The multifamily rental housing market in Virginia has been very competitive, with rents rising quickly over the past year. Demand for rental housing is reaching new highs as escalating home prices and rising mortgage rates have pushed more people into the rental market. Recent research from the Federal Reserve found that the share of renters who expect to own a home at some point has dropped to an all-time low. A greater number of higher-income renters has put added pressure on rents, sometimes fueling bidding wars and offers over advertised rents.
In the first quarter of 2022, according to data from CoStar, the statewide average rent was up 11.3% in Virginia. This is the third quarter in a row of double-digit rent growth in the commonwealth. In Q1 2022, the average rent in Virginia was $1,546, up from $1,386 during the first quarter of 2020, before the pandemic.
Rents have been rising in markets across Virginia. Since last fall, rents are up fastest in the state’s larger markets, as people are returning to the office and are moving back to more urban communities. In Q1 2022, the average effective rent per square foot was up 13.0% in Northern Virginia, following an 11.6% hike in Q4 2021. In the Richmond metro market, average rents rose 10.7% year-over-year, and the average rent was up 10.4% in the Hampton Roads market.
Mid-sized markets in Virginia have also seen rent growth, with rental demand up strongly in Roanoke and Charlottesville.
While new apartment construction has increased in most markets, it is still not sufficient to keep up with demand. As mortgage rates rise and buyer activity in the for-sale market cools this year, demand for rental housing will continue to be strong, and rents will likely continue to rise faster than home prices in 2022.