Study: Prescott needs more "missing middle" housing to keep workers in town

The Prescott City Council heard findings Sept. 9 from a city-funded housing needs assessment that identified a shortage of “missing middle” housing and rising costs that make it difficult for many local workers to live in Prescott. Michael McGinnis of the Community Development Department introduced Rick Merritt, president of Pollock & Company, who summarized the study. The assessment found home prices and rents have risen sharply since 2019, vacancy rates remain low and many workers — including teachers, first responders and retail employees — earn too much to qualify for subsidized housing yet too little to afford the typical market-rate units. “We talk a lot about housing, and workforce, or missing middle housing is really what we're focusing on,” Merritt said. The study notes Prescott’s median household income falls below $70,000 and that the median renter household earns under $50,000. Since February 2019 single-family prices rose about 63% (roughly $270,000) and condo/townhome prices rose about 71% (about $165,000), the presentation said. Merritt reported that 82% of recent home sales were above $400,000 and that a typical local household could reasonably buy about a $251,000 house, a price point scarce in the current market. Merritt told council the apartment market is tight — vacancy rates near 4–6% historically — and that typical rents push many households into cost-burdened status. “A household pays no more than 30% of their income on housing,” Merritt said. “In Prescott about 47% of all renter households pay more than 30% of their income on housing, and 28% spend more than 50%.” The study forecast population growth of about 6,200 people over 15 years, implying demand for roughly 3,200 housing units. Pollock & Company recommended that the city pursue code changes, a three-year action plan and community engagement to encourage duplexes, fourplexes, townhomes, small-lot single-family, accessory dwelling units (ADUs) and other models that can serve the missing middle. Council members asked about two policy concerns that emerged during the presentation: short-term rentals and ADUs. Councilwoman Freeworth asked whether workforce units could be restricted from use as short-term rentals such as Airbnb or VRBO; Merritt said that restricting use is a possible policy approach and that the issue has been particularly acute in Sedona, but that specifics would require further study. On ADUs, councilmembers asked for data on impacts; Merritt said he would follow up to gather evidence from cities such as Phoenix that have loosened ADU rules. The consultants noted a sizable pipeline of multifamily activity — the presentation listed roughly 437 units under construction, 160 permitted and nearly 1,200 planned — but cautioned that planned units do not guarantee delivery. Merritt also flagged water availability, construction costs and financing as constraints. He said next steps include translating the workforce housing policy into a formal strategy and considering targeted code changes and incentives. Council did not take a final policy vote at the meeting; the presentation closed with a request that staff and council continue to develop a strategy. Merritt said the firm had already collected more than 200 public survey responses and dozens of stakeholder interviews to inform the next steps.