5 Lynchburg market analysis
The following provides an analysis of major trends impacting housing within the City of Lynchburg.
5.1 Takeaways
- Growth in the city has been a result of international migration and natural increases.
- Once 44 percent renter households, the city is now majority renter households at 51 percent.
- There has been a loss of homeowners in the city, mainly among those households aged 25 to 64 years old.
- The number of higher income households is growing in the city, even among renters, but there is also a growing number of extremely low-income renters.
- In spite of its urban environment, housing in the city is dominated by single-family housing.
- Homeownership is declining as prices have climbed rapidly during the pandemic.
- Large amount of detached single-family rentals, especially in College Hill and Diamond Hill areas.
- Rental prices have remained generally flat among multifamily properties, but cost burden among renters has continued to rise.
5.2 Population trends
From 2010 to 2020, Lynchburg has only grown by four percent to reach a population of 79,009. Despite this growth, the current population is an estimated decline from a 2019 estimated population of 82,168.
The growth in population over the last decade in Lynchburg has been a result of international migration and natural increases. This is in contrast to the rest of the region where growth has been driven by domestic migration. The natural increases are notable for the region, indicating a larger number of households having children in the city.
Despite the decrease in population from 2019 to 2020, the city is expected to see continued growth over the next few decades. By 2050, the city is projected to have a population of 93,708, a 19 percent increase over 30 years.
5.3 Household trends
Lynchburg has steadily lost homeowners, while gaining renters. By 2021, the city had gained a total of 2,563 renters since 2010, while subsequently losing 1,499 homeowners. These changes have left the balance of renter and homeowner households in slight favor of renters, as renter households make up 51 percent of households in the city. This is a shift from 2010 when renter households made up 44 percent of all households in the city.
Breaking down the changes in tenure by age shows that more households of all ages are now renting in the city. The largest increases were among renter households under 45 years old, an obvious result of the many higher education institutions in the city.
Losses were mainly among 25 to 64 year old homeowners. By 2021, the city had lost 603 25 to 44 year old homeowner households and 909 45 to 64 year old homeowner households.
Among those growing number of renters, most of those households have been two-person households, an addition of 2,011 from 2010 to 2021. Households of three people or less have been declining among homeowners, but four or more person homeowner households surprisingly grew by 409 during this time.
The city has experienced a decreasing number of seniors living alone or with nonrelatives in recent years (-575). This is another contrast to the surrounding counties, where more and more seniors are living alone. Whether this is the result of Lynchburg seniors moving to the counties is not easily discerned, but regardless seniors in the city may find it more difficult to find housing that meets their needs for aging-in-place. Seniors in the city are rather increasingly the head of household (+604) or living with a spouse (+473).
The number of single parents living with other families is increasing in the city. From 2010 to 2021, there has been an increase of 330 single parents having to live with others.
Although the city was seeing a significant increase in adult (18 to 34 years old) children living with parents between 2016 and 2020, the overall increase was only 558 by 2021, when there were 4,730. These living arrangements, as well as families living with others, are often an indicator of affordability challenges in communities. The increase in 2020 may have likely been a result of pandemic impacts, and the subsequent decrease by 2021 could have been the result of loosening pandemic restrictions, as well as many millenials entering homeownership.
5.4 Economic trends
Income distribution in the city has shifted from 2010 to 2021. Lower income homeowner households have decreased over a decade, resulting in fewer homeowners making less than $25,000. And while there has been an increase in lower income renter households, there has also been an increase in renter households making $75,000 or more.
Median household income emphasizes these shifts. Homeowner median household income has increased by 15 percent from 2010 to 2021, while renter income increased by 25 percent. The growth in the median renter income was the result of higher income renters coming into the city, but still the typical renter in the city only makes about half ($38,229) of what a homeowner makes ($75,093).
In the city, Hispanic households have seen major increases in median household income since 2010. As of 2021, Hispanic households have the highest median income at $72,680. White, non-Hispanic households follow at $62,857, a slight increase of about $9,000 from 2010.
Black households in the city, however, had consistently low median household incomes. From 2010 to 2021, the Black median household income had only increased by 14 percent, while their white counterparts saw an 18 percent increase, furthering the Black-white income gap.
Warning
It is important to consider that the estimated median household income for Hispanics in the City of Lynchburg had a high margin of error in 2021 (+/- $23,689). Asian and multiracial households had high margins of error as well, although not as high as Hispanic households. The information provided here should be viewed with caution.
5.5 Housing stock
Lynchburg contributes to 28 percent of the region’s total housing stock in 2021. Most of that contribution is composed of single-family housing that is in the homeownership stock. Despite its urban environment, the homeownership stock in the city is not diverse and very few duplexes and other smaller housing types are not utilized for homeownership.
Rather, diverse housing is largely used for rental housing. Most of the rental housing stock in the city is made up of single-family and medium-scale multifamily (5 to 19 units).
Manufactured home communities exist within the city limits, mainly on the outskirts along major thoroughfares. Six of the eleven communities are located along or in proximity to Lakeside Drive in the western end of the city. The majority of communities are small, consisting of fewer than 50 homes. Although not as prevalent as in the counties, manufactured home communities also provide an affordable housing option within the city.
Residential building permits display the dominance of single-family construction within the city for much of the past two decades. Recovery from the Great Recession has still yet to come to the city, but the construction of five or more unit buildings in the city has continued to surpass all other types in recent years. Although the city saw the construction of duplexes and triplexes early on in the 2000s, there have been little to no construction of this type of housing in the city.
