vanced technical level. A high school level vocational school is train- ing about 200 students. The base medical facilties are being used as a rehabilitation center to provide medical treatment and training to men and women injured in industrial accidents or otherwise physically handicapped. - 7 - Employment Prospects It is anticipated that the improvement in the Salina economy which be- gan in 1966 will continue during the two-year period from March 1967 to March 1969. It is likely that, for the first time during the post-1960 period, there will be gains in both manufacturing and nonmanufacturing employment. The major share of the increase in manufacturing employ- ment will result from the initial hiring of personnel at the new West- inghouse plant and from planned expansion at Beech Aircraft. There are several firms in the area which plan small additions to their work forces. The decline in nonmanufacturing employment resulting from the closing of the air base has slowed, and there are indications that there will be some increase over the next two years. Contract construction em- ployment will be stimulated by local civic and commercial building programs. However, the increase in the number of construction workers cannot be considered permanent because most workers will be transients who will leave the area when the projects are completed. Increases in nonmanufacturing employment are expected in the trade and the ser- vice categories as the result of improved business conditions in the Salina HMA. On the basis of the considerations discussed, nonagricultural wage and salary employment is expected to increase by about 300 jobs annually over the next two years. The current level of reported unemployment(at 300) indicates that the present supply of labor will not be adequate to to meet the demand of local employers, particularly since many of the unemployed persons lack required skills. It is expected that there will be additions to the work force from present population, esp=_cially re- flecting an increase in the number of women employed, and that there will be some in-migration of workers from rural areas of Kansas. - 9 - Future Population Growth. It is anticipated that the population of the Salina HMA will increase by an average of 700 annually to a total of 51,500 by March 1969. The increase in population is projected on the basis of the expected employment increase and on the assumption that the employment participation rate will rise as a result mainly of the in- creased hiring of females. It is likely that the military-connected population will not change during the next two years unless the prac- tice of housing dependents at Schilling AFB is discontinued. There may be some increase in the number of students living in barrack ac- commodations at the Schilling Institute. Households HMA Total. As of March 1, 1967, there were an estimated 15,700 house- holds in the Salina HMA. From April 1960, when the census enumerated 16,200 households in the area, total households increased to about 17,500 in January 1965 and subsequently declined to an estimated 14,750 in October 1965. Since October 1965, households have increased by about 950. As mentioned in the section on population the largest part of the increase in households (735) consisted of the military dependents who have entered the area. Salina and the Remainder of the HMA. In March 1967, there were 12,800 households in the city of Salina and an estimated 2,900 in the remain- der of the HMA. The number of households in Salina declined from 13,500 in 1960 to an estimated 12,450 in October 1965. The closing of the air base resulted in a decline from 2,725 households in 1960 to about 2,300 in October 1965 in the remaining areas of Saline County. The increase since 1965 has resulted from the in-migration of military dependents and some increase in the number of households in areas adjacent to Sa- lina. The following table presents trends in households in the HMA since 1960 and a projection to March 1969. 11 - Housing Market Factors Housing Supply As of March 1, 1967 there were approximately 18,800 housing units in the • Salina HMA. The current estimate is only slightly above that of October 1, 1965, when there were an estimate418,700 housing units in the HMA. The increase since 1965 is attributed to the construction of about 100 units. Inventory losses resulting from.demol'itions, conversions-out and other causes have been offset by an increase• in mobile homes. Between April 1, 1960 and October 1, 1965, the number:of housing units in the Salina HMA increased from about 17,300 to 18,700; a gain of 1,400 (8 percent). Residential Building Activity. Reflecting the deactivation of Schilling AFB, construction volume as measured ;by building permits totaled 35 units in 1965. At that time construction was limited to a few houses built on contract for owner-occupants. Improved economic conditions re- sulted in an increase to 70 units 'in 1966; the majority were custom- built homes priced above $20,000.•. The housing units authorized by build- ire permits since 1964 are summarized by type of structure in the follow- ing table. Units Authorized by Building, Permits by Type of Structure Salina,: Kansas, HMA 1964:-1967 • One Two Three or more Total Year unit units units units 1964 114 6 10 130 1965 34 - - 34 1966 . 62 2 7 - 71 Jan. to March 1966 5 - - - 5 1967 4 - 4 Sources: U. S. Bureau of the Census, C-40 construction reports. Local building inspectors. • • • - 13 - Post Office Vacancy Survey Summaries Salina, Kansas Vacant units November September February 1964 1965 1967 Residences 720 2,575 1,675 ,Apartments 390 740 590 Total 1 , 110 3,315 2,265 a/ Includes 550 vacant Capehart units which were held off the market; these are included in the total of 735 on-base units. These units were occupied by military dependents in February 1967. Source: Postal vacancy surveys conducted by the Salina postmaster. It is important to note that the postal vacancy survey data are not en- tirely comparable with the data published by the Bureau of the Census because of differences in definition, area delineations, and methods of enumeration. The census reports units and vacancies by tenure, whereas the postal vacancy survey reports units and vacancies by type of struc- ture. The Post Office Department defines a "residence" as a unit re- presenting one stop for one delivery of mail (one mailbox) . These are principally single-family homes, but include row houses, and some du- plexes and structures with additional units created by conversion. An "apartment" is a unit on a stop where more than one delivery of mail is possible. Although the postal vacancy survey has obvious limitations, when used in conjunction with other vacancy indicators the survey serves a valuable function in the derivation of estimates of local market con- ditions. Current Estimate. Based on the results of the postal vacancy survey, (adjusted for incomplete coverage and converted to census concepts) and on information obtained in the Salina HMA, it is judged that as of March 1, 1967 there were 2,300 available vacancies in the HMA, an over-all vacancy rate of about 13 percent. Total available vacancies included about 930 units available for sale and about 1,375 units avail- able for rent, indicating an 8.6 percent homeowner vacancy rate and a 19.0 percent renter vacancy rate. It is estimated that about seven per- cent of the available sales vacancies and about 22 percent of the avail- able rental vacancies lack one or more plumbing facilities. The current estimate of available vacancies reflects the large reduction that has occurred since the postal vacancy survey conducted in September 1965. The 735 Capehart units now occupied by military dependents have accounted • - 15 - in north and northwest Salina are in poor condition and the majority are not competitive with sales vacancies in other areas of the com- munity. Unsold Inventory Surveys. The weakness of the sales market which de- veloped in the early 1960's was illustrated by the FHA unsold inven- tory survey of January 1964. The 'survey covered nine subdivisions with five or. more completions and revealed that 43 percent of the 150 houses built speculatively in 1963 remained unsold as of January 1964. Of the 65 unsold houses, 40 had been on the market for more than six months. The most serious problem was in the lower price ranges; all but six of the unsold houses were priced below $20.000. Reflecting the reduced construction volume in 1964, the unsold inventory survey of January 1965 counted 73 completions in nine subdivisions with five or more com- pletions in '1.964. All were speculatively built and 26 percent had not been sold at the. time of the survey. As is indicated by the surveys of January 1966 and 1967, the effect of the deactivation of the air base has been to limit construction to a few houses in the high price ranges, most of which were presold. FHA Foreclosures. As of January 31, 1967, the Topeka Insuring Office had 680 acquired properties in the Salina HMA. During the month of January seven properties were acquired and 21 were sold, resulting in a net reduction of 14 properties. During 1966, the inventory of ac- quired properties declined by 104 properties from 798 to 694. The areas of greatest improvement were east of the U.S. Highway 81 bypass, where the total number of units on hand declined from 160 at the start of the year to 75 as of December 31, 1966. The sales prices of the acquired inventory range from $2,500 to $9,000 for units located in west and northwest Salina and from $13,000 to $19,000 for houses in the south section of the city. Sale prices of houses in other areas of the community vary within these two limits. The majority of the units are in good condition. Foreclosures were a problem as early as 1961 ; however, virtually all of the properties now on hand have been acquired since 1964. That the most critical period is over is evident from the fact that total fore- closures declined from about 500 in 1965 to 200 in 1966. Also, the dis- position of houses exceeded acquisitions during 1966 and the trend toward reducing the inventory -has continued into 1967. FHA and local sources are confident that, with the exception of one area formerly oc- • cupied by military households, improvement will continue to be reflected in the reduced rate of foreclosures and the increased disposition of properties during the next two years. - 17 - The Civic Center(Kansas R-26) project, a two-block area in the north cen- tral section of Salina, is bounded by Elm Street on the north, Seventh Street on the east, Ash Street on the south, and Ninth Street on the west. The demolition of 35 structures involving the relocation of about 60 families began in March 1967, and clearance will be completed by June 1967. The proposed re-use of the site is for a city-county office building, a public library, off-street parking, and open space for parks and recrea- tion. _ The Northeast Industrial Park (Kansas R-29) project is located on the northern fringe of Salina and is bounded by the Union Pacific Railroad on the north,. 0hio Street on the east, Elm Street and the Smoky Hill River on the south, and Fourth Street on the west. The project area contains approximately 220 residential units which are, for the most part, substandard or in a deteriorating condition and have been scheduled for demolition. The area will be used to promote industrial development. Public Housing There are no low-rent public housing .projects in the Salina HMA. There are 735 units of rental housing owned by the Department of Defense on Schilling AFB, presently occupied by families of airmen assigned to duty in Viet Nam. Disposal of these units will constitute a problem for the locality whenever there may be major changes in Viet Nam and other over-seas conditions affect- ing the location of airmen families. APPENDIX TABLES Table I Total Work Force Components and Employment by. Type of Industry Salina, Kansas, HMA, 1964-1967 (annual averages) January 1964 1965 19668/ 1966a/ 196781 Civilian work force 18_ 600 17,225 16,650 16,525 16,450 Unemployed 525 500 350 550 450 Percent of work force 2.8 2.9 2. 1 3.3 2.7 Employed 18,075 16,725 16,300 15,975 16,000 Agricultural 950 875 850 675 725 Nonagricultural 17,125 15,850 15,450 15,300 15,275 Wage and salary 14,750 13,750 13,525 13,350 13,450 Manufacturing 1 ,800 1 ,500 1 ,600 1,450 2,075 Food and kindred products 925 800 650 700 650 Other manufacturing 875 700 950 750 1 ,425 Nonmanufacturing 12,950 12,250 11 ,925 11 ,900 11 ,375 Contract construction 1 ,575 1 ,450 1 ,400 1 ,375 1 ,000 Trans. , comm. , & utils. 1 ,425 1 ,350 1 ,300 1 ,300 1 ,300 Wholesale & retail trade 4,225 4,100 4,150 4,100 4,050 Fin. , ins. , & real estate 625 625 625 600 625 Services 2,850 2,900 2,900 2,900 2,775 Government 2,200 1 ,775 1 ,500 1 ,550 1 ,575 Mining 50 50 50 75 50 All otherb/ 2,375 2,100 1,925 1 ,950 1 ,825 a_/ Preliminary data. b/ Includes self-employed, domestic workers in private households, and unpaid family workers. 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