16 Rental market

This chapter analyzes the state’s rental market and current characteristics of Virginians who rent their homes. It also provides data on the scope and distribution of apartments supported by forms of public assistance that reduce rents to make them more affordable.


Major takeaways in this chapter include:

  • The age and income of the average renter in Virginia has increased, likely due in part to fewer homeownership opportunities.
  • Limited apartment supply, especially in high-growth areas, continues to tighten vacancy rates and raise rents.
  • Many low-income renters continue to be cost-burdened as the deficit of affordable rentals grows and demand is ever-increasing.
  • There are over 300,000 cost-burdened renters who have very low incomes—resulting in a corresponding gap of over 300,000 deeply affordable rental units in Virginia.
  • Over half of Virginia’s approximately 170,000 publicly-supported rental apartments rely on Low-Income Tax Credits from Virginia Housing. Three-quarters of these could be lost to expiring affordability restrictions by 2040.
  • The current supply of federal Housing Choice Vouchers is inadequate to meet the need; tens of thousands of low-income Virginians remain on waiting lists.

16.1 Virginia’s renters

Finding 1: A range of household types are common among renters.

Most renters live either by themselves or with their family.

FIGURE 16.1: Renter household types

No specific household type is dominant among renter households in Virginia, but renters in Virginia are much more likely to live with another family member or by themselves when compared to homeowners.

Finding 2: Renters generally have small household sizes.

Over a third of all renters in the state live alone.

FIGURE 16.2: Renter household size

Throughout Virginia—and particularly in Small and Rural Markets—renters are more likely than homeowners to live alone or with one other person. There are few distinctions in renter household size across market groups though Large Markets are more likely to have larger-sized renter households than other market groups.

Finding 3: Older Generation X and baby boomer households are increasingly renting across Virginia.

The number of renters aged 45 years or older is outpacing the growth of younger renters in all Virginia housing markets.

FIGURE 16.3: Renter household age

Across the United States there has been a major relative increase in the number of baby boomers who are choosing or being forced to rent. In Virginia the number of seniors (65 years and older) who are renting has increased by over 20 percent in Large and Small Markets.

Baby boomers often have higher incomes, and their demand for rental housing is driving the high-end rental market.26 27 High demand and low supply continue to influence prices that are out of reach for low- and moderate-income families.

Finding 4: Most renters across Virginia are white.

However, there are more renters of color than white renters in the urban crescent.

FIGURE 16.4: Renter race and ethnicity

Because Virginia’s population is majority white, white renters still account for a large proportion of renter households in the Commonwealth. However, people of color make up a larger proportion of renters than they do homeowners. Renter households are the most racially and ethnically diverse in Large Markets where households of color make up a majority of renters.

Finding 5: Renter income in Virginia is more evenly distributed than homeowner income.

While higher-income renters are common in Large Metro Housing Markets, most renters elsewhere are likely to earn relatively little.

FIGURE 16.5: Renter household income

Compared to the distribution of homeowner incomes, renter household incomes are much more evenly distributed. Increased preference for renting’s flexibility and high barriers to homeownership have increased the number of renters across Virginia, even among high income earners.

Renter income varies much more in Large Markets where households are widely distributed across income groups and where luxury rentals are more available. High-income Northern Virginia localities like Loudoun County also push renter incomes higher in Large Markets.

By contrast, in Small and Rural Markets renter households are more likely to earn less than $25,000. While housing costs are lower in these communities, very low incomes make it difficult for many renters to save money and pay for unexpected expenses.

Finding 6: Renters have diverse educational backgrounds in Virginia.

In Virginia’s Large and Small Metro Housing Markets, renters often have some college experience or higher.

FIGURE 16.6: Renter educational attainment

Renters have diverse educational backgrounds in Virginia’s Small and Large Markets, but renters in Rural Markets are less likely to have a bachelor’s degree. The percentage of renter households with a bachelor’s degree or higher has been on the rise since 2010. From 2010 to 2019, the number of renter households with a bachelor’s degree or higher has increased by 41 percent, while lower educational attainment households have declined or remained stagnant in recent years.

16.2 Rental prices and supply

Finding 1: Apartments are becoming more expensive in every part of the state.

Small Metro Housing Markets have the largest relative gains in higher-cost units.

FIGURE 16.7: Change in gross rent

The number of apartments with gross rents below $700 has decreased across Virginia in the last decade—especially in Large Markets—and apartments with higher gross rents have increased substantially. Small Markets have seen the most growth in higher-cost units; units with rents between $1,250 and $2,000 more than doubled from 2010 to 2019. High-cost rental units have increased even in Rural Markets.

Finding 2: Actual rents have increased more than renter incomes, but inflation adjustments flip the trend.

Average renter incomes have increased sharply in recent years.

