Demand for housing is soaring in Danville. Both the city and developers are responding.

Danville needs to see 80 houses built every year for the next few years to meet current housing demand.

And with the Caesars Virginia casino resort coming in 2024 and the Pittsylvania County mega site working to attract a major developer, the need for housing will only increase.

There’s a housing shortage across the board in Danville and Pittsylvania County, as well as surrounding localities. Local leaders convened a housing summit last summer with developers and construction companies to figure out how to address the growing shortage.

Their fears are twofold: that without a sufficient supply of homes for new employees, the region could lose out on large economic development prospects. And that if the young professionals Danville has been working so hard to attract can’t find affordable places to live, they’ll leave.

There have been hopeful signs in the seven-plus months since the summit, but leaders say there’s still a great need for construction of new homes.

According to a housing demand analysis conducted by Ken Danter, founder and president of real estate consultant The Danter Company, the region can expect to see 3,900 new jobs arrive by the spring of 2024.

With those jobs will come a need for 1,536 more apartments and 234 more single-family homes — on top of a pent-up demand for 760 apartments and 606 single-family homes.

Danter, who presented the findings at the summit, warned that the region has already moved beyond “Field of Dreams” and its “If you build it, they will come” mantra.

“Folks, they’re already here,” he said.

Housing has become a top priority for Danville, and the shortage is on the minds of many city officials daily, said Susan McCulloch, director of the city’s housing and development division.

“Some of us dream about it,” she said. “If anyone likes a challenge, this is a great opportunity. And I do enjoy a challenge.”

How did we get here?

Several factors have coalesced to create the housing shortage in Danville. A big part of the problem is lack of construction workers and contractors.

The pandemic wasn’t a huge factor in this, said Kenny Gillie, director of the city’s community development department, which includes the housing and development division.

The problem actually stemmed mostly from recessions in the 2000s, which hit the construction industry hard, he said.

“New home construction basically stopped. People couldn’t afford to put up houses,” Gillie said. “Then the economy picked back up, but the construction industry didn’t. It’s very hard now to find contractors, even just to get somebody to go do work at your house.”

Many colleges are trying to encourage trade and manufacturing programs, he said.

“But even if you get people in those programs, it takes three, four years to get them trained, maybe five,” Gillie said.

On top of that, Danville had a very old housing stock, and many homes became uninhabitable because of lack of maintenance and needed to be torn down. But they were never replaced, he said.

And until recently, there wasn’t a huge need for housing in the city, said Larissa Deedrich, executive director of the Danville Housing Redevelopment Authority, which works to provide affordable housing.

Only now, as industry and a substantial number of jobs are coming to the area, is housing really in demand, she said. And, she said, it’s one of the first things that companies look at when deciding where to locate, because they want to know that their employees will have places to live.

“The community is almost trying to play catch-up,” Deedrich said. “I think in hindsight, the city probably should have been developing houses years and years ago. But then again, when there weren’t jobs here, you didn’t want to have houses sit vacant either.”

James Buckner, city councilman and a Realtor with Wilkins & Co., one of the primary realty companies in the Dan River region, said he believes that the pandemic did play a role in the housing shortage, but in another way.

“I think folks realized that they could work their normal job and live anywhere in the world, and I think Danville and Pittsylvania County, and surrounding areas like Halifax County and Henry County, were attractive because this is still one of the cheapest areas in the country to live,” he said.

Home prices have soared in Danville recently, but they’re still relatively low when compared to other parts of the state, he said.

“We get a lot of flak about our utility costs being high, but our property taxes are still extremely low for the state of Virginia,” Buckner said.

And it’s not just one type of housing that’s needed, Deedrich said. The shortage extends to a wide variety of housing types.

“There’s certainly a need for affordable housing, which is what we specialize in, but there’s also definitely a need for what I would call workforce housing, market-rate houses and even houses for higher income,” she said.

Danville is not alone in facing this issue. Wytheville, for instance, is hosting a housing summit this month to address current and future housing needs in Southwest Virginia. Housing developers, builders, investors, bankers, local leaders and property owners are invited.

