Cottage Grove EDA hears Maxfield Research housing study highlighting senior and entry-level gaps

Cottage Grove Economic Development Authority members heard key findings from a housing needs analysis by Maxfield Research on April 8, 2025, that identified strong demand for market-rate rental housing and a growing need for senior-oriented units, while noting substantial barriers to entry-level and deeply affordable housing.

Mary Bujold, a consultant with Maxfield Research, told the EDA that the study drew a primary market area including Cottage Grove, Woodbury, Newport, Saint Paul Park, Grey Cloud Island Township, Denmark Township and Hastings, and that roughly 30% of demand would come from outside that area. "Cottage Grove is definitely growing but at a decelerating pace," Bujold said, adding that household growth has continued even as population growth slows in many Twin Cities suburbs.

The study found strong demand for market-rate rental housing, persistent interest from multifamily developers and generally rising rents. Bujold said new construction has slowed relative to the 2010s and that affordability programs are constrained by high land and construction costs, tight financing and competitive tax credit processes. "Affordable housing is the most difficult to develop ... due to high development costs and significant financial gaps," she said.

Why it matters: EDA members and staff said the study will inform future zoning and incentives. The city’s staff said they will reexamine zoning and density rules to better match identified needs and to encourage a broader mix of housing products.

Key findings and details - Market area and growth: The study treats housing demand as fluid within a primary market area; Bujold noted Cottage Grove’s growth has been steady but slowing compared with earlier decades. - For-sale and rental demand: The presentation stated projected demand (figures reported by the consultant) of roughly 1,900 for-sale units, 933 rental units and about 1,023 senior units in the multi-year planning horizon referenced in the report. The consultant described these as multi-product needs across ownership, rental and senior segments (the transcript contains corrupted date formatting for the exact planning increments as presented). - Senior housing: Demand for assisted living and memory care is increasing with an aging population, but operators face caregiver labor shortages that limit the ability to use existing beds even when demand exists. Bujold said average entry to assisted living or memory care has shifted to the early–mid 80s in recent years and that active-adult and single-level products (villas, cottage-style homes, twin homes) will be in demand. - Entry-level gap: Bujold and EDA members discussed the difficulty for seniors trying to move laterally into lower-cost villa or cottage products because of a pricing gap (example cited: villa prices often in the $450,000–$500,000 range versus many sellers’ proceeds in the $300,000–$350,000 range). The consultant noted some smaller, attached products (quad or cottage concepts) historically sold quickly at lower price points but are not widely produced today. - Barriers: Land acquisition costs, rising material and labor costs, tighter lending standards and state-level code changes were cited as constraints. Bujold also noted that rising market rents push up ‘‘affordable’’ rents that are indexed to market benchmarks, increasing cost-burden among lower-income households.

Discussion and options raised - Product types: The consultant and several EDA members discussed cottage/quad-style for-sale units, single-level condominiums or cooperative senior housing as potential tools to offer lower-priced new housing without large subsidy. - Attracting builders: Bujold said some national builders (she cited interest from David Weekley) have eyed the Twin Cities market, but national firms often seek faster-growth markets. She suggested continuing to court both regional and national builders; EDA members said regional builders remain important. - Policy levers: EDA members asked about local zoning, minimum lot sizes and design/permitting fees as areas the city can control to encourage different product types; Bujold urged exploration of adjustments to zoning, lot standards and permitting to reduce development costs.

What the EDA will do next Mayor Bailey (president of the EDA) said staff will review zoning and density rules and that the study will guide upcoming work on development incentives and site targeting. The EDA did not take a formal vote tied to the study at this meeting; the study was presented and discussed for planning purposes.

Ending: Members said the study will inform staff’s work and future agenda items; staff noted the city will revisit zoning and incentive options and that the study will be used to guide development outreach and priority-setting over the coming years.