ANALYSIS: Fredericksburg Has A Housing Problem - Now, We Know Exactly How Bad It Is
By Martin Davis
EDITOR-IN-CHIEF
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The Fredericksburg Association of Realtors released its 2024 housing report on Tuesday, and it reflected the same steady drumbeat FAAR’s previous monthly housing reports over the past year have banged out.
Too many buyers, too high interest rates, too few affordable units. (The full press release and accompanying graphic appear at the end of this article.)
The affordability issue is not just academic in this area. It’s keeping first-time buyers from buying homes — the single greatest vehicle most people have to build wealth. And while demand remains strong, the long-term consequences of failing to address this shortage could prove damaging to our economic lives, our educational lives, and our business lives.
Only recently have organizations begun to talk in more than generalities about the problem. In 2023, the George Washington Regional Commission (GWRC) launched the first Annual Regional Housing Summit. The idea was to bring together stakeholders in the housing industry to talk about the issues they see and face, and to explore possible solutions.
Chip Boyles, who serves as executive director of GWRC, told the Advance that this summit has a more long-range focus to the problem. The immediate answers fall to the local jurisdictions.
“The more immediate results have to come from the local governments,” Boyles told the Advance. “We are trying to plant those seeds for them to take action.”
Knowing what action to take, however, is difficult when there is no quantitative study of the housing crisis in this area to help leaders understand the scope of the problem and guide their thinking.
That changed on Tuesday when FAAR also released the Fredericksburg Area Housing Gap Analysis.
2,400 Units Needed Every Year to 2050
The gap study’s executive summary puts the extent of the problem front-and-center. Slide 2 reads:
To put an even finer point on the problem, the study found that today only about 8% of homes for sale are priced at or below $300,000. Just over four years ago, in 2020, 45% of homes had price tags of $300,000 or less.
Slide 9 demonstrates graphically how quickly the number of lower-priced homes has fallen, and higher-priced homes has risen.
The report doesn’t stop there, however.
When one breaks out families relative to the region’s Area Median Income (AMI), the impact on the very poor is obvious, but so, too, is the way that the housing shortage is creeping up the income scale.
The topline take-away is that those families whose incomes are between 50% and 80% of this region’s AMI face a housing shortage of nearly 10,000 units.
Just over 4,800 of these families are part of our “core workforce,” or people who live and work in the Fredericksburg area, according to Kim McClellan, Public Policy Director, Fredericksburg Area Association of REALTORS®. The non-core workforce includes those who commute.
But even among those living at or above AMI, the shortage of housing is becoming an issue.
‘Cost of Land Cannot Be Discounted’
The shortages are clear, but so, too, are the problems associated with addressing affordable housing. For McClellan, the “cost of land cannot be discounted.”
One solution that was discussed at the last housing summit was leveraging community land trusts. Simply said, an entity such as a nonprofit owns the land and builds an affordably priced home on it. The home is then sold to a buyer, whose mortgage covers the cost of the house. This buyer then pays $100 a year to lease the land under a 99-year lease, according to the Virginia Statewide Community Land Trust website.
It’s not the only solution. McClellan also referenced “cottage court” homes. Though these have been around for roughly a century, they’ve become more popular over the last 10 years, according to Robert Steuteville, who is director of publications at the Congress for the New Urbanism in Washington, D.C.
“Cottage courts are generally smaller houses,” Steuteville told the Advance, “that are grouped around a small public space that is useable for all of the cottages. Like a common front yard that can used for social purposes.”
Because the cottages, which tend to be smaller in square footage than a traditional single-family home, are on a single lot, no one home is bearing the land cost, which drives the selling price for each unit down considerably.
“If you can take a single lot and group eight cottages on it,” Steuteville said, it’s not only nice socially and a nice environment, but it also reduces the land cost for each unit. Then you can factor that in to get a smaller house with a smaller number.”
Also helping reduce land costs is the fact that cottage homes have no driveway or garage, but rather group parking in back of the buildings.
A Thousand Flowers Blooming in Waynesboro
Addressing the affordable housing crisis will not come with a one-size-fits-all solution, says Boyles. Rather we need to let “a thousand flowers bloom.”
That’s precisely the approach that Waynesboro’s new mayor, Kenny Lee, is taking to the problem of affordable housing in his community.
Sitting roughly 45 minutes west of Charlottesville, Waynesboro has become something of a bedroom community to the hometown of Virginia’s flagship university.
