As a housing shortage continues to impact the region, Loudoun’s Chamber of Commerce on Tuesday gathered regional and local industry experts together to discuss challenges and strategies for addressing the issue in Loudoun.
Virginia Housing is a public-private organization established by the General Assembly in 1972, and operates independently from taxpayer dollars to help residents attain affordable housing. Organization Director of Strategic Housing Chris Thompson said during the April 8 event that the number of available residential units continues to be a significant challenge.
“We are not keeping up with demand,” he said. “We're building about 30,000 homes a year, which is less than half of what we were building back in the early 2000s and we continue to see some strains on our capacity.”
Contributing to that are side effects from the recession in 2006 that resulted in a decrease of builders, fewer starter homes, and a decline in skilled tradespeople, he said.
“Fast forward five years from the pandemic, and we're all seeing the challenges that continue with that,” Thompson said. “It seems like everything is higher, whether it's cost of land, the cost of materials, the cost to recruit and retain staff [and] going through the entitlement process. All of this just translates into higher costs for developers and then trickles down to higher costs for anyone who's looking to rent or to own.”
Thompson said as his organization prepares its next five-year strategic plan, residents have continually voiced two priorities – costs associated with regulatory requirements and local government’s ability to address land use and zoning issues.
“We continue to see challenges around going through the entitlement process and having land that is available and even certain types of housing that's available,” he said. “We're big champions of modular and manufactured housing. It's a factory-built housing, but there are parts of the state that do not allow that through zoning. So, even though this could be a nice, affordable solution to implement, there are still regulatory issues that make it difficult to get some of this product on the ground.”
In addition to that, developers often face opposition from the community.
“Even if I were able to have some incredible superpower, snap my fingers and breathe this infinite wealth of resources, that's not our only challenge,” Thompson said. “We continue to have other barriers to development. Certainly NIMBYism, not in my backyard, has not gone away. We see that across the state, where you can have some very well organized and vocal opposition, not just to affordable and attainable housing, but to housing in general, that can stop a project or pause it and make it financially infeasible.”
Three panelists from Loudoun’s own community also weighed in the challenges facing their organizations. Hines Senior Managing Director Andrew McGeorge, Kite Realty Vice President of Development Nick Over, and True Ground Housing Partners Carmen Romero highlighted the importance of partnerships within the community.
McGeorge and Over said for their for-profit businesses that kind of helpful collaboration often comes from clear and well-thought direction from the county government.
Over referenced the development at One Loudoun, a project his company is developing, as a success story within the county.
“What's coming is very, very exciting, and the reason it's coming is because of what the [Board of Supervisors] did in laying the foundation with the new comprehensive plan,” he said.
The next phase of development on the project includes new restaurants, retail space and 425 more housing units.
For Romero’s nonprofit organization that owns and preserves affordable housing projects in Northern Virginia, local support often involves incentives and financial investments. One of the organization’s projects in Fairfax County that provided 500 attainable units required $90 million of subsidies, she said. That included local government support, federal funding and support from private businesses.
“I do think there are opportunities in Loudoun for a big play like that,” she said.
The organization has a project underway in Loudoun currently, but the challenges facing attainable housing projects are growing, she said.
“We can do this but it's critical, especially in moments like today, when the headwinds interest rates are high, we've got tariff risks, costs were already high, gaps are growing without the federal tools that we need to fill those gaps to get our deals across the finish line,” Romero said.
A project that takes six to seven years to get through the legislative and construction process is not feasible in the current environment.
“We are never going to get out of an affordable housing crisis as a country, as a nation, as a locality, if those are the timelines that you're expecting us to do to build one project. It just doesn't work,” she said.
Those challenges also effect for-profit companies that struggle to find investors when the market is too uncertain.
“We're market-rate developers, so what that means for us is I have lenders and I have equity partners, so I have to make sure that my projects are profitable for the lenders and the equity partners, and if they're not, I can't go forward,” McGeorge said. “… It’s just a big math problem that we do have to solve. And if the math doesn't work, we're not able to go forward unfortunately.”
Recent changes in tariffs are contributing to that uncertainty.
“I think, without a doubt, tariffs will raise prices,” McGeorge said. “It will contribute to inflation, which will increase rents, which causes more problems. So, we are monitoring it. It is day by day. As investors, we like certainty.”
Romero said her organization checks in often on products being shipped for the projects that are currently under construction to monitor tariff impacts on the overall project cost.
“We're trying to do what we did in the pandemic – carry extra contingency if we can get it so that we don't have to stop anything, because we really learned from the pandemic,” she said.
It will take continue collaboration and innovation to address the housing shortage, panelists said.
“We can push through it, but this is when we really need partnerships,” Romero said.
