The cost of housing in the United States is out of hand.
Mortgage rates are nearing 8% and with steadily rising home prices and the lowest inventory of homes for sale in over a decade, the housing market is increasingly pricing out working- and middle-class families.
The housing market in Virginia paints a similar picture: in Sept. 2020, the median home sale price in Virginia was $354,400. As of Sept. 2023, that figure had risen to $412,800, a 16% increase, according to Redfin. Renters are also paying more in Virginia. At the end of 2020, the average cost of rent in the commonwealth was $1,660 per month. As of Nov. 2023, that figure has risen to $1,946, a 17% increase.
According to Brian Koziol, executive director of the Virginia Housing Alliance (VHA) a nonprofit that aims to end homelessness in the commonwealth, there are a few reasons why this is happening.
Why the Cost of Housing Has Gone Up
Koziol says one of the largest reasons why Virginians are struggling to find places to live is because new housing isn’t being built fast enough.
Although there’s been a steady rise in new, multifamily construction in some areas throughout the state, according to the Department of Housing and Community Development, the median age of a home in Virginia is 38 years. Roughly 55% of the state’s housing stock was built between 1960 and 1999, and the number of homes built has declined since 1999.
“We’ve got this 15-year period where we have been grossly under-producing and not meeting the needs of a continually growing population,” Koziol said. “You factor in rising costs of everything from labor to bricks and sticks to everything that goes into housing…prices go up.”
Koziol also says the lack of housing construction in recent years is partly due to supply chain issues. For example, lumber prices skyrocketed in 2021 as many companies in the industry had to slow down or stop production due to COVID-19 lockdowns the year prior.
Nationally, Koziol says one of the main problems is the fact that inflation has “greatly outpaced real wage growth” in recent years. According to new Bankrate research, the gap between wage growth and inflation is finally closing, but won’t fully until the fourth quarter of 2024.
“Everything is getting more expensive,” Koziol said. “However, the average wage earner is not making any more money than they were 60 years ago. That’s the big thing, and that’s a multifaceted issue in and of itself, but it is really the driving factor behind why housing has become unaffordable.”
Those looking to build homes in Virginia are also dealing with a “hyper-regulatory environment,” according to Koziol. They have to deal with zoning laws, public participation requirements that add time and cost to development, land use regulations, and more.
“It is death by a thousand cuts,” he said.
Who This Is Affecting
Koziol says the rising cost of housing in Virginia is affecting low-income residents the most acutely.
He says that these families often have to make difficult decisions, like choosing between paying rent or fixing a flat tire so they can continue to go to work, for example, with eviction being a real danger.
“The trauma and stress of being forced to live like that also takes a toll on the mental health and physical health of households that are struggling to make ends meet,” he said.
Koziol also stressed the importance of addressing homelessness.
“We know that people experiencing homelessness are incredibly costly to society,” he said. “Research has shown it is far cheaper to house people than it is to leave them unsheltered because they create a disproportionate impact on social services. They create a disproportionate impact on medical services, hospital care. They oftentimes are using the emergency room as a primary care physician.”
Yet, Koziol says, the state is not investing in a way that will address those needs. In this way, the housing crisis is also a social issue.
“(The fact that) the wealthiest nation in the world has people living unsheltered is really morally indefensible,” he said.
What’s Being Done
There are steps being taken on the state level to address the housing crisis.
Koziol and the Virginia Housing Alliance, for example, have long advocated for increases to the Virginia Housing Trust Fund, the state’s largest development mechanism for expanding housing opportunity. Because of their lobbying efforts, and those of groups similar to them, the budget for the fund has grown from $11 million to $75 million in recent years.
The Virginia Housing Alliance has also advocated for funding the 5,000 Families Program, which would provide rental relief to low-income Virginia families with children on a monthly basis to keep their rent affordable for the long-term.
“We are hoping that the legislature will fund that program because we know that intervening at a young age and providing housing stability for kids is really the key to success,” Koziol said.
The VHA’s other legislative priorities for next year include advocating for the preservation of affordable housing by enabling localities to establish a Right of First Refusal, a clause that gives potential home buyers the right to enter into a business transaction with a person or company before anyone else can; in other words, if a buyer makes an offer and it’s accepted, then someone can’t outbid them after that.
The VHA also wants to ensure that affordable housing properties receive accurate property tax assessments. It’s important that these assessments be accurate, Koziol says, because they determine how much a buyer will owe, helping them to budget accordingly.
The VHA also wants to help ensure that housing and employment assistance is provided to Medicaid recipients, and help increase investments in permanent supportive housing and homeless services.
The organization also works with both nonprofit and affordable housing communities, as well as developers and homeless service providers, to come up with solutions to the crisis and learn how to better serve their clients. The VHA also provides educational opportunities for these providers to ensure that they’re providing the best services possible.
Koziol says that to affect real change, however, more support is needed from the federal government as well.
Most recently, the Biden administration announced that it’s launching a multi-agency effort to ensure access to affordable housing, introducing a slew of resources to help convert high-vacancy commercial buildings to residential use.
The White House says these efforts are an attempt to create “much-needed housing that is affordable, energy efficient, near transit and good jobs, and reduce[s] greenhouse gas emissions.”
Specifically, the administration is supporting the conversion of high-vacancy commercial buildings to residential use through new financing, technical assistance, and sale of federal properties.
“We need to continue to push for large federal investments because the federal government is really where we can see large, impactful investments made, and continue to push at the state level for increasing investments to meet the need,” Koziol said.
“Housing is something that every citizen needs, every resident needs, and so we need to create the political will to fund it at scale.”
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