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COST OF HOUSING

COST OF HOUS I NG

A lack of housing supply and restrictions on the density of new residential development can lead to rising housing costs and strain the ability of Blacksburg’s residents to afford their homes.

Demand and Home Prices

The third element impacting the future of Downtown—the cost of housing—is both simple and complex. Simply put, the price of housing is determined by the market—how many people need housing, and how much they can pay for it. Prices will always rise to the highest level of affordability, and as that demand is met, prices will come down to meet lower levels. The larger the gap between supply and demand, the fewer homes available at lower levels of affordability. Today in Blacksburg, particularly in Downtown, the demand for housing is much higher than the supply, and so prices are typically out of reach for the average working household. The complexity of Blacksburg housing in particular relates to its location and its student- dominated market. First, the town is hemmed in on three sides by mountains, which means that there is limited room to grow outwards. One upside to outward growth—though this sprawl has many downsides—is that it takes some pressure off of housing costs in a region. In the case of Blacksburg, these pressure valves are limited.

“Restricting housing supply anywhere pushes up prices everywhere. “

- Edward Glaeser, Urban Economist

In short, the supply gap in housing in Blacksburg, and especially in Downtown, has made it an increasingly unaffordable place for many, students and non-students alike. This unaffordability leads to a community that is less equitable, less accessible, less vibrant, and less livable for all those who would like to be a part of it.

Second, the demand by students for off- campus rental housing, particularly in areas close to campus, has led to the conversion of many single-family homes into student rental properties. By taking these homes off of the for- sale market for households looking to buy a house, supply is further constricted for the non- student population. Even for households willing to rent a house, the affordability level of three to four (or more) students renting a house by the room is much higher than that of an individual, couple, or family.

38 Chapter 2 - Analysis: A Framework for Downtown Blacksburg