“If you contact folks in Roanoke, if you contact folks anywhere in Southwest Virginia, you’re going to find that they’re in the same boat,” Gillie said.

But Danville may be feeling the effects of the shortage more fully because of its considerable revitalization, especially as new jobs continue to come to the area.

The city’s growth has also resulted in a lot of real estate transfers, Gillie said.

“The market is extremely hot,” he said. “That is a function of Danville’s growth, with all the industries coming, and the casino bringing people in.”

Historically low interest rates also contributed, Gillie said, leading to a spike in home buying in Danville — and around the country.

According to records from Wilkins & Co., 631 homes have sold between Aug. 18, 2022, the date of the housing summit, and April 11, 2023.

Buckner said this is far more than usual in that length of time.

Plus, home prices have increased substantially, as much as 75% in areas like the Schoolfield district, where the casino will be, Gillie said.

“We haven’t had new construction, but we’re seeing those house prices just really jump,” he said. “It’s a concern that this may price people out of the market” — another reason the city wants to increase the availability of affordable housing.

What is Danville doing about it?

In the past, before this shortage, developers would usually approach the city with an interest in a particular piece of property, Gillie said. But now that Danville needs housing so desperately, the city has been trying to recruit developers, often reaching out to them first, he said.

That was one of the main goals of the August summit. Representatives from Danville, Pittsylvania and surrounding areas even presented specific properties in each locality that they’d like to see developed.

The city has reached out to developers in many other localities, including North Carolina and Northern Virginia, Gillie said, to let them know about development opportunities in Danville.

McCulloch said there has been a lot of increased interest from developers in the months since the housing summit.

“The word has gotten out, which is great,” she said. “We’ve gotten lots of interest in multifamily [developments]. A lot of it is still in the pre-planning process, but we are hoping to hear from single-family developers as well.”

Danville has also changed some development regulations to make it easier for construction to happen.

One of the concerns that was raised at the summit, Gillie said, is that the city — unlike the county — mandated that developers install curbs and gutters, which adds expense to a project.

The city changed the requirement for new development, he said.

On top of that, the city is in the early stages of creating proposed incentives around housing, for developers, tenants and homebuyers, McCulloch said. This is a somewhat uncommon practice that was recommended by Danter.

“At today’s construction costs, entry level homes (<$300,000) will be difficult to deliver without special incentives to buy down the cost of construction,” according to Danter’s 2022 housing strategy report.

At a March 21 city council work session, McCulloch presented a proposal for real estate incentives for developers or new construction that could include real estate tax grants.

The proposal suggests that the incentive apply for up to 15 years for single-family developments and up to 10 years for multifamily developments, and that it would carry over to the next buyer or homeowner if the property was sold.

It also suggests permit fee grants and waivers, as well as possible incentives for home buyers and renters such as down payment or deposit assistance grants.

“Council was incredibly supportive” of the proposal, said McCulloch. “Now we start working on changes to take back to them on a few ordinances, and they will hopefully fund the program ideas.”

McCulloch said she’s not sure what will be finalized, but it’s an exciting process because it is unique.

“I don’t think a lot of localities have done this, offered incentives for real estate development,” she said.

And while changes to encourage development are helpful, some say there’s still a long way to go. There’s been a bit of a stalemate since the housing summit, Deedrich said.

“The city is still working on putting together and improving some of their zoning regulations, putting together incentives for developers, and that’s a long process,” she said.

Ongoing projects

One area that’s been targeted by the city for housing development is a swath of downtown that encompasses 110 separate parcels between Monument Street and Berryman Avenue.

The city issued a request for proposals in February and was pleased by the response, McCulloch said. City officials have been interviewing real estate owners, architects, developers and construction companies are still deciding whether to go with any of the submitted proposals.

The area “has a chance to be a really engaging anchor for the community,” she said.

“When I was living in Pittsylvania, and I was trying to find the quickest route to Danville City Hall, my GPS took me down Monument Street,” McCulloch said. “That street is the first impression of the city on many occasions.”

This area could see multifamily and mixed-use units, as well as single-family developments. Neighbors are excited to see it happen, McCulloch said, as many blighted and dilapidated homes have been demolished in preparation for development.

