Richmond's housing crisis: How it got here and how it may be solved

In the quiet of the morning, David Bey begins his days much the same way: He wakes up, takes his insulin and sets aside some time to give thanks for another day — a habitual reminder to stay positive.

The silence soon dissipates with the rising of the sun, as Bey rustles his 9-year-old and 4-year-old out of their beds and the one-bedroom apartment they share comes alive as the sounds of footfall and laughter fill the space.

Bey, a single dad, is one of many facing hurdles exacerbated by rising housing costs. For many living paycheck to paycheck, one unexpected financial setback could put them out of their homes and onto the street.

Each month, the bulk of Bey’s savings go toward his $1,200 rent plus fees, he said. Then there is the rising costs of groceries, clothing and child care, plus medical bills for the single father.

“Every choice matters, and I’ve had to make a lot of sacrifices, but everything I do is for them,” Bey said. “My children come first.”

The Richmond Times-Dispatch for the past month has been talking with housing advocates, elected officials and residents about the issue of affordable housing in Richmond, an issue that many areas face.

For decades, the city has had countless discussions on affordable housing and the lack thereof in its most vulnerable neighborhoods. Numerous elected officials have based their campaigns on the issue, and others have pushed hard for programs to alleviate the problem.

While there are solutions, it is a long and seemingly never-ending road. As one problem is solved, another worsens or a new one pops up. By the time another problem is fixed, the original issue is in need of additional attention.

It is a constant game of whack-a-mole that frustrates the city, nonprofit organizations and community groups.

As a result of the COVID-19 pandemic, the problem hit a fever pitch this year as home sale prices soared, rents skyrocketed and evictions climbed.

Now, Richmond is ramping up its efforts to solve this issue once and for all. But many are left asking if it will be enough. “Intention is currency,” Bey said. “There’s a lot of people out here that aren’t well.”

What is affordable housing?

While the price point for what is deemed affordable can differ from household to household and from locality to locality, the U.S. Department of Housing and Urban Development states that, for housing to be considered affordable, folks need to spend 30% or less of their gross income on either a mortgage or rent.

So with the median Richmond household income sitting at roughly $55,000, the average Richmonder should expect to spend $16,500 a year, or $1,375 a month, at most for housing.

But the department also defines a household as low-income if it makes less than 80% of the area median income.

With the city’s poverty rate resting at 19.8% and an average income of $25,000, a dwelling would need to cost less than 13% of the area median income to be considered affordable for low-income families: $7,700 a year, or $642 a month.

While several factors play into making affordability possible, the biggest takeaway is that families of all incomes need access to affordable housing.

What is causing Richmond’s housing crisis?

While a lack of affordable housing has plagued the city for years, those who felt its effects most often stood on the fringes. They were predominantly people resting at the poverty line and in neighborhoods most impacted by redlining.

Their biggest advocates came from community leaders, both in and out of city government, who saw the issues firsthand.

In Richmond’s Sixth District, which houses most of the city’s Section 8 housing complexes and is home to several former redlined communities, Councilwoman Ellen Robertson began her decades-long political career because of the lack of affordable housing.

“I carried the banner of affordable housing for the city of Richmond from Day One, and was carrying it 15 years before (I joined) City Council,” Robertson said.

When the COVID-19 pandemic hit, it brought the problem to the surface as more people began to face the same issues many had been facing for years.

As uncertainty loomed, the initial lull in home sales quickly turned into a seller’s market with record low interest rates and buyers often offering over asking price within hours of houses hitting the market. Out-of-state residential real estate investors flocked to purchase housing stock, and house flipping became more common. An increase in homebuyers chipped away at the city’s available housing stock. But stalled supply chains led to fewer homes being built, tightening the squeeze on availability.

Those who were once living comfortably saw their rents increase to match the market.

The Richmond-based nonprofit Partnership for Housing Affordability, which aims to create across-the-board housing equity, reports that, since 2020, average rents across the city have increased by nearly 20%.

The city’s North Side and South Side, where rents have traditionally been hundreds less than those farther into Richmond, have historically drawn residents seeking cheaper homes after being pushed out as a result of increased development.

