Trickle-down effect of tight housing market forces rental prices up in Henrico, too

Anyone who has searched for a rental property in Henrico recently knows prices have been going through the roof.

Rental prices for a single bedroom apartment in the county have shot up by more than 15% during the past year, according to data from Rent.com as of June 30, 2022. Rent price increases are not limited to Henrico, though; they have climbed more than 10% nationwide, according to CoStar Group, and 15% in Virginia according to Rent.com.

Henrico has shown higher price growth than surrounding areas since the beginning of 2020 –30% – when compared with Chesterfield County (26%), Hanover County (25%) and the city of Richmond (17%), CoStar Group Director of Market Analytics Michael Cobb said.

Although price growth has stabilized from last year’s all-time high, the moderation is only relative. Between 2015 to 2019, rents typically grew 3% to 6% annually in Henrico but already have shown an 8.5% growth so far in 2022, Cobb said.

Representatives from several Henrico apartment complexes, including Abbington West End Apartments, Maple Spring Apartment Homes and Carriage Club Apartments, cited an overall rise in market demand as a major factor in the price increases.

Demand has more than doubled in Henrico County since the COVID-19 pandemic as between 2015 to 2019 the annual net growth of occupied units – meaning move-ins minus move-outs – was 200, according to Cobb. But in 2021 Henrico saw a net growth of approximately 550 units.

The Partnership for Housing Affordability’s Housing Resource Line, which offers a phone hotline for those who are looking for housing, has witnessed had a higher call volume than ever before – about 800 to 900 per month, PFHA Executive Director Jovan Burton said. Between April 1 and June 22 this year, there were 500 calls from Henrico, and the top stated need was an affordable place to stay, Burton said.

Part of this increased demand across the country and Henrico is also a trickle-down effect from the rising prices of single-family homes.

“The real estate market is still way over the top, people are paying $30,000 to $40,000 over asking price and nobody wants to pay $40,000 over the value of a home,” a representative from Carriage Club Apartments said. “A lot of people are renting instead and waiting until the market goes down to buy.”

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In the Richmond area, recent population growth has also contributed to the growing demand. With the rise of remote work, people seeking more affordable housing have begun to move from higher-cost areas like New York City and Washington D.C. to Richmond, Cobb said.

People often are drawn to Henrico County because of its public school system, low overall tax rates and proximity to a variety of amenities, including retail destinations like Short Pump, and office locations in the West End or downtown.

“Generally, it's seen as one of the most centrally located geographies within the Richmond metro area in terms of a well-rounded environment like access to multifamily communities, single family communities and office or shopping nodes,” Cobb said.

Not only demand but a recent spike in inflation and supply of units also has posed challenges for those seeking rentals.

“A lot of this stems from just the lack of supply, which means that units are at a premium,” Burton said. “And with units being at a premium, you can charge a lot more for that – in some instances there's been bidding wars for rental units.”

Though price growth in Richmond and Henrico has steadied, neither Cobb nor Burton expects rent prices to come down to pre-pandemic levels very soon.

But while COVID-19 eviction protections and state rent reliefs have expired, there is still a clear need, according to Burton. As of May 2022, the number of unlawful detainers filed in the region has increased from 2021, and the number of evictions is expected to rise in late August and early September this year, according to the Henrico County Board of Supervisors.

Many renters also have received non-renewal notices from their landlords – even opting to move into hotels or motels when they can’t find affordable housing, according to Burton.

To assist those in need of affordable housing, Henrico supervisors plan to fund organizations and provide resources that allow households to find and transition into permanent housing. The board also hopes to increase the amount of affordable housing in the area by creating incentives for developers to develop permanent supportive housing.

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These resources are available for anyone concerned about facing eviction or in need of affordable housing:· Partnership for Housing Affordability Housing Resource Line: 804-422-5061 · Homeless Connection Line: 804-972-0813 · Civil legal aid programs: 866-LEGLAID · Eviction legal help line: 833-NOEVICT · Pro bono question and answer website, general legal information, Virginia judicial system self-help: https://Virginia.freelegalanswers.org· VA Law Help 2 go: 703-293-5544