FIGURE 16.8: Median gross rent and median renter income

An analysis of Virginia’s rent and income trends without adjusting for inflation suggests that rent increases have outpaced the growth in renter incomes. But adjusting to real dollars indicates that median gross rents have declined in Virginia since 2011 after rising from 2005 to 2010. At the same time, renter incomes have actually trended upward.

This complexity is likely the result of several factors, including Consumer Price Index (CPI) adjustments based on national averages, increased prevalence of upper-income renters who still have trouble buying homes in tight markets, and the absence of a true statewide rental market.

Finding 3: Rental vacancy rates are tightening across the state.

Lower vacancy rates make it more difficult to find a home.

FIGURE 16.9: Rental vacancy rates

Rental vacancy rates are dropping throughout Virginia. Large Markets are experiencing the most dramatic vacancy rate decline—from seven percent to five percent in the past decade. Low rental vacancy rates tighten the rental market and make it more difficult for low-income renters to compete for housing. Declining vacancy rates have major implications for housing affordability and underscore imbalances in supply and demand.

During the ongoing COVID-19 pandemic, rental vacancy rates across the nation have dropped to historic lows. By second quarter of 2021, Virginia’s rental vacancy rate was 4.4 percent, the 14th lowest rate in the country—with Vermont having the lowest at 1.8 percent and North Dakota having the highest at 12.9 percent.

FIGURE 16.10: Rental vacancy rates by state

Finding 4: Single-family detached homes are an important source of rental housing, especially in rural Virginia.

In Rural Housing Markets, single-family detached homes made up half of the rental housing stock in 2019.

FIGURE 16.11: Renter housing units by structure type

Few opportunities for dense development and increasing barriers to homeownership have accelerated the demand for single-family rentals (SFR) in Virginia’s Rural Markets where half of all rental housing consists of single-family detached homes.

Single-family detached homes also make up a significant portion of the rental housing stock elsewhere—23 percent in Large Markets and 24 percent in Small Markets. Freddie Mac has noted that SFR are helping to fill major gaps in the multifamily market by offering options for larger households and those wanting to live in a single-family home but unable to purchase one.28

Although SFRs are an important source of rental housing and an expanding slice of investor and developer portfolios, they also reduce the stock of for-sale homes. This causes supply to fall short of high demand, driving home prices even higher.

16.3 Affordability

Finding 1: Housing cost burden for Black and Hispanic renters in Virginia continues to rise.

While all other racial groups have experienced a decrease in their share of cost-burdened renters, Black and Hispanic or Latino renter cost burden has increased since 2010.

FIGURE 16.12: Renter cost burden by race and ethnicity

The pandemic exacerbated affordability challenges for many renters of color who often worked on the frontlines in essential yet low paying jobs. Nearly half of Black and Hispanic renters were cost-burdened in 2017; diminished hours and lost jobs during the pandemic put a large number of renters of color at risk of eviction and homelessness.

Finding 2: Regardless of renter household type, affordability has not improved.

Across all household types, the percentage of cost-burdened renter households has remained unchanged since 2010.

FIGURE 16.13: Renter cost burden by household type

When renter households are broken down into different household types, none have seen an improvement in affordability. From 2010 to 2019, the share of cost-burdened renter households of all household types has either remained the same or increased slightly.

But seniors living alone are more likely to be severely cost-burdened than any other household type. In 2017, over half of elderly non-family households (56 percent) were severely cost-burdened. Rising rental costs can be catastrophic for the many seniors living on fixed incomes.

Finding 3: Housing cost burden is on the rise for nearly all households with below-average incomes.

Despite little change in the total percentage of cost-burdened renters, the share of cost-burdened renters for low-income and moderate-income households has risen.

FIGURE 16.14: Renter cost burden by income

An assessment of cost burden by income group brings the rise in unaffordable rentals into focus. Households making less than 100 percent AMI are increasingly becoming cost-burdened. This shift is most apparent for low-income (51 to 80 percent AMI) and moderate-income (81 to 100 percent AMI) households. Between 2010 and 2017, the share of cost-burdened low-income renters grew six percent and the share of cost-burdened moderate-income renters increased four percent.

Affordability for ELI households (less than or equal to 30 percent AMI) and VLI households (31 to 50 percent AMI) is even worse. Over 80 percent of ELI and VLI households are cost-burdened, while 65 percent of ELI households are severely cost-burdened.

While ELI and VLI households most urgently need affordable rental housing, the increasing number of low- and moderate-income renter households that are cost-burdened signals an advancing crisis demanding attention.

Finding 4: The supply of deeply affordable rental housing has decreased since 2010.

ELI and VLI households increasingly reside in homes that are not affordable to them.

FIGURE 16.15: Renter housing affordability match

Comprehensive Housing Affordability Strategy data can present the income of households based on AMI and the affordability of the housing unit they occupy. This association indicates if a household is matched to a housing unit that is affordable to them.

