WINCHESTER — A new housing study presented to City Council on Tuesday night shows that Winchester has no shortage of homes for the middle class, but lacks adequate housing options for low-income and high-income individuals and families.

Council commissioned the housing study late last year to get a better handle on the types of residential developments needed in the city. The 157-page report was prepared by RKG Associates of Washington, D.C., at a cost just shy of $70,000.

"What the study is telling us is that we do not have the supply to meet the current or future demand [for households on the low and high ends of the economic spectrum]," Winchester Development Services Director Shawn Hershberger said in an interview prior to council's Tuesday work session.

The study used information from Zillow, local Realtors and other sources to determine the average costs of Winchester's existing housing inventory. According to the U.S. Department of Housing and Urban Development (HUD), only 30% of a household's income should be used for mortgage or rent payments. Anything above 30% means the resident is cost-burdened; anything below 30% means the resident could afford a nicer home.

According to RKG Associates, four-person households earning HUD's current average median income (AMI) of $83,400 in Winchester and Frederick County should have little trouble finding a home in their price range. That's because 30% of their incomes could comfortably cover monthly rent or mortgage payments of $2,000 to $2,100.

For homeowners, that level of monthly payment translates to a single-family house valued anywhere from $263,756 to $397,627, depending on how much downpayment was made, the type of financing used and whether the structure is detached or a townhouse or condominium. According to the study, Winchester currently has 734 single-family homes valued between $263,756 and $397,627.

Renters who earn the current AMI of $83,400 per year have even more options. The study states there are 2,560 rental units in Winchester with monthly payments that align with HUD's 30% rule.

Overall, the study finds that Winchester has no shortage of homes for sale or rent to people with moderate to high incomes. There are currently 4,985 homes for buyers and another 6,617 dwellings for renters. (The vast majority of those homes are currently inhabited by the city's approximately 28,000 residents and are not listed as available for purchase or rent.)

"There's actually a surplus of product," Hershberger said about available housing for mid-income individuals and families.

However, for low-income and high-income individuals and families who want to make Winchester their home, there are significant housing shortages.

The study reports that 1,001 people who currently live in Winchester earn 30% or less of the annual AMI of $83,400, yet there are only 188 rental units that charge monthly rents of $489 or less. As for potential homebuyers who earn 30% or less of the annual AMI, the situation is even worse. There are only 120 homes in the city that are valued at $119,342 or less and have monthly mortgage payments that HUD would consider affordable.

Supplies aren't much better for households that earn 120% or more of the annual AMI and can afford monthly payments starting at $2,442 for families of four or larger. According to the study, there are currently 908 single-family homes in Winchester valued at $400,671 or higher, yet 2,272 of the city's current households could afford homes in that price range. That means 1,364 of those households would have to build a new home or move out of the city in order to have a residence whose monthly cost equals 30% of their annual income.

Hershberger said the property taxes paid on high-end homes are crucial to the city's economy, so it is just as important for Winchester to bolster its supply of expensive dwellings as it is for the city to make sure there is enough affordable housing for its low-income residents.

"Households with that buying power are buying below their ideal target range," Hershberger said, "and that downward buying pressure is ultimately having the biggest negative impact on people who are the most vulnerable in the community."

That's because Winchester could collect higher taxes on high-end homes and use the extra money to fund programs and initiatives to assist low-income residents.

As for affordable housing, the local government cannot force a developer to build low-cost, high-quality dwellings on privately owned property, so the best officials can do is offer incentives to encourage the construction of houses and apartments that could be afforded by individuals and families who earn 30% or less than the current AMI of $83,400.

For example, the city offers density bonuses to builders who are willing to offer a percentage of affordable units in new housing developments. Density bonuses allow more dwelling units to be built per acre so, for example, a 30-unit apartment building could be enlarged to 35 units if the developer agreed to charge reduced rent for a percentage of the dwellings.

Also, Hershberger said, Winchester encourages residential developers to pursue financing from the Virginia Housing Development Authority and similar agencies that offer lower interest rates in exchange for the construction of affordable housing units.

It's a difficult balance. If Winchester pushes too hard for affordable housing and limits the options of residential developers, Hershberger said, "It would create an environment where we're slowing down growth and development, and creating higher levels of scarcity in the housing market.

"The only thing we can do is offer options," he said. "We cannot force private developers to go in that direction."

Now that the housing study is finished, Hershberger said City Council will use the data to fuel future decisions on the types of developments most needed in Winchester and determining the best incentives for enticing developers to address housing supply shortages. Conversations and decisions stemming from the study are expected to continue for months.

The housing study is available for viewing online as part of Tuesday night's City Council work session agenda at winchesterva.civicweb.net.

— Contact Brian Brehm at bbrehm@winchesterstar.com

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