What’s behind the rapid rise in rent in Richmond?
What’s behind the rapid rise in rent in Richmond?
Published: Mar. 9, 2022 at 7:36 PM EST
RICHMOND, Va. (WWBT) - As we enter the third year of the pandemic, tenants across the country and here in Central Virginia are facing astronomical rent hikes.
People are receiving lease renewals demanding several hundred dollars more per month. These hikes are all legal, but are putting some people in a bind.
Erica Taylor and her husband are moving out of their Henrico County townhome with their three children. Her lease renewal calls for an additional $521 a month starting in April.
“We have to move. We can’t afford the new rent,” Taylor said. “They told us that it’s market rate and that they’re actually keeping us below market rate.”
Taylor isn’t alone. In Henrico, the average rent shot up about $185 a month from 2021. That’s a 28% increase, one of the highest in the Richmond region.
The Greater Richmond area is facing about an average $123 jump per month, according to data from CoStar Group, a commercial real estate information company.
RVA area rent increase from 2021 to 2022 (first quarter)
Source: CoStar Group
- Richmond Metro- 21%
- Henrico- 28%
- Chesterfield- 22%
- Hanover- 17%
- Richmond City- 14%
- Tri-cities- 16%
Nationwide, rent is up a staggering 17.6% compared with last year, according to the Apartment List National Rent Report.
Landlords and property managers say they’re keeping up with the market or with what everyone else is charging, according to Patrick McCloud, of the Virginia Apartment Management Association.
“What we’re seeing is a function of basic economics of supply and demand,” McCloud said.
Experts say a lot of things that usually keep the housing market fluid paused during COVID. The construction of new apartments was at a standstill. People didn’t move nearly as much because of pause on evictions, and government subsidies, such as the Virginia Rent Relief Program. Vacancies in the Richmond-area have now plummeted to a now 20-year low.
Experts say a historical lack of affordable housing in Central Virginia has added to the squeeze.
“It’s a ripple effect on the entire housing market that just pushes prices up because we have a shortage of housing at the lower end,” said Marty Wegbreit of the Central Virginia Legal Aid Society. “We certainly have a lot of people contacting us about problems paying rent.”
More people are also now working remotely, moving out of big cities. Richmond is looking pretty enticing to folks in Washington.
“You see a lot of influx in sort of second-tier towns or places like beach towns,” said Jon Ziglar, CEO of RentPath.com. “Much more lifestyle-focused, where people say, ‘I’m going to move here because I can work anywhere.’”
Other factors adding to price hikes include the nation’s rising inflation, making the cost of almost everything more expensive. The supply chain shortage is also adding to potential delays in new construction.
“Some may call it price gouging. Some would call it a free market,” Wegbreit said. “It’s not necessarily a fair market. … I would be very surprised if landlords are incurring a 20, 30, 40 percent increase in cost. I mean, the biggest cost for a landlord is their mortgage, and that’s a fixed cost.”
Could these increases legally be considered price gouging?
A spokesperson from the office of Virginia Attorney General Jason Miyares said that price gouging applies to hikes on necessary goods or services during a state of emergency - which Virginia is no longer in.
So, just because property managers can charge hundreds of dollars more a month, is it ethical to do so?
“I think for everyone who’s looking at their retirement accounts, the answer would be yes,” said McCloud. “Everyone in multi-family is usually managing a property for a group of investors. Many of those investments are in people’s retirement accounts. And people expect the return to be what the market will get them, and what their risk tolerance will allow for.”
We’re starting to see a few states regulate rent increases. For example, in Oregon, most rent hikes are already limited to 7%, plus inflation. But these types of laws are not likely to happen here in Virginia, since localities don’t have the authority to enforce rent limits.
“The General Assembly has not given localities the power to impose any type of rent control, rent caps or anything of that nature,” Wegbreit said.
The difficult reality of moving is becoming more apparent for many, especially if your family is accustomed to the area.
“My son has to go to a new school,” Taylor said. “So, it’s going to be sad to uproot him and have him start over again.”
Experts suggest trying to negotiate with your landlord, explaining your situation. You should highlight if you’re a responsible tenant, making payments on time. You could also see if your landlord would accept a lower rent if you pay a few months in advance or sign a longer lease. If there seems to be no wiggle room, try asking for upgrades to your apartment instead. Also, property managers must inform you of any rent hikes or changes within the time frame stated in your lease (and according to all stipulations within the contract). That’s often within 30 to 60 days of the lease ending.
If you do end up finding a new place, the hassle of moving may be a better sacrifice than draining your wallet every month, spending well over the recommended 30% of your income on housing.
“I just talked to one of my neighbors, and they’re moving,” Taylor said. “What else is going to happen, you know? If we find a new place, how long before that rent goes up to a price that we can’t afford?”
Rent hikes are also pushing a lot of current tenants into trying to buy homes - investing instead of “throwing money away” on rent. But there’s a tough battle in the home sales market, as well. New home prices soared nearly 19% last year. In the Southeast, home prices are up more than 25%.
“We shouldn’t think of multi-family as any different than the single family home market,” said McCloud.
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