Would former Smithfield Foods Chairman Joseph W. Luter III’s “Grange at 10Main” development help alleviate the lack of affordable housing in Smithfield, or would it make the problem worse?
Luter bought and razed the former Little’s Supermarket and 1730s Pierceville Farmhouse in 2020, proposing in 2021 to turn the 56.8 acres at the west end of historic Smithfield into a mixed-use development named for its location at Main Street and Route 10, which would include a permanent farmer’s market, a hotel, three- and four-story apartment buildings, single-family and duplex homes, retail space, and more than 1,000 parking spaces.
Luter’s son, Joseph W. Luter IV, wrote to Smithfield City Council in 2020 that his father envisioned “high quality development” with multi-family housing “for all income levels”.
But according to a tax impact study prepared by Ted Figura Consulting for LSMP LLC, Luter’s holding company for the Grange project, one-bedroom apartments in the development would rent for $1,525 a month – well above rent. 2020 Census median monthly $995 listed for Smithfield.
The study estimates the average sale price of single-family homes at $575,000, nearly double the median census listing value of $299,200 for Smithfield owner-occupied homes. Even duplexes are said to have an average sale price of over $500,000.
“Average household incomes are expected to be about $78,400 for apartment dwellers and about $109,650 for single-family community residents,” the study said.
Although neither Luter has made a formal request for rezoning or permits to date, Smithfield Planning Commission Chairman Charles Bryan said April 14 that he understands the project’s intent de Luter was to provide “young professionals working in this community” with “some place to live.”
But could they afford what is on offer?
In 2020, the median annual household income for all ages in Smithfield was $83,977, according to census data. Per person it was $43,680.
For Isle of Wight County as a whole, the 2020 median household income for all ages was slightly lower at $77,870, but still above the statewide median of $76,398. . Per person, county residents earned a median of $39,024.
County residents aged 22 to 24 earned an average salary of $32,808 in 2021, according to data provided by the Isle of Wight County Department of Economic Development. For ages 25 to 34, the average salary was $46,080.
“Locally and nationally, we’re seeing more new Millennials and Gen Z buyers,” said Smithfield-based real estate agent Jay Hassell, referring to people born in the 1980s, 1990s and early 1990s. 2000s. Both generations, he said, account for about 30% of today’s housing market.
According to Hassell, the current average house price in Isle of Wight County and Suffolk City is $278,000 for townhouses and duplexes, and $360,000 to $405,000 for townhouses. individual single-family homes.
Fannie Mae and Freddie Mac, two federally controlled companies that provide money to the US housing market by buying residential mortgages and bundling those loans to sell to investors, were offering interest rates of 2.73 % to homebuyers with a credit score of 740-759. starting in January, Hassell said. Over the past three months, interest rates have increased to 5.23%.
“When rates go up, it’s not going to create less demand, but it’s going to change ‘buying power’ and it will force most buyers down into the price bands,” Hassell said.
A $400,000 house at 2.73% interest in January, he explained, would equal a monthly mortgage payment of $1,550. At the current rate of 5.23%, monthly mortgage payments for the same house, at the same selling price, would increase to $2,120.
For the average income on the Isle of Wight or Suffolk, “this would limit the buyer to a payment of around $1,972 per month” taking into account mortgage principal, interest and taxes, said Hasell.
That payment, at the current interest rate of 5.23%, he said, would limit the buyer to a home between $250,000 and $300,000, which would put him about $100,000 less than he wanted. wouldn’t have had one a year ago.
There are only 27 detached and semi-detached houses in this price range currently available for sale in Isle of Wight County and Suffolk. Of these, only seven are located on the Isle of Wight, he added.
“The average Isle of Wight and Suffolk buyer can no longer afford the average house in the area,” Hassell said. “Finding a home they can afford has become much more difficult in this already tight housing market.”
A Feb. 16 draft of Smithfield’s new comprehensive plan, which is expected to pass later this year, further alleges racial disparity in Smithfield’s housing market. According to the draft plan and the census, 12-17% of Smithfield residents live below the poverty line, compared to 9-10% statewide.
In the United States, “black residents are more likely to fall below the poverty line” and “this trend is more prevalent in Smithfield,” the plan says. In the city, 9.2% of white residents and 31% of black residents live below the poverty line, compared to 10.3% of white residents and 21.2% of black residents living in poverty nationally .
According to the tax impact study, the Grange “could seek” funding through the US Department of Housing and Urban Development, in which case 20% of the apartments would be reserved as affordable housing for households earning 80% of income. median of the region. — in the case of Smithfield, $67,000 or less. But “no presentation is made to this effect”.
HUD defines “affordable” as no more than 30% of an occupant’s gross income spent on housing costs, including utilities. According to the draft comprehensive plan, 44.4% of Smithfield apartment dwellers are already paying 35% or more of their income in rent.
Despite high rents, Smithfield saw a five percentage point change in its split of renters versus landlords. In 2010, 75% of Smithfield residents were homeowners and 25% were renters. By 2019, the city’s share of tenants had risen to 30% and its share of landlords had fallen to 70%.
“The increase in Smithfield is double the national average and may be the result of rising house prices and lack of affordability,” the plan says.
According to the census, housing growth in the county of the Isle of Wight has greatly exceeded that of the state and the region. In 2020, the number of housing units on the Isle of Wight increased by 16,441, or 12.4%, from 2010. Meanwhile, the number of housing units in Southern Virginia grew only 1.4% over the same period, compared to 7.6% statewide.
“As interest rates rise and despite new construction efforts, we’re still nearly 2 million homes short (nationally),” Hassell said, “which means we’ll likely see a market unbalanced sellers in the years to come”.