Housing challenges the next governor of Virginia will face
Communities across Virginia face a variety of housing-related stresses. In the past year, house prices have risen by more than 10% in the state’s largest metropolitan areas, putting pressure on first-time buyers. At the height of the COVID-19 pandemic, more than half of renter households suffered loss of income and about 20% fell behind on their rent. Even before the COVID-19 pandemic, Richmond had one of the highest eviction rates in the country, especially in historically black neighborhoods. As Virginia voters prepare to choose a new governor this year, they are expected to assess the candidates’ plans to address housing challenges.
Well-functioning housing markets are essential to the economic success of the Commonwealth. High housing costs make it difficult for employers to attract and retain good workers, especially as extended telework and hybrid work become more common. Communities that can offer high quality amenities, such as public schools, parks, restaurants and cultural attractions, at reasonable prices, will be the most attractive to workers who can choose their location. Access to stable, decent-quality housing in safe and healthy communities enables people to be productively engaged in school, work, and other social and economic activities.
While housing has generally been left to local governments, four key challenges would benefit from state-level attention: monitoring regional housing supply, providing income support to poor households, investing to improve quality housing and climate resilience efforts.
Virginia doesn’t have a statewide housing shortage, but there are local warning signs
Over the past 10 years, Virginia’s housing market has performed well in one key dimension: the supply of housing has grown more in the places where people want to live the most. House prices are a useful indicator of underlying demand, as people are willing to pay more for homes located near well-paying jobs and in communities with good public schools, parks and other amenities. Between 2010 and 2019, the supply of housing increased further in Virginia counties and independent cities that had relatively high real estate values in 2010, an indicator of healthy housing markets statewide.
But there are localized warning signs of a supply shortage, particularly in the Washington, DC metro area. Figure 2 shows the relationship between initial home value and home growth for each of the three largest metropolitan areas in Virginia. Richmond and Virginia Beach exhibit trends similar to those for the state as a whole: both show strong positive correlations between home values in 2010 and growth in housing supply over the following decade.
The Washington, DC metro area, the largest region in the state, presents a very different pattern. The correlation between initial house prices and supply growth is much weaker there (flatter slope) than in Richmond or Virginia Beach, reflecting a large variation in growth rates between communities with housing values. similar. While some expensive communities, such as Loudoun County and Falls Church, have experienced housing growth rates above 20%, Fairfax County and Alexandria have experienced housing growth of 6% and 8%, respectively, well below the average for the region. Fairfax has the largest population in the state (over one million people) and is home to major employment centers such as Tysons Corner; any housing shortage in the county will affect the entire metropolitan area.
Outside the larger metropolitan areas, there are also signs that housing supply may be lagging behind demand in some regional employment centers. Affordability and availability of housing have become increasingly controversial issues in Blacksburg and Charlottesville, where flagship Commonwealth universities have driven regional employment growth in related industries such as medicine and technology. Some of these jobs offer high wages, allowing workers to find accommodation close to their workplace. But workers in lower-paying support jobs, such as clerical work, catering and housekeeping, often have to seek cheaper accommodation in neighboring counties, resulting in longer journeys and volumes of travel. higher traffic.
The number of homes built in which locations is not just a function of market forces; local governments regulate housing development through policies such as zoning and building codes. Overly strict zoning, such as large minimum lot sizes, apartment bans and complex development processes can reduce the supply of new housing and increase housing costs. In states like California and Massachusetts, local zoning regulations are now adding to a substantial drag on the overall statewide housing supply – a caveat Virginia should avoid.
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Low-income Virginians across the state are struggling to afford housing
Even in places where enough new housing is added to keep up with job growth, low-income households have difficulty paying for market housing. The incomes of many lower paid workers have not kept up with rising rents.
The US Department of Housing and Urban Development recommends that households spend no more than 30% of their income on shelter. Among Virginia’s poorest households, renters and landlords spend about 60% of their income on shelter costs (Figure 3). The high burden of housing costs leads many households to cut back on food, health care, transportation and other necessities, while preventing their ability to save for rainy days. The gap between income and housing costs exists in all parts of Virginia – urban, suburban, and rural – similar to long-standing national trends.
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Housing quality is a concern in cities and rural communities
While housing affordability generally receives more attention, a related concern is the prevalence of poor quality housing. In Virginia, older homes are especially common in large cities; for example, more than 30% of the dwellings in Richmond were built before 1940.
Some older homes have been recently renovated and are popular for their historic architecture (Old Town Alexandria and the Fan Quarter in Richmond, for example). In general, however, older homes are prone to health hazards such as lead paint and asbestos, require more energy to heat and cool, and have higher maintenance costs for their owners. .
Rural communities in Virginia, on the other hand, have a high proportion of vacant housing. Vacant housing can be a source of scourge for the surrounding community, creating risks to the health and safety of neighbors and leading to higher crime rates. Suburban communities, on the other hand, have both new housing and lower vacancy rates than cities or rural areas.
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Climate change is already hurting homes and communities in Virginia – and will get worse
The physical, economic and human costs of climate change are becoming increasingly tangible in Virginia and across the country. Intense storms and rising sea levels cause wind and water damage to homes and businesses. The extreme heat creates threats to health and safety, especially for the elderly, the homeless and those whose homes are not air-conditioned.
The harms of climate change are disproportionately borne by low-income, black, Latino or Hispanic, and Native American communities. The predominantly black neighborhoods of Richmond, previously marked in red, suffer from higher heat exposure. The Virginia Beach-Norfolk-Newport News metropolitan area, home to nearly two million people, already suffers frequent flooding from rising sea levels. Even inland communities like the Roanoke Valley experience more frequent flooding due to severe storms. The energy consumed to heat and cool homes is a major contributor to climate change, as are the transport costs incurred by increasingly long journeys across the Commonwealth.
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What Virginia’s next governor can do to help
The strategic housing policy choices of Virginia’s next governor can strengthen the state’s economy, reduce household financial stress, and improve climate resilience. State intervention would be most useful in five areas:
1) Encourage high potential communities across the state to expand the supply of affordable housing. Providing policy guidance, technical support and financial incentives would help local governments to modernize their land use regulations and related development policies. Allowing enough housing at different price points is necessary to support the economic growth of the state and the region, while reducing the financial pressure on middle and middle income households.
2) Expand funds for housing vouchers to low-income tenants and invest in the acquisition or development of subsidized apartments. The support of the state congressional delegation would be helpful in increasing the availability of federal housing vouchers.
3) Invest in building maintenance and upgrades for older homes across the Commonwealth. Greater access to low-interest loans or grants for energy efficiency improvements would improve the quality of housing for owners and tenants, while reducing the carbon footprint of households.
4) Better integrate housing, transport and land use to improve climate resilience. Virginia and the federal government are negotiating a one-time investment to expand passenger rail service. This plan offers the opportunity to strengthen bonds between communities in Virginia and stimulate economic growth. But to maximize the economic and environmental return of this investment, it is necessary to coordinate transport, housing and land use near stations.
5) Enabling better policies through better information. Regular collection and dissemination of information on housing market conditions and unmet needs would benefit state and local governments, as well as housing advocates and the real estate industry.
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