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We’re continuing our series on whether or not increasing the housing supply will lower rent. This time we’re asking ‘is there really a housing shortage in Hampton Roads?’ Plus we’ve got the latest housing numbers to start your weekend.
We’re continuing our series on whether or not increasing the housing supply will lower rent. This time we’re asking ‘is there really ahousing shortage in Hampton Roads?’ Plus we’ve got the latest housing numbers to start your weekend. As always, if you like this work and want to help keep it free please consider supporting us here. We are entirely donor funded.
Along with averages, we’re adding median numbers to our reports.
The average asking rent in May came in at $1,803 / month.The median asking rent was $1,700 / month. The breakdown by unit type:
Studios: Average: $1400 | Median: $1,410
1 Bedroom: Average: $1,538 | Median: $1,534
2 Bedrooms: Average: $1,747 | Median: $1,713
3 Bedrooms: Average: $2,213 | Median: $2,121
4+ Bedrooms: Average: $2,144. | Median: $2,034
“Virginia is experiencing a significant housing shortage.” That’s the opening line of a recent Op-Ed in the Virginian-Pilot. Seemingly, Virginia is not facing this problem alone. Dispatches from every major and micropolitan city across America tell of the same acute shortage of places to live. The commentariat are quick to pin high rents on this lack of housing. And Hampton Roads is no exception.
In an interview with WHRO, YIMBY Hampton Roads notes that the region is short 50,000 homes, leading to an affordability problem. This tracks with Norfolk’s new comprehensive housing report that calls for building 250 new units each year to make up for a housing deficit.
Much of the debate around housing policy, at home and elsewhere, is based on a somewhat reasonable assumption that there is a region-wide housing shortage. But is it true? In our series so far, we have examined Collateralized Loan Obligations; the evidence that increasing housing supply will lower rents, and the impacts of short-term rentals. Today we are asking: Is there actually a housing shortage in Hampton Roads?
One way to measure if there is a shortage of housing units is to look at the vacancy rate. The vacancy rate is all vacant housing units as a percentage of total housing units. These vacant units include units available for rent or for sale, off-market units, and units that are rented but empty. As housing supply goes down, the vacancy rate goes down.
Let’s take the Hampton Roads region as a whole. The chart below shows the region’s vacancy rate since 2014. The current vacancy rate sits at 5.9%, down from an uptick in 2022. That 5.9% vacancy rate is a historic low for the region. Housing availability does seem to be dwindling. The drop in vacancy rate can be attributed to any number of factors such as less apartments on the market, increased renter demand, or high mortgage rates forcing would-be buyers to rent longer. But, the story is a little more complicated.
Hampton Roads has 744,132 housing units. A 5.9% vacancy translates to around 44,000 empty homes at the moment (oddly close to the push for 50,000). While it’s safe to say housing supply is falling relative to demand, that shortfall is not distributed equally.
Data from the National Low-Income Housing Coalition paints a grim picture about who bears the brunt of Hampton Roads’ falling housing stock. Looking at HUD's Fair Market Rents, they find poor and working class renters are struggling the most.
The AMI, or Area Median Income, in Hampton Roads is $100,500 a year.
For every 100 households making 50% AMI or less, there are only 43 affordable units available to rent. To put it another way, if 100 families making $50,000 a year wanted to rent without being rent-burdened, they would all be competing for just 43 homes.
Worse, for every 100 households making 30% AMI, roughly $35,000 a year, there are only 26 affordable units available to rent.
The story is quite different for those at 100% AMI. For every 100 households making $100,500 a year there are 101 affordable units available to rent. In other words, for households making the median income in the region, there is a surplus of affordable housing to choose from.
Is there a housing shortage in Hampton Roads? Yes. But not for everyone. The housing shortage skews towards lower-income renters. Households making the middle range of income are experiencing a surplus of housing. If those numbers are striking, consider the fact that they haven’t changed much for over a decade.
Below is a chart that shows the vacancy rate in Hampton Roads against available rental units per 100 households at 50% AMI. The amount of affordable apartments for households making half the region’s median income has been between 57 and 43 since 2014, regardless of whether housing stock increases or decreases. In a seemingly paradoxical move, between 2014 and 2016, as housing stock increased, renters at 50% AMI lost available rental units. Meaning that as the housing stock went up for the region as a whole, low-income renters lost affordable housing options. And as housing stock fell between 2016 and 2017, renters at 50% AMI actually gained more housing choices!
If building more housing lowers rents, we would see the opposite happen. As a caveat, it does appear true that dwindling supply puts pressure on renters at or below 50% AMI. It does not appear true that simply increasing supply alleviates that pressure.
There are two conclusions to draw. First, Hampton Roads does have a housing shortage, but it’s a shortage experienced acutely by poor and working-class households making $50,000 a year or less. Second, the housing shortage is not new. It’s been here for a least decade. And whether the supply of housing goes up or down, households at the 50% AMI will continue to feel the burden of renting.
Not once since 2007 have households at 50% AMI had a surplus of affordable rental housing to choose from. While households at 100% AMI have had a consistent surplus of affordable rental housing since 2007.
The way we speak about the housing shortage matters. Claiming a shortage in the abstract offers a blinkered, radically anesthetized vision of a rental market that works for some and not others. If we base our housing policy on a misunderstanding of the rental shortage, we will end up with misguided solutions. ‘Build more’ has been the dictum of housing advocates for decades, in Hampton Roads it hasn’t worked for renters who need help the most. On the heels of a renewed push to deregulate developers, I am reminded of a line in Giuseppe di Lampedusa’s novel The Leopard, “everything must change so that everything can stay exactly the same.”
Lest we end up repeating the mistakes of the past, like when Hampton gave incentives to real estate investment firm Collins to build apartments, only for them to boast about having the highest rents in the region.
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