Change in Income Housing Costs: 2009 to 2018
Richmond Regional Housing Framework
In 2015, PHA worked with Virginia Tech’s Center for Housing Research to produce a study that assessed the Richmond region’s housing needs. As part of the Framework, Virginia Tech conducted a five year update to the 2015 report, providing a thorough outline of our region’s housing challenges and changing demographics. These findings cover both the rental and homeownership market while also examining housing needs by race, age, and income. As a result, the Framework provides a detailed analysis of where we have been, where we are, and where we are going.
The Region’s Rental Market
Renters across the Richmond region have exceedingly diverse backgrounds, challenges, and opportunities. Much attention gets paid to young professionals with stable, well-paying jobs who compete with one another for newer, high-end apartments.
But at the same time, low-income renters compete for an extremely limited supply of quality housing and face long waiting lists for rental assistance programs. When service-industry employees and others who earn a working-class wage find affordable homes, they often must endure long commutes to their jobs.
Today, our region faces a major deficit of apartments that fit the budget of low-income households. Without significant intervention, this shortfall will grow dramatically in the coming decades.
“The area is going to continue to grow and there is not enough affordable housing going in, it feels like they are trying to weed us out.”
—Resident of Ashland
Where We’ve Been
Income growth has significantly lagged behind rent increases.
Despite modest increases in real wages, rents in the Richmond region have risen much more quickly than the ability of most households to pay without being cost burdened. Across all localities, median incomes rose by 10% on average, while median rents increased by 20% on average.
Over the past five years, dedicated affordable apartments account for less than 20% of all new rental construction in the region.
Apartments remain in strong demand since the Great Recession.
Housing Tenure in the Richmond Region: 2005-2018
A decade ago, the foreclosure crisis pushed thousands of homeowners into the rental market at the same time millennials joined the workforce and entered the housing market. Much of that demand still exists today: in the RRHF footprint, there are over 6,400 new renter households and 1,100 fewer homeowning households now than in 2010.
Federal resources for affordable housing have changed drastically since the 1980s.
Low-Income Housing Tax Credit Production in the Richmond Region: 1990-2019
Between the 1940s and 1970s, the federal government created and funded deeply affordable housing for very low-income households, including public housing. Those programs either no longer exist or are severely underfunded.
Today, almost all new dedicated affordable apartments are created by private and nonprofit developers using the Low-Income Housing Tax Credit (LIHTC). Hundreds of new LIHTC units are produced in the region each year, but the current demand still far outpaces new supply.
Where We Are
Low-income and black households are much more likely to have a rent burden.
Rent Burden by Race and Ethnicity
Half of all the region’s renters pay more than they should for their apartment, but this burden is not equally distributed across the population. Two-thirds of these cost-burdened renters have household incomes below $35,000. And black renters are 15% more likely to be cost-burdened than their white counterparts.
Many of our region’s new apartments are out of reach to low-income households.
Building Permits and LIHTC Production in the RRHF Region
Over the past five years, dedicated affordable apartments account for less than 20% of all new rental construction in the region. Average rents for new, market-rate apartments built since 2014 are between $1,200 and $1,400—affordable only to households earning $50,000 per year or higher.
For every low-income household in an affordable apartment, another two are struggling to make rent.
Rental Gap by Income Range
The region is home to roughly 21,700 apartments with dedicated public subsidies to make rents affordable, including public housing and LIHTC properties. Roughly another 4,400 households use housing choice vouchers in the private rental market. Unfortunately, another 59,240 low-income renter households in the region remain cost-burdened. The Richmond Redevelopment and Housing Authority (RRHA) voucher waiting list, which has been closed for three years, contains over 6,300 families.
Most non-developed land parcels in the region are not zoned for apartment buildings.
Where Apartments Are Allowed By-Right
For example, in the City of Richmond, there are approximately 496 total acres of vacant parcels currently zoned for multifamily development—which accounts for just one-tenth of all the vacant land in the City.
Where We’re Going
By 2040, the region will need homes for another 29,000 low-income households, including 16,000 who are very low-income.
Projected Change in Households by Income: 2010-2040
Our region already has a deficit of 20,000 homes that are affordable to very low-income renters. Over the next two decades, we will also need to meet the coming demand for approximately 750 new low-income (between 50-80% AMI) and 800 new very low-income (below 50% AMI) households per year. On average for the past five years, the region has only produced 240 units of dedicated affordable rental apartments, primarily through the LIHTC program.
Many of the region’s fastest-growing occupations will have working-class wages.
Affordable Monthly Rents for the 8 Fastest Growing Occupations
According to the Virginia Employment Commission, these occupational groups will account for over half of the employment growth in the Richmond region between now and 2026. Three of the eight have average salaries that do not support monthly housing costs above $1,000.
• There is a need for substantial new resources to meet current and future demand for affordable rental units. But federal funding remains limited and uncertain. Localities will need to consider innovative ways to provide these resources.
• Restrictive land use policies can make apartments more expensive. Demand for apartments is high, but most of the region’s residential land remains zoned exclusively for single-family homes. This artificial scarcity increases development costs and raises rents.
• Meeting demand for new housing types is a major opportunity to create denser, well-connected neighborhoods that have lower fiscal impacts. Localities should relax policies that restrict the development of higher density, more affordable housing options to make communities that are mixed-use, walkable, and better served by transit. By design, these developments require lower local infrastructure costs than sprawl—in both short and long terms.
• Workforce training provides the opportunity for individuals to earn a family sustaining wage. However, investments in financial aid are necessary to help participants enroll, persist, and complete requirements for a workforce credential.