Study: Prescott needs more 'missing middle' housing to keep workers local

Prescott — City consultants presented a housing needs assessment to the Prescott City Council on Sept. 9, concluding that the city faces a shortage of “missing middle” housing—smaller-scale multifamily types such as duplexes, fourplexes, courtyard buildings and townhomes—needed by workers who earn too much to qualify for federal or state assistance but cannot afford market-rate housing.

The presentation, led by Rick Merritt of Elliot D. Pollock and Company and introduced by Michael McGinnis of the city’s Community Development Department, said households earning roughly 60–120% of the area median income include teachers, police officers, firefighters and many retail and service workers. Merritt said Prescott’s median age (about 60) and low labor-force participation make housing availability an economic development issue because employers struggle to recruit and retain staff who then commute from farther away.

Merritt told the council that median household income in Prescott is under $70,000 and median renter income is under $50,000. Since February 2019, single‑family home prices in the study area have risen about 63% (roughly $270,000), and condo/townhome prices rose about 71% (roughly $165,000). He said roughly 82% of recent home sales exceeded $400,000 and the typical Prescott household could afford a house priced near $251,000—far fewer units than needed.

The consultants reported a tight rental market with vacancy rates around 4–6% and said average one‑bedroom rents are roughly on par with typical household incomes while two‑bedroom units are more costly. Merritt said roughly 47% of renter households spend more than 30% of income on housing and 28% spend more than 50%.

Merritt outlined the city’s housing pipeline as of the study: about 437 units under construction, 160 permitted and roughly 1,200 planned, but he cautioned that not all planned projects will necessarily be built. He also cited barriers including high land and construction costs, elevated interest rates and limited local contractor capacity.

Council members asked about likely rents for new apartments; Merritt said he expects new units will be at the upper end of the market and estimated average rents near $1,700–$1,800 for typical units. Council members also asked whether short‑term rentals such as Airbnb and VRBO were being considered; Merritt said the study team will examine options to restrict workforce housing from being used as short‑term rentals.

The presentation recommended translating the council’s workforce housing policy into a formal strategy, updating city codes, producing a three‑year action plan and continuing community engagement. McGinnis said the city received a $200,000 grant from the Arizona Department of Housing in 2024 to fund the assessment.

Next steps identified by the consultants include draft code changes, an action plan and further outreach; no ordinance or new rules were adopted at the Sept. 9 meeting.