The issue is well-known to Bey, who works with the Rise Up Foundation, an organization aimed at improving literacy among children in underserved communities. His journey has sent him to Washington, D.C., New York and back to his home city Richmond, where he says it has become nearly impossible because of the housing cost.

For nearly two decades, Bey has worked to form his own community — a network of thousands he has taught, worked with to improve their situations and for whom he has laid the groundwork to escape poverty.

Now, prices are rising nearly twice as fast as in any other part of the city. In the last year, neighborhoods like Bey’s off Midlothian Turnpike are seeing a 24% increase.

“It’s getting harder and harder to keep your head above water,” he said. “I’ve taken a lot of blows here recently, but it’s a matter of getting back up and shaking it off.”

While housing and rent costs have gone up, rental vacancies have decreased. Vacancy rates serve as a way to indicate the number of available housing stock.

So if rates are low, there are fewer available units. Fewer units mean more competition as renters scramble to find any available housing. Competition drives up rent prices as higher demand leads to landlords increasing rents with little to no repercussions.

Simply put, tenants in need of housing are forced to fork over more money to ensure they have a place to call home.

Likewise, the average home in the city now costs well over $300,000 — a $135,000 increase over the course of eight years.

In a recent sit-down interview with the Richmond Times-Dispatch’s editorial staff, the city’s Chief Administrative Officer Lincoln Saunders said that, as of mid-April, there are only four houses currently listed in the city that are under $200,000.

Laura Lafayette, CEO of the Richmond Association of Realtors and executive director of the Partnership for Housing Affordability, has spent the bulk of her career fighting for everyone to have adequate access to affordable housing.

Lafayette said some of the leading contributors to the lack of affordable housing are limited available housing stock, a lack of government funding, income inequality, and restrictive zoning and land-use policies.

To meet the needs of many across all income brackets, there must be access to homes at varying price points; once those prices exceed the average annual median income, then there is a larger deficit furthering the wealth gap, she said.

“The problem with being in a housing crisis is that it takes a very long time to dig your way out of that and it’s very costly,” Lafayette said. “So because we have not been developing and preserving an adequate supply of housing for many, many years in our region, we find ourselves in an incredible deficit.”

If one of the leading ways to close the wealth gap is through homeownership, and the only people able to purchase a home are upper-class, a cycle begins and the wealth gap continues to widen.

In a city steeped in systemic discriminatory practices toward Black people, Indigenous people and people of color since its inception, those gaps are further exacerbated, leading to continued oppressive cycles.

According to 2020 U.S. Census data, the areas of the city that sit below the average median income are also the areas that have the highest Black populations. These also correlate with the city’s redlined districts.

“We believe in homeownership, and we believe that if we’re going to close the racial wealth gap, we’re going to do that through homeownership,” Lafayette said. “So we want to create opportunities for Black, Indigenous, people of color to have access to affordable homeownership.”

According to Lafayette, it is crucial for governments to be involved and aware of affordable housing concerns.

According to a 2022 study issued by the Virginia Department of Housing and Community Development, housing is multifaceted and has overarching impacts on a locality’s economy. If city residents are spending less on housing, they have more funds to spend on other goods and services. Homeownership is the best pathway for people to achieve housing security, accumulate wealth and establish generational wealth.

Likewise, the housing industry is integral to the state’s economy. From real estate agents to developers to builders to lenders, the housing industry is the sixth-largest private sector industry in the state with an estimated $14 billion in total wages.

In the city’s current situation, in order to make a dent in the problem, Lafayette argues that there needs to be government intervention.

“Everyone has a stake in creating more affordable housing opportunities for a variety of reasons, whether you care about economic mobility or you have compassion for your neighbor,” Lafayette said. “If we’re going to recruit jobs in our region, we’ve got to create opportunities for the people who are going to take those jobs to live in our region.”

Development begins in the Planning and Zoning Department. The more restrictive the zoning codes are and the slower the permit process, the harder it is for developers to build affordable housing.

While it may seem daunting, there are solutions. Many experts push for various degrees of government involvement. But the resounding push is for more government funding.