Based on this data, nearly 300,000 low-income Virginia renter households occupied a home that was not affordable to them in 2017. This spotlights a shortfall of roughly 300,000 units affordable to households making less than 80 percent AMI and an inadequate housing supply for households making more than 80 percent AMI. Many households making 80 percent AMI reside in rental housing that would be affordable to those with lower incomes, further squeezing out lower-income households from affordable housing.

16.4 Assisted rental housing

Finding 1: There are more than 170,000 publicly-supported affordable rental homes in Virginia.

Over half of these apartments receive Low-Income Housing Tax Credits from Virginia Housing.

FIGURE 16.16: Federally-supported rental units in Virginia

According to the National Housing Preservation Database, 171,370 rental homes in the Commonwealth receive subsidies to lower their rents. Many different programs support these subsidies and a significant number of affordable apartments are individually supported by multiple subsidies, but the LIHTC is the most common form of assistance.

LIHTCs provide a tax incentive to housing developers to construct or rehabilitate rental housing and reserve a certain number of units for VLI and ELI households. Virginia has approximately 91,599 rental homes supported by LIHTCs provided by Virginia Housing.

But in 2017, more than 300,000 cost-burdened renter households were making less than 50 percent AMI. This represents a massive gap in affordability for a significant number of Virginians.

Most of the state’s LIHTC units are located in Large Markets where most low-income renters live and where apartments (of all types and prices) are more common. In rural areas, where there are fewer low-income renters and multifamily developments, the preservation and replacement of existing affordable housing stock is often a more urgent need than significantly expanding supply.

For example, homes supported by USDA Rural Development subsidies, particularly Section 515 rental properties, are at-risk due to owner opt-outs from affordability restrictions and the decrease in overall USDA rental assistance funding. Further loss of dedicated affordable rentals in rural Virginia will place additional pressure on already sparse Housing Choice Vouchers, whose recipients rely on single-family rental homes that are less likely to meet the program’s Housing Quality Standards (HQS).

All types of entities are involved in the production of affordable housing in Virginia—including for profit organizations. But a large portion of federally-supported rental housing projects have not reported their organization type—an important data point to understanding the landscape of affordable housing.

Finding 2: Without additional subsidy, Virginia is at risk of losing nearly three quarters of its LIHTC housing stock by 2040.

By 2040, over 60,000 of Virginia’s LIHTC housing units could lose their affordability restrictions.

FIGURE 16.17: Expiring LIHTC affordability restrictions in Virginia

Although LIHTC aids the construction and rehabilitation of housing units in Virginia, the program does not mandate the permanent affordability of those units. Program participation requires a minimum 15-year compliance period, and Virginia Housing’s LIHTC program generally requires 30 years of compliance through a 15-year extended use period. After that time, owners can convert income-restricted units to market rate.

While many properties remain affordable after the initial compliance period—and some are expected to remain affordable after the 30-year period—there is always a risk that properties will convert to market rate without additional allocations of tax credits or subsidies.

By 2040, almost three quarters of LIHTC units will reach the end of the 30-year affordability period. While the potential loss of affordable units is a priority, the physical condition of these 30-year old properties also deserves attention.

Some LIHTC programs in other states require affordability compliance beyond 30 years. For example, California has a mandatory 55-year extended use period for nine percent tax credits, and major incentives for the same compliance term from four percent tax credits.

Finding 3: Housing Choice Vouchers make homes affordable to more than 45,000 renters in Virginia.

Public housing authorities, Virginia Housing, and local administrators all help deliver these vouchers.

FIGURE 16.18: Housing Choice Vouchers in Virginia

The Housing Choice Voucher (HCV) program, which is a major component of federal assistance known as “Section 8,” is the federal government’s major program for addressing the affordable housing needs of VLI households. The program provides rental assistance to qualifying households that are then able to choose their type and location of housing as long as it meets certain criteria.

As of August 12, 2021, there were 45,587 HCVs in Virginia. Given the number of renters making less than 50 percent AMI in 2017, this translates to roughly twelve vouchers per 100 VLI or ELI renter households. While there is a greater share of HCVs in Large Markets to meet the need, Small Markets do not have a comparable share of HCVs for their low-income renter households.

Finding 4: Tens of thousands of Virginians remain on voucher waiting lists.

The scale of federal rental assistance is not enough to meet the demand from VLI renter households.

FIGURE 16.19: Demand for Housing Choice Vouchers in Virginia

The HB854 public housing authority survey reported that there were just over 56,000 households on waiting lists for public housing, LIHTC units, or HCVs. The survey did not include all PHAs in Virginia so this number is an undercount of households on PHA waiting lists.

When compared to the number of estimated cost-burdened renter households making 50 percent AMI or less in 2017, the current number of HCVs does not come close to meeting the total need for assistance, which will only continue to worsen if ignored.