There are many factors at play in the housing crisis; many of them beyond the control of local and state governments to affect. But there is one factor in their control – building more housing.
One doesn’t need a degree in economics to know that housing is a significant issue here locally, in Virginia, and across the nation.
However, fixing the issue will require a team of economists, developers, politicians, activists, journalists, and a much-more-informed citizenry to address a housing crisis whose root causes are as numerous as the heads of the Hydra from Greek lore.
Here are just some of the Hydra-like heads this issue includes:
- A Dearth of Housing: Over the past two years, the number of new-home starts has grown at a healthy rate. However, new-home starts cratered in 2007, and we have yet to fully recover from that loss. A report by Moody’s Analytics found that “Despite incrementally higher single-family housing stock coming online in particular over the past two years, Moody’s Analytics estimates that there is still a total housing deficit of 1.5-2 million units with a shortfall of 1.1-1.2 million single-family housing units.” The following chart from the Federal Reserve Bank of St. Louis of the shortage of housing in Virginia shows the Commonwealth isn’t bucking the national trend.
Locally, we see the same pattern of declining inventory in Spotsylvania and Stafford counties.
- Rising Housing Costs: The July report on housing in the area served by the Fredericksburg Area Association of Realtors found that “The regional median home price was up again in June, with all but one locality in the FAAR footprint seeing increases. The median sold price settled at $474,093 this month compared to $450,000 in June of 2023, representing a more than 5% year-over-year increase. Units sold were down 14%, coming in at 537 compared to 625 units sold last June. Total sold dollar volume was down nearly 12%, posting approximately $271.4 million in sales for June of 2024 compared to $308 million in sales last year.”
- Increased Percentage of Population Is “Cost Burdened”: A report published in December 2021 by the Joint Legislative Audit and Review Commission, or JLARC, found that 29% of Virginia households are cost burdened, meaning these households spend more than 30% of their income on housing. Nationwide, that puts Virginia in the middle of the pack. While that may not sound horrific, it masks a more challenging problem. Cost-burdened households are more likely to be renters, and more likely to be cost burdened, as the following chart from the JLARC report shows.
- Increasing Percentage of Population Is ALICE: Cost-burdened is one measure of the struggles people have securing housing. Examining the numbers of people classified as ALICE (Asset Limited, Income Constrained, Employed) households is another. According to recent United Way report about ALICE in Virginia, 40% of households are ALICE households. These are working families who do not make enough money to cover their day-to-day expenses. And they are being disproportionately affected by spiraling housing costs. “Housing costs are on the rise in many parts of the state, and the impact is greater for those who were already struggling financially. According to the SHED, in 2022, 43% of households below the ALICE Threshold in the Virginia reported that their rent or mortgage had increased in the prior 12 months (compared to 31% of households above the Threshold).” This has a profound impact on households with children (See graph below.)
- Escalating Rents: Recently, the Advance has spoken with renters in our area who are seeing their renewal contracts come with bumps of $100 to $250 a month. Their experiences are common in this area. A recent Washington Post analysis found that rents in Spotsylvania (average of $1,772) are up 5.5% since 2023, and 34.9% since 2019; in Stafford (average of $1,862) they are up 6.6% since 2023, and 36.1% since 2019; and in Fredericksburg (average of $1,770) they are up 5.5% since 2023, and 29.7% since 2019. Like single-family housing, there is a dearth of apartments available to rent, which partly explains the jumps. But there’s growing concerns of price-fixing. An investigative report by Pro Publica found that “While supply and demand, high mortgage interest rates and other economic factors are certainly at play in rising rents, … another key factor [is] a rental pricing software owned by real estate tech firm RealPage.” That is leading to investigations by some State AGs.
Affordable Housing Is the Key
The list above just scratches the surface of the host of issues (other significant factors include local zoning laws, and growing income inequality) facing people looking to buy or rent. So it’s important to be specific about what aspect of the housing crisis communities wish to tackle.
That’s the message that Randy Weaver, president of the Fredericksburg Area Association of Realtors, delivered to Fredericksburg Planning Commission chairman David Durham recently.
In a letter dated July 3, 2024, Weaver expressed to Durham FAAR’s “strong support for affordable housing initiatives in our community…. . Rising housing costs, stagnant wages, and limited availability exacerbate this issue, leaving many vulnerable populations at risk of homelessness or housing instability.”
In order to address availability, local governments have to make it easier for developers to build more.
“The primary reason housing is so expensive in Virginia and elsewhere,” wrote Adam Millsap in an article for Forbes, “is because we do not build enough of it. Research shows that zoning and land-use regulations artificially increase the price of housing by making it more expensive to build.”
If we’re going to address that situation, then Virginia — and its localities — are going to have to be intentional about clearing the way for developers to construct affordable housing. That means building for the most-vulnerable populations of people who are most likely to be shut out of the housing market and find themselves homeless.
It also means creating the conditions to build starter homes, and more-affordable apartment units that provide opportunities for those on the lower-end of the economic system to find some stability in their lives and begin to build the generational wealth that home ownership makes possible.
To accomplish this, we must become better informed about these issues as a community.
We can do that by volunteering with organizations that serve the most-vulnerable in our communities — local school systems offer support to homeless students and welcome support (find the McKinney-Vento contact person in your district); local nonprofits that work with people facing housing struggles, like Loisann’s Hope House, Habitat for Humanity, the Brisben Center, Micah Ministries are welcome of contributions — whether financial, in-kind, or of time.
To gain a better overview of the issues and problem, the best move is to attend the Regional Housing Summit scheduled for October 24.
There, policymakers, government leaders, developers and others will continue their work of trying to craft a path forward to create more-affordable housing in the region.
Some factors are difficult to control — inflationary pressures and its incumbent issues (rising ALICE population, stagnant wages, and growing income inequality) are largely out of the realm for local and state governments to do much about.
But there is one place where local and state governments can affect real change: Making it much easier for developers and home builders to do what they do best — build. On that front, Virginia has a long way to go to clear a path for launching the type of new building that can ultimately slay the Hydra.
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