Another project, this one by Danville-Pittsylvania County Habitat for Humanity, will create a neighborhood of more than 25 homes on Seminole Drive. Habitat Village North will be designed to give families decent, affordable housing at a time when that can be hard to find in the area, said Kim Baldridge, executive director of the local Habitat affiliate.

“There’s a lot involved in this so families can be set up on their own, can sustain themselves and continue that into future generations,” Baldridge said.

The first four families have already been selected for the neighborhood, she said, and a construction coordinator is working on these four houses with a small team of volunteers.

But this project has also felt the effects of the shortage of skilled labor, Baldridge said.

“[The construction coordinator] is having a hard time keeping people on his staff to do the work,” Baldridge said. “We had about four or five regular construction volunteers, and now we’re down to about two.”

Baldridge said she’d like to see the entire neighborhood complete in under 10 years — between five and eight years, ideally — but construction shortages could slow that down, she said.

Still, she said she’s optimistic that the neighborhood will fill a large need in the community.

“We can do this efficiently and cost-effectively, and that’s a better fit for the community than renovating old homes, which can be very expensive,” she said. “Obviously, there’s a huge need for housing in the area. Even before the casino comes in, before Tyson’s came in, before all these things that are coming.”

High stakes

Increasing the housing stock in Danville is important before the casino and other big industry comes to town — but it’s also important to accommodate residents today, Gillie said.

“We’ve had many people interested in the apartments downtown, which is great, because it’s helping to fill some of the need,” he said. “But the single-family home construction hasn’t been there.”

This is a problem because the city wants to hang on to the young professionals it has attracted, who typically move into River District apartments — at least for a time.

“When you want to step out of your apartment and go into a home, where’s that starter home for you? We don’t have that supply available,” Gillie said. “A lot of people say they like Danville and want to stay, but where are they going to go? You don’t want to live in an apartment forever. We’re trying to make it so that they can stay.”

Another factor to consider is the increase in Airbnb projects in the area.

“We’re seeing probably 20% of sales are going to folks buying properties to make into Airbnbs,” Buckner said.

He didn’t attribute the burst of these projects to anything specific, other than the trendiness of short-term rentals. “Everybody thinks they’re cutting-edge,” he said.

The Airbnb factor is something of a wildcard. In some ways, converting existing homes into Airbnbs presents another obstacle; in others, it presents a solution, Buckner said.

On one hand, Danville has a great need for temporary housing, Buckner said, especially for people like the Caesars Virginia construction crews, who are only in town for months at a time.

On the other hand, there’s already a shortage of homes for permanent residents, and converting houses into Airbnbs decreases the supply further.

“It is a concern, because a home that could have been used as a single-family home is now being taken off the market, but there’s not something being built to replace it,” Gillie said.

Danville’s most recent Airbnb project, VANTAGE Art Flats, was unveiled March 20, though it avoids some of these concerns because it was built specifically as a short-term rental project and didn’t take any single-family homes off the market.

VANTAGE, which is on Craghead Street in the River District, includes nine one- and two-bedroom Airbnb units. It’s the latest project by Danville-based developer Rick Barker, who is credited with the redevelopment of much of that stretch of Craghead.

Despite these challenges, city officials remain cautiously optimistic about fixing the housing shortage. “With the right tools, it is attainable,” McCulloch said.

One big factor in Deedrich’s optimism is the level of support that these efforts have received, she said.

“Since I’ve been here, I’ve seen such a huge outpouring of support from the city, from developers, from the community at large,” she said. “I’m very optimistic. You have to take off one bite at a time, but we’re making huge strides.”

Gillie described himself as more of a realist. If the mega site lands a large company, the demand for housing will double or triple, he said.

The mega site could draw workers within a 40- or 50-mile radius of the area, so he said he believes that people will be able to find housing within the region, though Danville would love to see new employees move to the city itself.

“I don’t necessarily know that we’ll be able to meet all the demand, but we’ll do our best,” he said. “I’m optimistic in a way, but I’m also a realist.”

Grace Mamon

Original Article: Demand for housing is rising in Danville. The city & developers are responding.- Cardinal News