Commerce Lexington & BIA Host Housing Development Workshop with City Councilmembers

Johan Graham with AU Associates talked about the details that go into creating an affordable housing development.

​Commerce Lexington and the Building Industry Association (BIA) of Central Kentucky recently hosted a Housing Development Workshop for Lexington City Councilmembers and legislative aides. The workshop provided an opportunity to educate council members about the current housing landscape, community needs, challenges, and opportunities to provide more accessible and affordable housing in Lexington.
 
During the workshop, Councilmembers learned about the history of land use and housing development, recent home building and permitting trends, and factors impacting supply and affordability.  Councilmembers participated in site visits to active housing developments both for affordable housing and market-rate developments. The immersion tour helped local leaders better understand the realities of “a day in the life of a developer.”  From lengthy development plan certifications to costly regulatory requirements and other delays, local government process challenges add additional costs that impact housing affordability.

We are under-building housing.

• For the last decade, Lexington has only been building a third of the homes required to meet the needs of our community. 
• A 2016 Housing Study found Lexington needed 23,000 new housing units by 2025, including 16,125 single-family homes, to meet demand.  The city should’ve averaged 1,600 units per year to meet demand.  However, only 4,175 homes were built between 2017 and 2025.  The city only averaged 520 units per year. 
•  The Kentucky Housing Corporation released its Statewide Housing Gap Analysis report in 2024.  The findings followed a similar trend.  Lexington-Fayette County currently faces a housing gap of over 22,000 units for both rental and home ownership. The gap is anticipated to increase to 30,000 units by 2030.  

We are pricing residents out of the market.

• The housing shortage, combined with limited land available for housing, and rising land and development costs, is pricing many Lexingtonians out of homeownership. Over the last decade, Lexington's median home price has doubled—rising more than 100%, while wages have only grown by about 30% during the same period. Today, the median home price exceeds $350,000, creating a significant affordability gap for many families.
• According to March 2025 data from the National Association of Home Builders (NAHB):
  • Median new home price: $378,269
  • Household income needed to afford it: $115,754
  • Total households in Lexington-Fayette: 232,899
  • Number of households that can afford a median-priced home: 165,698
  • Percentage of households priced out of the market: 71.1%

• These figures underscore the reality that homeownership is becoming increasingly out of reach for most residents, even those earning above-average incomes.

We have local policy barriers to increasing housing supply.

• Lexington’s local land use policies have resulted in a limited supply of developable land, with much of the existing vacant land under development inside the Urban Services Boundary (USB) or not available on the market.  With less than 4% of vacant land available to market inside the current USB for housing and job needs, infill and redevelopment opportunities are limited and often the most difficult and costly sites.
• Planning process delays also increase project timelines and developer carrying costs. The City’s 2023 Planning and Development Approval Process Study revealed that it takes more than twice as long to navigate the development process in Lexington compared to the national average. For example, subdivision plan approvals in Lexington average 523 days, while our peer city, Greenville, S.C., completes the same process in just 45 days.

 
What Can Be Done to Address the Housing Challenge?
The City’s Comprehensive Plan adopted in June 2023 by the Urban County Council outlined “GOAL 1: Expand Housing Choices” through six key objectives including pursuing incentives and regulatory approaches that encourage housing development and exploring opportunities for unused and underused publicly owned land to be developed for affordable housing developers.

In 2023, Lexington's Planning Commission recommended a 2,800-acre expansion of the Urban Service Boundary (see below) to support housing development. The Urban Growth Master Plan was completed in 2024, providing development guidance for the expansion areas including increased density for units per acre. While the recent expansion areas offer additional opportunities for housing development, it will take significant investment from public and private sector leaders in infrastructure (water, sewer, utilities, roads) and regulatory flexibility with development plans to expedient bringing housing to the market.

Advocacy Next Steps:
Commerce Lexington and local developers have identified additional policy areas where local government leaders can help address supply and affordability challenges in Lexington. 
 
1. Access to Land:

• Establish a housing goal with trackable metrics for the city by 2030.
• Annual review of vacant land inventory with input from developers to determine land available to the market for housing similar to the rural land management board.
• Pursue additional innovative incentives and public-private partnerships to activate land in challenging infill areas.
• Explore opportunities for unused or underused publicly-owned land to develop affordable housing or workforce housing.

 
2. Cost to Development:

• Continue investments in infrastructure funding in partnership with developers to assist with difficult infill sites and prioritize investment in public infrastructure I the expansion areas.
• Continue investments in city’s affordable housing fund to help close the gap for affordable housing.
• Create and implement housing incentives for higher-density and housing affordability.
• Examine regulatory policies for economic impact with cost/benefit analysis.

 
3. Speed of Process:

• Establish a goal to reduce number of days for development plans to go through the city process.
• Establish a development liaison who will help expediate certification of development plans inside City Hall.
• Consider regulatory flexibility for challenging infill sites and expansion areas to incentivize housing development.

 
Convening policymakers and the housing industry experts for an educational discussion helps foster informed dialogue and a stronger shared understanding of the urgent housing challenges Lexington faces. Continued collaboration will be essential to closing the gap and ensuring that Lexington remains a livable, affordable community for all.

This blog post was written by Andi Johnson, Commerce Lexington's Chief Policy Officer and Director of Regional Engagement.