This chapter uses the latest available population projections for the state to estimate housing demand in the coming decade. It also discusses the limitations of such data and the need to generate new estimates as post-pandemic census figures are made available.
Major takeaways in this chapter include:
- Virginia will likely reach a population of 10 million by 2040—with growth continuing to be concentrated in the urban crescent.
- The share of seniors in Virginia will grow faster than all other age groups, creating major shifts in housing demand and the workforce.
- Policymakers should reevaluate projections when the latest 2020 Census figures are incorporated into new population predictions published by the University of Virginia Weldon Cooper Center for Public Service in 2022.
Based on the most recent population projections published by the Weldon Cooper Center for Public Service at the University of Virginia, the Commonwealth will have a total population near 9.9 million in 2040. If the average household size stays slightly less than 2.5 persons, this means that Virginia will need to build approximately 25,000 more homes each year to accommodate this growth. However, these projections do not yet incorporate the results of the 2020 Census.
Small Metro Housing Markets will also grow while Rural Housing Markets will continue to decline in numbers.
Population growth from 2020 to 2040 is expected to be most rapid in Large Markets, where the total population will reach just over 1.7 million by 2040. Small Markets will see growth but at a slower pace, reaching a quarter of a million people by 2040. On the other hand, Rural Markets are projected to lose 14 percent of their population by 2040.
These shifts in population will have major economic consequences that will impact housing supply and demand across Virginia.
The Northern Valley, Charlottesville, and Richmond also will grow by more than 15 percent in the next two decades.
The most rapid growth will occur in four markets in Virginia: Northern Virginia, the Northern Valley, Charlottesville, and Richmond. These four markets will see their populations grow by over 15 percent between 2020 and 2040. Northern Virginia will see the most rapid growth, with the population growing by over 25 percent within two decades, while Hampton Roads, one of Virginia’s most populous regions, will see relatively slow growth.
All Rural Markets will see population declines, with the Alleghany Highlands expected to experience the greatest population loss at over 15 percent.
High-density parts of Northern Virginia will grow, while other major cities in the urban crescent might not grow at all.
Breaking down population projections by submarkets shows that the greatest growth will occur in the suburban areas of Virginia. Prior to 2020, these areas have seen growth as urban cores become increasingly unaffordable and this trend is expected to continue. Suburban areas in proximity to Interstate 95 will see the most increases as Washington, D.C. commuters continue to search for housing convenient to their work.
Although Virginia’s youngest residents will continue to increase in number, the segment of the population expanding most dramatically will be the oldest; the number of Virginians 65 and older will nearly double in the next two decades. This age-based demographic divergence will have major implications for the Commonwealth’s housing and workforce. The needs of seniors will be a priority statewide issue.
At the same time, there will be increased demand for housing for Generation Z and millennials, who are often locked out of the homeownership market due to high home prices and economic burdens such as student and automobile loan debt. For younger generations looking to form families, these costs coupled with potential child care costs further put home purchase out of reach.
Generation Z’s expansion will not be evenly distributed across Virginia’s market groups. Younger Virginians increasingly will reside in Virginia’s Large and Small Markets, while Rural Markets will lose much of their younger population. The loss of young people in rural parts of the Commonwealth will be detrimental to rural economies in need of a workforce.
The growth in the population 75 and over will be significant in all market groups, and 75-and-over will be the only age group to increase in Rural Markets. The greatest growth will occur in Large Markets where this age group will nearly double in number from 2020 to 2040.
HB854 asks for “an informed projection of future housing needs in the Commonwealth.” While the engagement results and data included in this report help paint that picture, another common method for estimating future housing needs is to project actual household growth in addition to the standard population projections analyzed above.
In many cases, these household projections are disaggregated by age, race/ethnicity, and/or income to help researchers and policymakers better anticipate and prepare for future needs. Such estimates apply various methodologies to a series of demographic data, especially decennial census counts, annual population estimates, and other details from products like the American Community Survey.
What about projections by race and ethnicity?
In the past, the Weldon Cooper Center published race and ethnicity projections alongside projections by age groups. However, the center ended production of these estimates several years ago. Researchers cite both the way people identify and how the Census Bureau collects data as the major reasons why it is difficult to produce accurate projections by race and ethnicity today.
Although the specific methods for household projections can vary, each is an arithmetic model with inputs and outputs. The accuracy of the outputs depends on the quality of the inputs. Unfortunately, the current timing of data availability in 2021 means that high-quality inputs are not available to produce reliably accurate estimates for future household growth in the Commonwealth.
This is the result of pandemic-related delays in the 2020 Census data releases and the timing of the HB854 deadline, which falls prior to the first release of American Community Survey data collected during the pandemic. The next expected release of high-quality population projections from the Weldon Cooper Center (which will incorporate the 2020 Census results) is early 2022.
New household projections for Virginia, its regions, and its localities cannot be completed until later in 2022. These projections should incorporate:
- 2020 Census data on population and housing units, released in August 2021,
- 2016-2020 American Community Survey 5-year estimates, and its associated Public Use Microdata Sample (PUMS), to be released in early 202235,
- New population projections for Virginia and its localities, published by the Weldon Cooper Center, to be released in early 2022, and
- Best practices on household projection methodology, for which there is no universally recognized standard.