The perennial shortage of affordable housing in Hampton Roads and around the state has grown so acute that 84% of Virginians said in a recent survey that they believe the General Assembly needs to do more to address the problem.
More than one-third of respondents said the cost of buying or renting a place to live is their top concern, below inflation and health care expenses, according to the survey last month by the research and analytics firm YouGov. The survey was commissioned by the Commonwealth Housing Coalition, a consortium of housing advocacy groups and nonprofits.
The median sales price of homes sold in July in Hampton Roads was $368,250, about $12,000 more than a year ago. Prices here remain among the highest in the state, behind Northern Virginia.
Rental housing costs in Hampton Roads are among the fastest growing in the nation, hitting a median of $1,599 in July. A recent survey for the Norfolk City Council indicated a gap of 12,000 rental units within the price range of households earning up to $35,000 a year, and the gap is now affecting people making as much as $75,000.
State lawmakers have taken steps in recent years to expand housing options, including creating incentives to build apartments in commercial areas and prevent rent increases on older apartments without accompanying upgrades.
Some measures, such as a bipartisan proposal to enable localities to ease approval of accessory dwellings, failed but are expected to return to the General Assembly for a second look.
Another bipartisan proposal, discussed recently by the Virginia Housing Commission, would limit the ability of cash-rich investment companies to muscle out first-time homebuyers and small-scale landlords. In Richmond, for example, 20% of apartments are now owned by equity firms. Statewide, more than 13% of all apartments are owned by investment companies.
Just over a decade ago, the General Assembly established the Virginia Housing Trust Fund, which in the past decade helped preserve or create more than 19,000 affordable units, invested $66 million in homeless reduction grants and assisted over 8,500 households at risk of homelessness.
Despite those contributions, many Virginians are experiencing financial stress due to housing costs. It’s not strictly an urban or suburban struggle; half of rural residents responding to the YouGov survey said housing expenses are a worry for them too.
Housing Forward Virginia and other policy and advocacy groups want the General Assembly to consider enabling localities to earmark a portion of real estate transfer taxes to fund affordable housing. Arlington County currently does so, but state law restricts the amount and doesn’t enable adoption of higher amounts for high-dollar homes.
Nationwide, seven states impose a “mansion tax” on luxury homes to generate money for affordable housing programs and incentives. A study last year by the Center for Budget and Policy Priorities found that Virginia could generate an estimated $128 million annually by adopting a progressive marginal rate on houses sold at prices ranging from $900,000 to $1.9 million.
Such a tax would dramatically boost the state’s housing fund, which has received about $18 million from the General Assembly since 2018.
Regardless of how lawmakers choose to respond, it’s clear that inaction isn’t an option. For one thing, voters expect a change. The economic health of the state also depends heavily on housing availability. A capable workforce isn’t likely to remain in the commonwealth or relocate here if it’s a major challenge to find a house or apartment at a reasonable price.
Likewise, major employers won’t stay in or come to Virginia if they can’t find the workers they need. True, employers could raise salaries to match housing costs — but that balance is difficult to achieve, particularly when builders can make more money by focusing on higher-end properties.
As challenging as the problem may be, state lawmakers cannot avoid it. Keeping a roof over one’s head simply shouldn’t be a worry for so many Virginians.
