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Realtors say zoning can help market create more affordable housing

Officials with the Charlottesville Area Association of Realtors say more affordable housing could be built in the region if local governments adjust zoning regulations to allow more construction and higher density.

CAAR leaders say planned growth areas need to be increased in size and zoning changes made to allow new construction that will meet the needs of moderate-income residents, especially in the wake of societal changes fostered by the pandemic.

That, they said, will ease the economic pressures that drive the cost of affordable homes higher.

“When we talk of traditionally available affordable housing, we’re usually talking about housing in urban areas where people work because they need to be geographically located near their jobs,” said Quinton Beckham, CAAR president and the president of Keller Williams Alliance. “But changes brought by the pandemic give us the opportunity to place people in communities, in homes they can afford, that may not be right in the center of town, keeping more affordable homes affordable.”

Beckham said housing developments that provide easy access to urban centers and have access to broadband and services such as grocery stores could be designed to add affordable housing in the market.

“If we can leverage this and get help from municipalities and local governments by making it simpler and less expensive to get approval, you have an opportunity to create the space you need,” Beckham said. “People have embraced virtual work and we’ve seen geography for buyers expand. They are no longer limited to being near the office. What was once location, location, location is now location, location, broadband.”

Central Virginia’s housing market is in an upward cost spiral. Sales prices are increasing, the number of homes for sale is decreasing and there is little new construction for lower-income residents.

Home sales surged 23% in the last three months of 2020, according to the CAAR fourth-quarter report issued last month. The demand created rapidly rising home prices that put the median sale price across the region at $348,050. That’s a 13% increase from the same period in 2019 and a hike of nearly $40,000.

In Albemarle County, the median price of a home — the price point at which there were as many houses that sold for more as sold for less — was $420,000. In Charlottesville, the median price was $403,750.

In Central Virginia, Fluvanna County had the most affordable median sale price, at $275,000.

Meanwhile, there were only 671 homes for sale at the end of the fourth quarter in the region, which includes Greene, Fluvanna, Nelson, Louisa and Albemarle counties, as well as Charlottesville. That is about half of what was on the market at the end of 2019.

Beckham said the shortage of homes for sale drives prices up — a home valued at $250,000, for example, may fetch $300,000.

“It drives the prices higher for existing homes so that there are more homes being sold in the $300,000 and $400,000 categories and fewer homes available in the $200,000 category,” Beckham said. “One of the things we want to see is a way for people who can only afford a $250,000 home to be able to buy a $250,000 home.”

Lisa Sturtevant, chief economist for the Virginia Association of Realtors, said having a variety of homes at a variety of price points makes housing affordable across the economic spectrum.

“Having homes in price ranges that different buyers can afford is good for business. Having apartments and other rental properties that are affordable so people can save money to buy a home, that’s a good idea, too,” she said.

“Here in Northern Virginia, we’re talking about people in income ranges of $80,000, $90,000, $100,000 who can’t find housing they can afford. They have to rent but rental properties are scarce and that raises rents to where rents are not affordable for those with lower incomes.”

“Lower income” is a relative proposition. According to U.S. Department of Housing and Urban Development figures, a person making $52,600 in Charlottesville is low income based on HUD’s estimation of a $93,900 median family income.

A person earning $19,750 is considered extremely low income for the city and a person earning $32,900 is considered very low income, the HUD figures show.

The average salary for a Charlottesville school teacher, according to, is about $57,000 a year. Using the website’s mortgage calculator, the teacher would qualify for a $200,000 mortgage with no money down.

But Charlottesville’s median housing price is $403,750, requiring an annual income of more than $101,000 to qualify for a mortgage, according to the mortgage site. Albemarle County’s median price would require an income of more than $107,000 in this scenario.

The figures are simplified. Actual lending and sales practices differ depending on individual circumstances, including down payments, the website notes.

“As a rule of thumb, mortgage lenders don’t want to see you spending more than 36% of your monthly pre-tax income on debt payments or other obligations, including the mortgage you are seeking,” the website states. “That’s the general rule, though they may go to 41% or higher for a borrower with good or excellent credit.”

CAAR recently wrote a policy to support expanding growth areas in Albemarle County and other jurisdictions and adjusting zoning to allow for smaller lot sizes and an increased number of homes.

“Our construction of homes in these lower brackets has been stymied and has not kept up for the past decade,” Beckham said. “Since we have so many more homes growing in price point, it tells us that the way we have forced developers to build has focused on price points in the upper deviations.”

Sturtevant said the costs associated with development can make it financially infeasible for developers to build homes in the $200,000 to $300,000 ranges.

“The price point to build rentals or affordable housing — the cost of materials, the cost of land, the cost of government regulation and fees — make the housing cost so much to build that it can’t be rented low enough for someone to afford it,” she said.

Sturtevant said relaxing fees and some restrictions for developers could spur builders to create more homes in lower price brackets.

“There are ways for the private sector to create more housing options that are affordable to people in the moderate income range, ways that don’t need any government subsidies,” she said.

Beckham said the millennial generation is beginning to settle down, making the time right for changes in land use plans.

“We have an entire generation that has stopped being couples and singles and now have families. They are searching for homes to raise their families and they are the most competent with the technology that makes expanding geography available,” he said. “We have an opportunity to create more affordable housing in places that are perfectly accessible, have services and are not packing dense housing on dense housing.”

Sturtevant said the current market, with its high demand and low supply pushing up housing costs, could turn around if supply is increased in the more affordable housing range. Beckham agreed.

“The price ladder, where prices are driven up, is all about pressure. If you reduce the pressure, that will stop the march from the $100,000 house selling for $200,000, the $200,000 becoming $300,000 and the $300,000 becoming a $400,000 house,” Beckham said.

“In the next 12 months, I would love to see a move to allow some of these developments to actually happen,” he said. “I believe we have developers and investors who would embrace that because we have a new generation coming.”


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