Access to affordable housing remains a challenge in Virginia as in many states. During the 2021 General Assembly session, Virginia adopted a Low Income Housing Tax Credit and initiated several studies, including a deeper look into the benefits of utilizing accessory dwelling units.
In April, the Virginia Housing Commission met to discuss the current state of housing in the Commonwealth, and members heard presentations on affordable and equitable housing. Members also agreed to take up the following topics in the remaining months of 2021: (1) effects of evictions; (2) landlord tenant law and how it is evolving; (3) long-term affordability solutions; (4) land banks; and (5) challenges to establishing affordable housing near metro stations. Presentations from Jenny Scheutz, Senior Fellow at the Brookings Metropolitan Policy Program, and Lisa Sturtevant, Chief Economist of the Virginia Association of Realtors, provided context for the Commission’s work in 2021. Key takeaways from their presentations include:
- In the latter half of 2020, new construction in exurbs and suburbs helped to meet high demand in the midst of low inventory. However, these exurbs are located far from public transportation and major job centers. Jurisdictions closest to public transportation and major job centers are not building new housing.
- Local zoning ordinances have limited the locations in which townhouses, two-to-four-unit multifamily residences, and apartments can be built, ultimately making it difficult to build low and moderately-priced housing. Additionally, localities’ development processes are often lengthy, complex, and expensive and allow for discretionary approval that favors existing homeowners.
- The financial health of white-collar workers has generally improved since the pandemic began. This population has saved money on costs such as commuting, dining out, and childcare. Savings have thus skyrocketed, which has helped fuel a boom in the housing market.
- Residents of Northern Virginia have been moving to smaller markets, such as Harrisonburg and Winchester, which is driving up prices in these markets and putting local buyers at a disadvantage.
- Houses are being taken off the market almost as soon as they are put on. Due to this, buyers are now having to make significant compromises and concessions to secure a purchase. Statewide, the average home is selling for more than its listing price.
- Low-income rent prices are rising while high-end rents remain low This may be because financial losses due to the pandemic have often occurred among low-income populations, resulting in an inability to pay rent, and landlords are trying to cover these losses.
- The rate of home sales is beginning to slow - not because of a lack of demand, but because of constraints on housing supply.
- There is a lack of inventory across price points and rent points in most markets across Virginia. It is important to note, however, that an inventory challenge has been occurring since 2017. It is not a new trend that arose only when the pandemic began.
- The black/white home ownership gap has widened in the past 9 years. People of color are more likely to be rejected for a loan and experience higher mortgage rates. Additionally, there are recent news reports that homes owned by people of color receive lower appraisals than comparable homes owned by white individuals.
- Looking forward, inventory is likely to remain low in 2021. That said, there will likely be a slight decrease in demand and a small uptick in supply as some buyers are putting off moving altogether until the market is more favorable to purchasers.