Affording the American Dream in F.C.

The City of Falls Church is an expensive place to live. According to 2000 census information it was 23rd in the nation in median housing values. Since then the housing market has exploded and the prices continue to rise.

Even more significant than the high cost of housing is the lack of diversity in the housing market.

The majority of the City’s housing is within a thin price band with few housing options at the high and low end of the spectrum. Tennille Smith Parker, with the City of Falls Church Department of Housing and Human Services, said that single family houses below $300,000 are virtually non-existent, and the median value of a single family home in Falls Church is a whopping $527,000, according to the City’s Chief Financial Officer Shirley Hughes.

Ken Billingsly, a demographer from the Northern Virginia Regional Commission wrote about causes for the inflation of housing prices in a report he published about the City. “When people buy or rent a home, they are purchasing more than just a roof over their heads; they are buying a school system, a lifestyle, a location, a pattern of associations.” In Falls Church the school system is one of the main attractions for prospective residents. One of the best and most challenging in the nation, the schools bring a lot of families to the area looking to provide a strong education for their children.

Also, Falls Church combines the benefits of urban living—proximity with retail stores and Metro accessibility—with a small town atmosphere.

Parker said in the City housing values have grown by over 20% in just the past year and that market value has outpaced the growth in assessed value of the City’s housing.

“Buyers are by themselves increasing the value of the market by offering bids that are well beyond the assessed value of the property,” she said.

As an example, in a recent real estate listing, a small single family house in the City was listed at $450,000, and was sold within the week.

Parker, told the News-Press that housing affordability is determined by comparing a households monthly housing expenses and a household’s monthly income. If expenses comprise over 30% of a household’s monthly income then that house is deemed “unaffordable” for that individual.

She said that the median family income in the City in 2000 was $97,000. At this income level Parker said that a family should pay only as much as $380,000 for a house, far less than the median housing value in the City.

So what does it mean when the average household in Falls Church can’t afford to buy the average home in the City?

Parker said that the high prices have several consequences. For one, she has seen an increase in people with higher incomes buying homes in the City. Also, she has seen an increase in people who have found non-traditional ways of paying for their home, such as assistance from family members.

Especially among minorities, she has seen a growth in non-traditional households, multiple families or unrelated people living together.

But there are also a lot more people living beyond their means. Parker said that people in higher income brackets have become more willing to pay a higher percentage of their monthly income for their housing.

Along with stretching budgets, the prices have affected the composition of the City’s population, which has seen very different growth than the surrounding areas of Northern Virginia.

While Fairfax, Arlington, and Alexandria, have each seen over 20% increases in their minority populations in the past 20 years, Falls Church has seen only a 9% increase since 1980.

Ray Spicer, also with Falls Church Housing and Human services, talked about the impact of the housing market. “As long as there’s a wide spectrum of housing choices then diversity will follow it, but if there becomes one type of housing then diversity will suffer,” he said.

The prohibitive housing prices have also affected the age of the City’s population by making it more difficult for younger people to move in.

Falls Church has the oldest population in Northern Virginia at a median of 39.7 years of age, and the high prices mean that younger people with lower paying jobs can’t rent or buy a home easily.

Parker said that the high prices have also made it difficult for people working in the City to be able to live where they work.

But the increases haven’t only made it difficult for those hoping to move into the City. The rise in property values has increased property taxes, which can create new expenses for the retired population. For many retirees who own their homes and live on a fixed income, the dramatic rise in taxes creates unexpected problems.

Richard and Betty Allen were residents of the City for 50 years and raised three children within its borders. Throughout their lives in the City they have watched the prices grow. While they recently moved to Goodwin House West in Fairfax, two of their three kids have moved back to the City.

The Allens moved to Falls Church in 1954 when they started their family. Richard worked for the CIA in Washington, D.C. and Betty was active in the League of Woman Voters and the School Board.

They bought their house, a three bedroom, one and a half bathroom home, for $19,700.

They said even at that time the housing market wasn’t cheap. “I remember seeing houses for $32,000 and $33,000, in the City, which was a lot of money at the time,” said Mr. Allen.

Recently, the Allen’s house was assessed at $494,000. Mr. Allen admitted that they have made two additions to the house, but the increase was impressive.

When the Allens’ children left home they started their lives elsewhere. Their two sons moved to North Carolina and their daughter lived in Arlington. But as they have started their own families they began to return to Falls Church.

This has given their parents another perspective on the housing market in the City.

Their daughter moved back into the City with her husband around 10 years ago after their second child was born. After a difficult search for a home, they bought and an older house on Poplar Drive and have since been renovating it.

More recently one of their sons moved back into the City and plans to buy the family home from his parents.

While her children have managed to find homes, Mrs. Allen said that it is harder now for younger people to afford a house in the City.

“There are still some moderately priced homes in the City but they are much harder to find now,” she said.

Parker agreed that the real estate market has become increasingly prohibitive and said that the City tries to assist people by working with the supply and demand factors of the house buying process.

