Affordable Housing | Virginia Market Update
Affordable Housing Investments & The Virginia Economy
Investment in Virginia multifamily assets continues to flourish, as investors from out-of-market look to capitalize on the higher cap rates and stable population base that the region provides. Moreover, Low-Income Housing Tax Credit multifamily assets are becoming a more popular investment as they have an average sales price per unit approximately 50% less than market rate properties while compensating investors with market rate yields, or better. The overall effect being that investors are realizing they can enter into recession-proof, workforce housing investments at a fraction of replacement cost.
Home to more than 8.6 million people, the Commonwealth of Virginia is the 12th most populated state in the nation. Virginia’s population has grown 7.9% since 2010, outpacing the U.S. population growth of 7.6% over the same time period.
The state labor market continues to tighten with unemployment rate decreases observed in every corner of the Commonwealth. The state unemployment rate decreased to 2.9% as of June 2019, 80 basis points lower than the national unemployment rate of 3.7%.
Virginia’s economy is as diverse as the shipbuilding in the Norfolk MSA, agriculture in rural areas, and seafood harvesting along the Atlantic coast to the technology companies of Northern Virginia. The state’s employment climbed to another record high with nonfarm payrolls reaching 4,031,600 in June 2019. There are 21 Fortune 500 companies headquartered in the state, including General Dynamics, Capital One, Northrop Grumman, Norfolk Southern, and Amazon’s highly anticipated HQ2.
Even as the economic expansion reaches full maturity, further economic growth is expected in the Commonwealth. Increased consumer expenditures supported by continued employment and wage growth as well as federal fiscal stimulus should contribute to moderate national and state economic growth into the coming year.