A housing market expert hired by the City of Danville says Danville is typical of soft market cities throughout the country where the defining characteristic is that demand exceeds supply and the housing stock does not match what people want today.
Charles Buki, owner of the Alexandria-based urban planning and neighborhood development consulting firm CZB LLC., presented his assessment Tuesday night to City Council and on Wednesday morning to real estate agents and mortgage lenders.
“It is sobering information, but I don’t think for any of you it is surprising information,” Buki said. “There are no quick fixes. The dig-out will be slow. The public can get the idea that this is a problem for the city to fix, but partnerships will be needed.”
Buki presented several strategies for consideration, including:
• Continue redevelopment efforts in the River District in order to create additional professional income, high quality housing. Cities such as Richmond and Durham, N.C., have succeeded in adaptive reuse of tobacco warehouses and other structures.
• Thin the supply of housing, particularly pre-1930 wood-framed structures. Buki said these houses have no value today, and there never will be a market for them.
• Provide significant financial incentives in the form of grants and loans to owners or buyers of hard-to-market brick ranch houses throughout Danville for upgrades such as second baths, new kitchens and exterior treatments.
• Significantly increase code enforcement efforts and demolition of troubled mutlti-family structures.
Buki arrived at these other findings after two researchers from his firm spent six weeks living full-time in Danville. They graded 20,000 structures, analyzed thousands of real estate sales records, and interviewed residents, business owners, real estate agents, and mortgage lenders.
“The city has put forth considerable effort in removing blight, stabilizing neighborhoods through its ‘Safe and Sound’ program, and in development of the River District,” Buki said. “These actions are so notable. They are demonstrated actions with tangible outcomes. Few cities have been able to do this.”
However, he cautioned, “You have done some smart things. There would be a natural bias to take your foot off the gas pedal. If you did that, you will not free yourself from the excess supply that you have. The housing market will not do it for you. You have to get out front, and the challenge will exceed your wallet, so you need champions who will join you.”
Buki said the excess supply developed because of several factors. He said the city is geographically isolated because it is not located near a metro city with a thriving economy. Other factors include population loss, decline in wages, lack of reinvestment in houses, and a lack of product.
“You must build a product for the group of age 28 to 45,” Buki said. “If you do not, your city will die. You need a starter product and a pickup product (houses available when young couples are ready to upsize). That is name of game.”
Today, the city is “bottom heavy,” with large numbers of pre-1930s, wood-framed homes and an excessive volume of 1964-and-later, brick ranch-style homes that have not been upgraded or maintained.
“When you have negative equity, it does not pay to maintain or upgrade a home,” he said. “This is why you are seeing rapid turnover of these homes to absentee landowners. … You must create demand. You must build a middle class. That will drive retail.”
Buki also said there is a virtual absence of neighborhood with retail and related amenities. A prime example is the Danville Regional Medical Center, which he said with 1,800 employees should be an economic driver for restaurants and retail within a walking distance of the hospital.
Another issue for the city is its lack of compactness. He said the city is too spread out.
Due to the cost, Buki suggested a focus in select areas, including the River District, hospital, Averett University and Danville Community College. “These are the sweet spots,” he said. “You want a medium to high end product. You want a rental product. You want a mixed product. You want a competitive product in walking distance.”