What is Richmond doing to solve its housing crisis?

According to the Partnership for Housing Affordability, the city needs an estimated 40,000 additional housing units to significantly alleviate its housing crisis.

In late March, Mayor Levar Stoney, along with all nine City Council members, held an impromptu news conference to declare an affordable housing crisis in the city.

As a result, Stoney promised to allocate $10 million to build 1,000 housing units each year over the course of the next five years, for a total of $50 million and 5,000 units — further highlighting the gravity of the situation.

While the proposed allocation is currently just a budget line item on an unapproved five-year capital improvement plan, the council unanimously passed a resolution following the announcement formally codifying the crisis and, in turn, essentially guaranteeing its vote to approve funding in May.

“To achieve these goals, we are dedicating federal and local funds and making strategic policy decisions,” Stoney said. “This is what it looks like to address our housing crisis in a better way.”

While the declaration came last month, the city has been working both in and out of City Hall for some time to create avenues for further development, inclusive housing and public and private sector funding.

According to Lafayette, she and her team meet regularly with government officials to discuss the city’s housing status and best practices moving forward.

In December 2020, the council adopted its “Richmond 300: a Guide for Growth’’ master plan that serves as the city’s 20-year roadmap for future development.

The 262-page document dedicates a chapter to inclusive housing in which the city outlines over 50 strategies to address affordable housing.

Specifically, the city’s goal is to build 10,000 affordable housing units, prevent involuntary displacement, integrate housing at all income levels and transform public housing properties.

Additionally, the plan lays out six major projects to tackle, including a complete rewrite of its zoning ordinance, which the city kick-started last year.

The three major changes include revising short-term rental regulations, eliminating parking space minimums and permitting dwelling units — all of which will have a direct impact on future development.

The city has made headway on a couple of these, including its recent vote to eliminate parking minimums, which offers a solution to both housing needs and the need to efficiently utilize space.

Previously, developers were required to provide a certain amount of off-street parking spaces in order to build. Now, they will have the option to construct additional housing units instead of large patches of asphalt.

The construction costs associated with building a parking lot will no longer be a burden to the renter, as higher construction costs statistically result in higher rents.

In recent months, the city has made strides in its permitting process. In the past, it could take 10 to 12 months for developers to acquire a permit to build. Now, they can obtain permits and begin construction at a much faster rate.

“Make the investment, remove the choke points, find the right people, the most intelligent people to get the job done and produce abundance so people can live a more comfortable life,” Stoney said in an interview with The Times-Dispatch.

While limiting restrictions can lead to development, there is no guarantee that development will result in affordably priced units. So the city offers various loan programs, tax abatements and rebates to incentivize developers to build affordable housing units.

Recently, the city began providing an affordable housing tax abatement program, facilitated by the Economic Development Authority, to offer property tax rebates to developers that offer a percentage of affordable housing units.

“It’s based on a formula on how deep the affordability is and what percentage of the total units you’re providing,” Saunders said. “You can submit to the EDA for that abatement, and the EDA serves as the city’s conduit for giving you that incentive.”

While it anticipates success with this program, the city has offered similar incentives in the past that faced controversy.

In the 1990s, Richmond implemented the Affordable Housing Partial Tax Exemption Program, which offered a partial tax exemption to property owners who rent their single- or multi-family properties to people earning up to 80% of the city’s area median income.

The program came with a list of requirements property owners had to meet but, ultimately, if they met the requirements, they could collect on the abatement.

In 2019, the Virginia Commonwealth University Center for Urban and Regional Analysis published a study regarding the program, indicating that 60% of the abatements issued were to property owners living in the city’s West End — a predominantly white, upper-class district.

From 2009 to 2016, the city granted more than $78 million in abatements. With most of the funds funneling into the city’s richer communities, many argued that it mostly benefited the wealthy as lower-income families could not afford to make the investments required by the program.

Despite the criticism, many organizations still push for incentives, which can help ensure the creation of affordable homes.

