It has been a wild ride for Virginia’s multifamily apartment sector. In 2021, the rental market crushed records, as demand for multifamily housing soared in the fourth quarter. The outlook for 2022 is continued strong performance in the multifamily sector as household formation rates rise and more people head back to the office.
What Records Did Virginia’s Multifamily Rental Market Break in 2021?
- Occupancy is higher than at any time since 2002. Statewide, occupancy was at about 96% in the fourth quarter of 2021, meaning that apartment buildings across the state are virtually full. Record-high occupancy rates make it hard not only for new renters to find a unit, but also for existing tenants to switch apartments when their family or employment situation changes.
- Rent growth hit a 20-year high. In the fourth quarter, the average effective rent in the state was up 11.3% compared to a year earlier, the fastest rate of year-over-year rent growth since at least 2000. Rents were up fastest in Virginia’s urban markets, as offices began opening up, restaurants and bars were returning to more normal operations, and downtown amenities and conveniences attracted a rebound in residents.
- There are more new apartments being built than at any time in the past two decades. In the past year, there were more than 27,000 new apartment units under construction across Virginia. Despite challenges in the residential construction sector, new apartments are being built at a faster pace than in any year since at least 2000.
Despite an increase in new construction, supply remains tight. Demand for rental housing is surging as household formation rates rise, Gen Z enters the rental market, and escalating home prices have put home buying out of reach for a growing number of individuals and families. With strong rental demand, constrained inventory, and high occupancy rates, it is expected that rents will rise at double-digit rates in 2022.
To read more about the record-setting year and for an outlook for 2022, check out our full Q4 2021 Multifamily Market Report.
Click here to send any comments or questions about this piece to Virginia REALTORS® Chief Economist Lisa Sturtevant, PhD.