5.6 Homeownership market
As the number of renters has been increasing in the city, the homeownership rate has continued to drop. From 56 percent in 2010 to 49 percent in 2021, the city is now majority-renter.
As the homeownership rate has declined, home prices have been on the rise. The pandemic had a profound impact on the homeownership market in the city. The median home price increased by 14 percent from Q2 2019 to Q2 2022 and by Q2 2023, the price had reached $250,000, an overall 32 percent increase from the last quarter of 2019. Although the city was seeing general increases in prices, the pandemic accelerated price increases in a shorter period of time than previously seen.
Closed home sales increased slightly during the pandemic reaching a high of 191 homes sold in the June 2021. Despite the high demand produced by record low interest rates, the number of homes for sale in the city did not increase significantly.
The demand in the city is exemplified by the average days on market, which was already trending downward ahead of the pandemic. But ever since the start of the pandemic, the average days on market has generally not exceeded more than 30 days.
From 2016 through 2022, homes sales in the city have been concentrated in the Perrymont and Fort Hill neighborhoods. There have also been a large number of home sales at the southern edge of the city along Timberlake Road.
5.7 Rental market
Like the counties, rents in the city have been relatively flat from 2015 to 2020. From 2020 onward, there were bumps in the market asking rent that led to a high of $1,106 in the second quarter of 2022. But average market asking rent has been in decline since then and sat at $1,046 by the end of 2022, the lowest average rent over the course of seven years.
Rental vacancy rates in the city hit a high during the early parts of the pandemic. This could have been the result of the student population leaving due to pandemic protections and other workers now being able to work from elsewhere. However, vacancy rates reached a low in the latter half of 2021 and then began to climb back up in 2022 onward. More recently, rental vacancy has sat around a more balanced 6 percent.
5.7.1 Single-Family Rentals
It is important to note that CoStar data excludes a significant amount of single-family detached rentals, which has been growing in demand across the nation. In the city, there are an estimated 4,922 single-family homes that are being used as rentals. A majority of the detached SFR is located in Ward II, where the College Hill and Diamond Hill neighborhoods are located.
Rental prices for these are not easily discerned, as this type of housing is sometimes marketed on non-traditional channels, like Facebook groups or simply with a yard sign.
5.7.2 Assisted Rentals
As of early 2023, there were a total of 3,651 assisted rental units in the city. While assisted units can be supported by multiples types of federal subsidy, the bulk of these units (35 percent) are supported by the Low-Income Housing Tax Credit (LIHTC) program. They are followed by project-based Section 8 at 1,201 units.
Public housing in Lynchburg
The Lynchburg Redevelopment & Housing Authority (LRHA) owns and operates 328 units of public housing within the city. The majority of these units were built in the middle of the 20th century and, like any residential development built during this time, face deterioration and significant need for revitalization and rehab.
At the end of 2022, city council designated the Dearington Hills Apartments as a revitalization area. This is part of a long term plan to initiate the redevelopment of the property, increasing the total number of units to 242 (from 100).
As a major portion of Lynchburg’s affordable housing stock, LIHTC is potentially at-risk due to expiring affordability commitments. By 2035, over 40 percent of active LIHTC units are set to exit their affordability commitment period. These properties would need to obtain an additional allocation of tax credits to maintain affordability. While nonprofit owner/operators will seek to maintain affordability, for-profit owners are more likely to convert their properties to market rate.
Section 8 properties are those that utilize project-based rental assistance. This is different from Housing Choice Vouchers, which are tenant-based and allow a recipient to choose a rental in the private market. With project-based Section 8, HUD contracts directly with private owners of multifamily housing to make units affordable. The rental assistance is tied directly to a property and cannot be transferred.
Section 8 project-based makes up a significant portion of affordable rental units in the city and also face expiring affordability periods.By 2035, roughly 47 percent of existing Section 8 project-based will exit their affordability period.
Housing Choice Vouchers (HCVs) are utilize throughout most of the city. But most Housing Choice Vouchers are being used in the central parts of the city, where there are denser housing options. Areas of Rivermont and Daniels Hill, as well as Diamond Hill, seeing the highest utilization of HCVs among renters.
5.8 Affordability
In 2021, there was a total of 8,875 cost-burdened households in the city, 75 percent of which were renters. Even those the overall total of cost-burdened households in the city has declined by five percent, that decline has been mainly among homeowner households.
The number of cost-burdened renter households has increased in the last decade from 5,380 to 6,663, a 24 percent increase.
Cost burden by race within the city has followed similar trends at the regional level. Cost burden among Black households has remained relatively unchanged over the last decade, but has more recently seen slight declines. Asian, Hispanic, and other racial categories have seen fluctuating cost burden levels, but again, these estimates should be viewed with caution due to low sample sizes. However, white households in the city have consistently seen declining cost burden since 2014.
Based on the latest data from CHAS, there was a gap of 3,855 units for households making less than 80 percent AMI. The bulk of the gap was among deeply affordable units (i.e. units affordable to households making 30 percent AMI or less). For these extremely low-income households, there were at least 2,545 units needed.
This was only a decrease of 35 from 2012, when the gap was estimated to be 3,890 units. This small amount of change over nearly a decade suggests that despite efforts to address affordability, affordability challenges persist that negate any gains affordable units. There is a clear need to ramp up assistance to renters in order to see substantive change in cost burden.