“We have had a lot of development going on now for the last 3 to 4 years,” Lee told the Advance. Even at that, “most folks are saying we have a 1% vacancy rate, which is not good.”
The new builds in Waynesboro start at $250,000 or so, according to Lee, but rise to $600,000. While those numbers may sound good to people in and around Fredericksburg, they are worrying for many in Waynesboro whose salaries are not enough to buy their way in to these new places.
“We focus on a two-income family working at Walmart,” Lee says, “that can’t afford that new build or a new rental.”
He notes that’s there’s “not a cure-all” for this problem, so the city is “trying to find ways to do this in a measured approach.”
Currently, the city is developing both land trust housing and cottage court housing. There are plans in place now to build a minimum of four to five homes on a land trust site.
And on Monday evening, the city council passed an ordinance to clear the way for cottage court housing.
The ordinance that altered the zoning laws defines common court housing as:
a group of small detached houses, attached houses, townhouses (limit of 4 attached units per structure and up to 50% of development), or tiny homes fronting around a common space.
And it explained the advantages of cottage court housing thus:
The purpose of the cottage court housing type is to promote infill development and redevelopment within established neighborhoods that is consistent in style and materials with existing surrounding structures. By situating many housing units in small spaces, cottage courts are an efficient use of land and cost-effective in delivery of city services. The cottage court housing type encourages innovative site planning and variety in housing types to meet the needs of diverse populations, including young professionals, older adults and empty nesters, and small families. Cottage court housing is pedestrian-scaled and community-oriented. It provides developers and property owners the flexibility to develop projects that strengthen existing neighborhoods
Lee noted that the council also acted to ensure that any cottage court housing built would be in line with the look of the community in which it’s developed. Each project requires a conditional use permit, Lee says, “so each instance of a request must come before the planning commission for a CUP.”
Currently, Lee says, there are no projects in the pipeline. Rather, Lee said, the ordinance “is an initiative to open that door.”
Intentionality
This kind of forward-looking thinking is what Danae Peckler, who is a preservationist on staff at Historic Fredericksburg Foundation Inc., would like to see here in our region.
“It would do well for planning and council to be proactive on something like cottage courts, and not just being denser and taller,” she told the Advance.
Currently, she is concerned that the area is seeing luxury condos being built that aren’t helping ease the cost-burdens of those who can’t afford to live in those types of buildings.
She’s also worried about “displacement” of individuals, “Especially older people who have been in their homes,” she says, because they are vulnerable to rising property taxes.
“We operate off of trends and not facts,” she said.
However, she is encouraged by some recent moves.
“Props to Planning staff,” she told the Advance, “for the infill/teardown analysis & memo presented to the public/planning commission a few months ago. It covered the topic clearly & showed awareness. More of that kind of data analysis and discussion helps build trust.”
The Time Is Now
The Fredericksburg Area Housing Gap Analysis gives political leaders, policymakers, and everyday citizens a quantifiable analysis of just how bad the situation with housing has become in this area.
Thanks to the efforts of the George Washington Regional Commission, those with a stake in the housing industry are having the conversations about the issues we confront and learning about potential solutions to explore.
It’s up to localities, however, to start acting on the affordable housing needs. And the needs are acute and immediate. As the gap analysis revealed:
There’s an immediate 4,000 unit gap for extremely low-income renters
Some 33,500 households face housing costs outside their budget
Many public sector workers are priced out of renting and buying
Current pace of housing production is not enough to meet needs of today and tomorrow
In fact, the analysis finds we need 11,500+ new homes by 2030, and 35,300+ by 2040.
“We are so far behind the affordable housing curve,” Boyles told the Advance.
Our region needs to not make the perfect the enemy of the good. That’s the lesson from Waynesboro. The city sees the challenge before it and is acting proactively to address it. Success is not guaranteed, but the city is trying. And it will adjust as developments roll out and they see what is and isn’t working.
It’s past time for our region to get moving.
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Important to note that this is a regional, multi-jurisdictional study. Of the jurisdictions included in the study, the City of Fredericksburg is the tiniest (less than 11 square miles); is already the most densely populated; and whose housing market forces (such as, costs and desirability) are least able to provide affordable housing.
This is an excellent analysis, but it is also safely regional in scope. If anything is going to come from this, individual jurisdictions need to do the hard work of developing action plans.