RICHMOND — Rent in all but five Virginia counties increased in a 10-year period, according to a Capital News Service analysis of U.S. Census Bureau gross median rent estimates. The average percent change statewide in rental costs was 24%.
Richmond Mayor Levar Stoney and the City Council declared an affordable housing crisis late March. Over 85% of “extremely” low-income renters in Richmond and surrounding areas pay over 30% of their income on housing costs, according to the resolution recently adopted by City Council.
A majority of Richmond renters earn an income that falls anywhere between $35,000 and $75,000, according to U.S. Census Bureau estimates that are adjusted for inflation. The fastest-growing sector of renters in the Richmond area are people who make $150,000 or more a year, according to a recent Axios article. That income disparity can drive demand and rental prices up.
Housing issues throughout state
Over 60% of Virginia renters experienced rent increases this year, according to the Richmond mayor. The low housing inventory will continue to drive rent and mortgage costs up statewide, according to the resolution.
That means employees who barely earn minimum wage are burdened with finding affordable housing near school and work. Virginia minimum wage currently stands at $12 an hour and will increase by $1.50 an hour in January 2025, according to state law.
Del. Marcia Price, D-Newport News, represents approximately 80,000 people, she said. She introduced several bills this past session to help address housing issues, such as House Bill 1650, 1651 and House Joint Agreement 485.
Price’s biggest goal as a representative of Newport News and Hampton is to “eradicate economic disparities,” she said.
“We have homelessness and mansions in the same district,” Price said. She wants to ensure that residents have basic human needs met, Price said.
“The fact that we have jobs that don’t pay livable wages I think is the starting point,” Price said.
People don’t earn enough money to make ends meet, according to Price. That, coupled with the additional problem of inflation, contributes to the housing crisis.
A long-established government standard to estimate housing affordability is the 30% rule. Anything over that is considered “housing burdened.” Anyone spending more than 50% income on rent is considered “severely burdened,” according to the policy and research arm of the U.S. Department of Housing and Urban Development.
The Virginia median monthly rental cost is $1,326, according to the 2021 U.S. Census Bureau estimates. But rent can be much higher in some areas of the state. Thirty percent of the annual rental cost would be close to $16,000 annually, based on census data. The estimation does factor in some utility costs.
Who is being affected?
Public servants, teachers and firefighters are examples of professions that are often unable to rent in places where they work, specifically in Newport News, Northern Virginia and Richmond, according to Price.
The top 10 occupations with the most employees in Virginia range from fast food workers to software developers, according to the U.S. Bureau of Labor Statistics data. But, of those 10 occupations, only three can comfortably afford the median rent based on 30% of their income.
Restaurants were in the top five professions in the Richmond area in 2022, according to BLS occupation statistics. The workforce is approximately 50,000 people. That includes jobs such as bartenders, chefs, cooks, dishwashers, hosts and servers. The mean annual income for the occupations is just over $30,000, according to the BLS.
William “Mac” McCormack owns three restaurants: McCormack’s Irish Pub, McCormack’s Whisky Grill and McCormack’s Big Whisky Grill.
McCormack opened the pub in the Shockoe Bottom area of Richmond 25 years ago, he said. Richmond did not have a booming real estate market at the time, and rent was not considered expensive, he said.
“I keep hearing the costs are getting higher and higher and some of them are having to move further away from the city just in order to live,” McCormack said.
The bar is popular among restaurant industry employees who may want something to eat or drink when they are done with their shift, he said.
“I feel like the idea of having a one-bedroom apartment at this point for someone who works in the [restaurant] industry, is tough,” McCormack said.
McCormack feels confident his employees earn a liveable wage despite climbing real estate costs, he said.
“I’ve always made it so that people can afford to live,” he said.
It took increasing his employee’s salaries to make it work, he said. McCormack increases his workers wages based on performance, according to the restaurant owner.
To help renters and reduce the housing crisis, minimum wage needs to increase, Del. Price said.
“Right now, it’s kind of like a perfect storm where forecasters are saying it’s gonna get worse before it gets better,” Price said.
More affordable housing is needed, along with a decrease in corporate price gouging, she said. Developers also need incentives to create more inclusionary housing.
Inclusionary housing is a program that incentivizes developers to sell or rent a percentage of their properties to low-income residents. Incentives can include tax abatements and reductions, or the right to build at higher densities.
“Doing a better job of enticing developers who want to make a difference — as opposed to just wanting to make money — and giving them more projects to work on,” Price said.
Committee slams door on housing bills
There is a shortage of housing in Virginia. The state needs over 165,000 housing units and the city needs over 23,000, according to the recent Richmond City Council resolution. The shortage is compounded by out-of-state investors who charge higher rent or who purchase and flip homes at a higher cost.
Laura Dobbs is a housing attorney for the Virginia Poverty Law Center. She advocates for better health and safety policies for tenants and homeowners across local and state governments, Dobbs said.
“Having housing is at the center of so many issues,” Dobbs said. “Having stable housing, having healthy housing, is the foundation block for having a successful and healthy life.”
Without stable housing a person loses access to things like better health care, jobs and schools, according to Dobbs. This crisis is due to rising rent prices and stagnant pay, she said.
“The situation is pretty dire,” Dobbs said.
Partisan politics during the General Assembly session can contribute to the growing housing problems, Dobbs said.
“Unfortunately a lot of the policies that were put forward this session failed,” Dobbs said. “I think a lot of partisan politics got in the way of looking after people’s constituents who are suffering.”
Del. Betsy Carr, D-Richmond, introduced HB 635 to develop inclusionary housing in Virginia. It did not advance past a Republican-controlled House committee.
Del. Daniel Marshall III, R-Danville, introduced HB 1413, to promote the development authority of safe and affordable housing. It did not advance past the same House committee.
Putting a roof on the problem
Richmond leaders aim to create 1,000 new affordable rental units each year and 2,000 new homeownership opportunities for low-income residents by 2030, according to the resolution.
Nonprofit organizations like Virginia Supportive Housing, or VSH, want to alleviate the state’s affordable housing issues by creating more permanent solutions, according to Kate McCarthy, VSH communications officer.
VSH has built affordable housing in Charlottesville, Hampton Roads and Richmond.
VSH analyzes a city’s area median income. They ensure that the cost of their housing is affordable to citizens making a certain percentage of the area’s median income, according to McCarthy.
“We actually have a few buildings where about half of the units are reserved for individuals making 50% or less of area median income,” McCarthy said.
The organization also provides services to its residents, like social workers and other programs, according to McCarthy. Many of their residents are dealing with more than just financial obstacles, according to VSH.
“There’s always been a need for affordable housing,” McCarthy said. “Especially for the past few decades, there’s been a really high need for affordable housing.”
The increased need for affordable housing is tied to the overall value of housing in society, McCarthy said.
“How we value housing, whether or not that’s something everyone has a right to, as opposed to a commodity in the market,” McCarthy said. “But the situation has been pretty serious for a few years now.”
Capital News Service is a program of Virginia Commonwealth University’s Robertson School of Media and Culture. Students in the program provide state government coverage for a variety of media outlets in Virginia.