House Bill 854 (HB854) directed Virginia Housing and the Department of Housing and Community Development (DHCD) to complete a statewide study on affordable housing. Pursuant to that requirement, this report is the product of extensive research and engagement to understand Virginia’s current affordable housing landscape and to chart a path forward that recognizes the importance of affordable housing to all Virginians.

BACKGROUND

Virginia Housing and DHCD are joint authors for this report. These agencies also received support from an external Stakeholder Advisory Group and the nonprofit organization HousingForward Virginia (HFV).

Per the bill’s requirements, Virginia Housing and DHCD assembled a Stakeholder Advisory Group (SAG) of thirty-nine housing experts who represented a wide range of regions, industries, and demographics. Members shaped the report’s priorities, participated in subgroups on specific policy issues, and helped design recommendations.

To aid both agency staff and SAG members, HFV was engaged as a research partner. HFV is a nonprofit, nonpartisan research and education organization that regularly supports housing studies throughout the Commonwealth. HFV contributed by administering surveys, analyzing data, and researching best practices.

HB854 asked stakeholders to determine the current and future housing needs of Virginians, including the availability of affordable housing across the state. Data from federal, state, and other sources were compiled, analyzed, and translated into major findings for the following topics.

Demographic trends

The demographics of Virginia will continue to evolve, but persistent disparities between generations and racial and ethnic groups require continued efforts to ensure opportunity for all.

Virginia’s population growth over the past decade has concentrated along the Urban Crescent, which includes Northern Virginia, Richmond, and Hampton Roads. These areas are consistently increasing in diversity.

A dramatic rise in the older adult population will call for new senior housing opportunities across all parts of the Commonwealth.

Virginians born in this new century are much more racially and ethnically diverse than previous generations.

Housing options in Virginia should adapt to shrinking household sizes among both owners and renters in nearly every part of the state.

Economic trends

Despite strong growth in the face of two major recessions, new economic opportunities in Virginia are not equally distributed.

Jobs rebounded quickly in metropolitan areas following the Great Recession and COVID-19 pandemic, but total employment levels in rural Virginia have consistently declined since 2008.

Black and brown Virginians suffered a much higher rate of pandemic-related job losses compared to white Virginians and also consistently have lower average household incomes.

Many of the state’s fastest-growing job sectors, such as healthcare support occupations, offer below-average wages. These workers will have less income available for rent or mortgage.

Housing inventory and production

Housing production has yet to recover to pre-Recession levels, while population and job growth continues.

About 30,000 new homes are built in Virginia each year.

However, this rate is about half the annual production from the mid-2000s.

Statewide population growth remains several percentage points above the increase in housing supply, even as shrinking average household sizes require more homes per person.

Even in the Urban Crescent, Virginia’s housing supply is predominantly detached single-family homes. These are also the most common new homes built, along with larger apartment buildings.

Townhomes and small-scale apartments—which can be more affordable by design—remain relatively rare.

Homeownership market

Virginia’s homeownership rate is consistently higher than the national average, but recent declines may continue without a proactive response to changing demographics and market conditions.

Compared to the average Virginian, homeowners in the Commonwealth are older, more affluent, and more white.

Homeownership among young adults is declining, while in many small and rural markets, a majority of homeowners are more than 55 years old.

As of August 2021, the average single-family home in Virginia sold for $355,000—an increase over 30 percent from five years prior.

Limited supply—especially of smaller homes equally sought after by young buyers and downsizing baby boomers—has lifted prices and kept homeownership out of the reach of many.

Rental market

Many low-income renters continue to be cost-burdened as the deficit of affordable rentals grows and demand is ever-increasing.

Four in five renters below 50 percent of their Area Median Income are cost-burdened. This is more than a quarter of a million households in Virginia—and that number continues to rise.

Over half of Virginia’s approximately 170,000 publicly-supported rental apartments rely on Low-Income Housing Tax Credits from Virginia Housing. Without intervention, three-quarters of these could be lost to expiring affordability restrictions by 2040.

The current supply of federal Housing Choice Vouchers is inadequate to meet the need. For every household with a voucher, another seven are eligible but do not have one. Tens of thousands of low-income Virginians remain on waiting lists.

Housing instability and homelessness

COVID-19 could undo Virginia’s progress in reducing homelessness and stably housing tens of thousands of Virginians.

Point-in-Time counts across Virginia have shown a general decline in observed homelessness—fewer than 6,000 individuals in 2020—although this was a slight uptick from 2019.

On the other hand, housing instability among Virginia’s school-age children has increased in the past decade.

COVID-19 has put thousands of low-income Virginians behind on rent payments, which in turn put landlords at risk of missing their mortgage payments.

Virginia’s national best practice for delivering rental assistance to both parties offers policy solutions to ensure long-term housing stability.

Homeowners in Virginia have fared better since the Great Recession and even during the pandemic, due in part to the federal foreclosure moratorium from March 2020 to July 2021.

Projections

Many low-income renters continue to be cost-burdened as the deficit of affordable rentals grows and demand is ever-increasing.

Virginia will likely reach a population of 10 million by 2040—with growth continuing to be concentrated in the Urban Crescent.

The share of seniors in Virginia will grow faster than all other age groups, creating major shifts in housing demand, healthcare needs, and the workforce.

Beyond these clearly significant forecasts, policymakers should use caution with population projections current as of this report.

Findings should be reevaluated when the latest 2020 Census figures are incorporated into new population predictions published by the University of Virginia Weldon Cooper Center for Public Service in 2022.