Houses in Harrisonburg are selling more quickly and going for higher prices than in the past. The growth of James Madison University is sometimes cited as the main factor, but there’s more to it than that. WMRA's Randi B. Hagi reports, in the first of an occasional series on housing in our area.
Tensions between long-term Harrisonburg residents and college students are nothing new. Noise levels in neighborhoods, increased traffic, and the remnants of Greek house raves scattered on front lawns are common topics of complaint against students. Increasingly, so is the availability of housing in Harrisonburg.
According to James Madison University's Office of Institutional Research, since 2010, enrollment has grown by about 1800, to its current level of 20,798 students. At a recent 'Poverty Interrupted' panel in Harrisonburg, Shannon Porter, executive director of the nonprofit organization Mercy House, cited the last four or five years as an especially rapid period of enrollment growth.
SHANNON PORTER: During that time they have developed minimal housing. That has forced the student population into our community. It’s taking capacity out of the marketplace.
Of course, an increase of 1800 students in the last nine years affects housing availability. But Harrisonburg's population as a whole, including those students, has grown by more than 5,000 residents in that time, according to federal census estimates. So the students account for about a third of the city's total population growth.
SCOTT ROGERS: More people seem to want to move to this area than move out.
Scott Rogers, a real estate agent with the Funkhouser Real Estate Group, has been studying the local housing market for 12 years. And while he notes that the number of overall sales has been on a gradual upward trend since 2010, the pace of those sales has increased dramatically.
ROGERS: When homes are coming on the market, they're selling, going under contract much more quickly, which is keeping inventory numbers low.
From April 2018 to March 2019, houses in the city sold 22 percent faster than in the preceding year, according to Rogers’ April market report. Rogers says that, typically, developers would see that increased pace of sales and build new homes to sell or rent. But currently, Harrisonburg is at a bottleneck of high demand and insufficient new construction.
ROGERS: We’re big enough to be a great place for people to want to live, but we’re small enough to where it’s not necessarily sustainable for those regional or national builders to come in and start buying land and build. And so we’re kind of, in some ways, caught in the middle.
Charlottesville may be getting past their own bottleneck. The Charlottesville Area Association of Realtors reports that, after a few years of growth in the number of area home sales and decreasing inventory, those numbers have begun to stabilize. And while the median sales price continues to climb, it’s doing so more slowly - and houses are generally taking a bit longer to sell than last year.
The Charlottesville area does have a booming market for new construction. Jim Duncan, a realtor with Nest Realty, said that four large developers accounted for over half the single-family homes sold in the first quarter of this year in Albemarle County – and that proportion has been even higher in the last few years. In contrast, there is only one regional developer active in Harrisonburg: Evergreene Homes, which is building the Preston Lake development on the East end of town.
There are a number of barriers that prevent smaller, local developers from building houses more quickly: the rising costs of certain building materials, the cost of raw land, and the limited availability of contractors and subcontractors. And in many parts of the city, housing is already as dense as its residential zone allows.
Thanh Dang, Harrisonburg's assistant director of planning and community development, explains:
THANH DANG: How can they develop that property and still make their ends meet, pay all their bills, pay all their contractors and everything, will depend somewhat on the number of dwellings that they can fit on that property.
Dang’s office recently drafted a new zoning class: R8, or "small lot residential," which would allow some property owners to divide their lots and build a small house or duplex on the second lot. Harrisonburg’s planning commission voted unanimously in favor of R8; Dang said the proposal now goes before city council for approval on June 11.
But the number of dwellings allowed per acre isn’t just an arbitrary number: it corresponds with the capacity of nearby infrastructure, such as roads and water lines.
New construction on more than an acre must also remediate stormwater runoff. J.M. Snell, co-owner of Valley Renovators, says that can raise the construction price of each new house by around $10,000. There are a variety of best management practices to achieve that remediation, from expensive technologies such as underground cisterns to more affordable landscaping measures, such as rain gardens.
J.M. SNELL: The easiest way to manage or to improve the stormwater’s quality is to just store it, hold it. Let it run off of your acre, store it in the corner of your acre, give the nutrients a chance to fall out and drain slowly and be absorbed into the soil.
But landscaping like that takes up surface area, that otherwise could be used to build more houses - driving up the prices of the houses that do get built.
The more a house costs to buy, the more likely a prospective buyer is to choose to rent, instead.
Funkhouser's Scott Rogers explains:
ROGERS: So it is creating more of a demand on the rental market, which is then potentially making someone who is looking at buying a piece of land to build townhouses say, "oh my heavens! There's so much demand for rentals, why don't I just rent them instead?"