Additionally, the Richmond Redevelopment and Housing Authority, or RRHA, which is tasked with handling all of the city’s public housing complexes, has recently taken big steps to protect and increase available housing stock to provide options for low-income families.

Housing authority CEO Steven Nesmith said that to solve the problem, the RRHA needs more housing units and more funding.

In an effort to raise more funds and lessen the tax burden on residents, the authority launched the Richmond Development Corporation, which will allow the public entity to work with the private sector to facilitate further funding.

When the authority received $14 million in federal dollars for the renovation of some of the nation’s oldest public housing units in the nation, Nesmith said the RRHA is more likely to see private matches through the corporation.

Unlike Social Security, Medicaid or food stamps, public housing vouchers are not considered in the nation’s entitlement program. Therefore, while a resident might qualify for public housing, if there is no available stock, they are not guaranteed a place to live.

Currently, the authority has a wait list with no vacant rentals available. So it is crucial for public housing to retain its housing stock as well as develop additional units.

According to Nesmith, the authority is doing just that. There are plans to renovate older units as well as some pretty bold plans to build mixed-use housing units on authority-owned land, offer rent-to-own homes and partner with banks to provide loans for public housing residents.

“We’re probably the largest, if not the second-largest landowner in the city,” Nesmith said. “We’re going to negotiate with developers who want to develop on our land ... to create as much density as possible.”

The plan, set to launch later this year, is to utilize RRHA-owned land to construct numerous housing units. Those units will be offered at lower rates to anyone in the city — not just public housing residents.

There are also plans in motion for public housing residents, including rent-to-own programs on behalf of the authority. Additionally, Nesmith said the RRHA is in negotiations with local banks to create loan programs that are not based on credit scores.

Instead, if public housing residents can prove that they have consistently made month-to-month rent payments on time, then they may qualify for a home loan.

“We’re going to be doing something that’s never been done before, but it’s my vision,” Nesmith said. “We’re going to self-develop, and we’re controlling our own destiny.”

Is it enough?

While the city is taking steps to improve its affordable housing crisis, many argue it’s not enough.

For the faith-based organization Richmonders Involved to Strengthen Communities, or RISC, the answer lies in the city’s Affordable Housing Trust Fund.

The fund, established in 2004, serves as a way to provide financial resources to address affordable housing. The fund works with both nonprofit and for-profit developers to leverage funds. With it in place, the funds can accrue interest.

According to Pastor Don Coleman, co-president of RISC, the organization worked extensively to help get the trust fund up and running.

In 2021, the City Council passed an ordinance to transfer a portion of real estate tax revenue to a special reserve to act as a dedicated funding stream to the trust.

However, what felt like a win quickly soured as RISC members learned that the city had not used its special reserve to fund the trust. Instead, the city opted to dedicate $20 million in federal American Rescue Plan Act funds to support housing developments in the 2022-23 fiscal year.

“We believe that the Affordable Housing Trust Fund is the best way to start to put a dent,” Coleman said. “It’s one of the primary tools in anybody’s toolbox as far as alleviating the lack of affordable housing.”

Now, with a new budget in the works, the city is once again being asked by RISC to place funds into the trust.

Recently, the council voted against the construction of a warehouse in South Side that would serve as a workshop for Richmond-based nonprofit project: HOMES to construct HUD-approved, small, affordable modular homes.

The organization argued that this would increase housing stock and is in line with the city’s goals to improve the affordable housing crisis. The plan was to build modular homes to replace existing aging, dilapidated mobile units. But because the proposed building site is zoned as residential, the city voted to deny the request.

The city previously faced controversy as several RISC members, many of them living in aging mobile homes, came forward to question why the city had not utilized previously allocated funds for the purpose of mobile home renovations and replacements.

They have yet to receive an answer, Coleman said.

While funding is crucial to help solve the problem, he said it does not do any good if the city does not make good on its word to actually allocate the funds.

Currently, the organization is still waiting to see budgeted funds allocated toward affordable housing efforts.

“It’s about the people who are suffering, and we should all want to alleviate that suffering,” Coleman said. “We’re about fighting for the people who need it the most, and we hope our elected officials recognize they should feel the same way.”