The supply side of the equation is the stock of affordable options in the city, which can include present affordable sites, the construction of new affordable dwelling units, or the modification of existing housing sites to allow for more people living on the same parcel of land.

The demand side deals with providing financial assistance to people looking to buy homes in the City and assistance programs for renters.

On the supply side, there are some affordable housing units in the City. Westbrook Commons, an apartment complex in the City renovated seven years ago, received tax credits when it was renovated and in return promised to keep its units at below market value for 15 years. At the end of the 15 years it will then be able to release them at market value.

The new construction of four mixed-use developments in the City will create more housing for the City, as well as the possibility of more affordable housing choices.

But it has not been easy to incorporate affordability into the new developments.

The recent construction has been done on commercially zoned land and Spicer said that as a result, the construction has been done under a special exception by the City.

Under the terms of the deal with the City, affordable housing is only one facet of a package that the City has negotiated for from the developers that also includes cityscape management, public utilities, and community development.

The City has managed to negotiate only as high as 6% of new units as affordable. Under the agreement, these units will be sold at below market value and will be required to stay under market value for a certain period of time.

Another part of the deal with the developers has been in getting monetary donations to the Affordable Housing Fund and the Falls Church Housing Corporation. The fund is for the City to assist in future housing developments and rehabilitation of the existing housing population.

Another way to increase the supply of affordable housing is to add accessory dwelling units to existing residential sites. Sometimes known as granny flats, the process involves building additional separate living space on land presently used for a single family dwelling.

This process allows for more people to live on existing land without any new development. But Jackson said that existing ordinances must be modified to make the process easier.

For seniors in the City there are a few more affordable housing options.

One choice is the Winter Hill Apartment development. The development provides one room apartments for seniors over 62 and disabled residents.

Carol Jackson, the director of the Falls Church Housing Corporation, a non-profit group that owns Winter Hill, said that while there has been some turnover recently, the amount is still insufficient for the needs of the City. As the City ages, and the numbers of seniors continue to grow there may be a substantial shortage of space for elderly residents in need of affordable housing.

The Falls Church Housing Corporation also owns affordable housing in limited numbers as part of its Virginia Village apartments.

A new development, presently under review by the City Council, promises to add as many as 70 affordable housing units for the City’s seniors, though the project has been protested by members of the Falls Church community who say that the development should not be built on open space that should be part of West End Park.

For Falls Church, the lack of affordable housing stock means that the work with present and hopeful Falls Church residents with moderate means must be accomplished on the demand side of the equation.

Many retirees in the City live off a fixed income, often owning their homes, but rising property taxes have created new burdens for them.

To take care of its seniors the City has worked to find options that will allow them to continue to live in the City even as expenses increase.

One option for seniors is so-called “reverse mortgages.” This allows seniors to borrow money from the bank against the equity of their home which would be paid back to the bank upon the sale of the house or when it becomes an estate.

Along with allowing older residents to pay for rising expenses, it provides them the money for upkeep of the house. Falls Church has one of the oldest housing stocks in the region and upkeep of the older houses is necessary to keep their value.

Another option is a tax deferment for older citizens who have a hard time meeting new tax demands. The policy allows for taxes to be deferred and then paid through the individual’s estate.

For people looking to buy a home, the City provides home purchase assistance for people who qualify through down payments and closing cost assistance, and providing low interest loans.

Down payment and closing cost assistance gives as much as $9,600 in forgiveable grants that don’t have to be paid back, provided the homebuyer lives in their home for a certain length of time, usually three to five years.

Low interest loans help less affluent homebuyers afford housing in the City. While the size of the loan is connected to the housing market, Parker said that present loans have been as high as $322,000.

In an area where modest single family homes are priced in the high $400,000 range, $322,000 in loans still limit homebuyers to the condominium market.

For those looking to rent, Parker said the market is less volatile than home sales and hasn’t increased at the same rate.

Still the median rent in the City is above $900 a month, which has put a strain on the rental population.

Parker said that many of the renters in the City are paying well above 30% of their monthly income in rent.

To help renters, the City offers modest rental assistance that subsidizes a renter’s cost. Under this plan renters pay 30% of their income each month and the City makes up the difference. These subsidies last for 18 months.

Another program is the Housing Choice Rental program run through Fairfax County. The program provides vouchers for renters and, unlike the City’s program, doesn’t have a term limit.

But there is a waiting list for the vouchers, and for some would-be renters that has meant waits as long as four years. Additionally, landlords renting out apartments aren’t required to accept the vouchers. Jackson said that in a tight rental market, people are less likely to accept the vouchers when they know they can easily get other residents.

Overall, Parker said that while their programs have helped people find affordable housing in the City, they haven’t been able to help those looking for homes among the standard housing stock.

But Parker said she hopes to make housing available for everybody. “When I started working here, one of my goals was to look at housing choices for every tier of income level,” said Parker. “The pace of the market growth just makes us have to move a lot quicker.”

She said that by focusing on both the supply of affordable housing and assisting homebuyers, she hopes the City can cater to a wider diversity of people. “Hopefully we can provide a home for everybody who wants to live in the City,” she said.