Modest Employment Growth and Soft Home Sales Conditions in the Virginia Beach HMA
This analysis was completed before the COVID-19 outbreak in the United States and does not account for the economic and housing market impacts of the actions taken to limit the spread of the virus. Currently, the duration and depth of the economic disruption are unclear, as are the extent and effectiveness of government policies to counteract the disruption. HUD will continue to monitor market conditions in the area and will update this report as needed.
HUD’s Comprehensive Housing Market Analyses provide information on changes in local economies, housing markets, and populations and provide 3-year forecasts for demand in the area. This article is part of a series that sheds light on the content of these analyses.
The Virginia Beach-Norfolk-Newport News, Virginia-North Carolina Housing Market Area (Virginia Beach HMA) encompasses 5 counties on the southeastern coast of Virginia, two counties on the northeastern coast of North Carolina, and includes 7 of the 11 largest cities in Virginia, including the largest, Virginia Beach. The area has an estimated population of 1.74 million and is home to the world’s largest naval base, Naval Station Norfolk.
A recent Comprehensive Housing Market Analysis on the Virginia Beach HMA highlighted the economic and housing market activity in the area.
Modest Employment Growth With Largest Gains in Leisure and Hospitality Sector
From October 2018 to October 2019, nonfarm payrolls increased by 0.4 percent for an additional 2,900 jobs. The modest payroll increase is less than the 1.3 percent increase during the 12 months ending in October 2018 and less than the area’s average annual payroll growth of 0.9 percent from 2011 to 2017.
During the 12 months ending in October 2019, the goods-producing sectors — mining, logging, and construction and manufacturing — experienced the highest rate of growth, increasing by 4.2 and 4.3 percent, respectively. The largest private employer in the HMA is Huntington Ingalls Industries, Inc., which is the largest military shipbuilding company in the United States. The company recently was awarded contracts to build two new aircraft carriers and nine new Virginia-class submarines.
Among service sectors, the leisure and hospitality and financial activities sectors led employment growth with increases of 2.8 and 2.1 percent, respectively. The leisure and hospitality sector has been the second-fastest-growing sector in the HMA for nearly 20 years, behind only the education and health services sector.
The government sector is the largest employment sector in the area, accounting for 20 percent of jobs in the HMA. The sector includes the area’s largest employer, Naval Station Norfolk, which has roughly 55,000 employees. Between October 2018 and October 2019, employment in the government sector declined by 1.4 percent for a loss of 2,300 jobs. Although state and local government employment in the HMA declined by 700 and 2,100 jobs, respectively, during this period, federal government employment increased by 500 jobs.
Other sectors to experience employment declines during the period include the information sector, which decreased by 6.4 percent, or 700 jobs, and the transportation and utilities sector, which decreased by 3.5 percent, or 900 jobs.
A Soft Sales Market and a Balanced Rental Market
Sales market conditions in the area are slightly soft, with an estimated vacancy rate of 2.3 percent. The soft sales conditions are due to net out-migration, which the report attributes to the slow economic recovery from the Great Recession. Approximately 32,600 homes were sold from October 2018 to October 2019, which is a 7 percent increase over the previous year.
Rental housing market conditions in the HMA are balanced, with an estimated vacancy rate of 6.4 percent. Since 2010, rental unit construction has been concentrated in the cities of Norfolk and Virginia Beach. The balanced conditions are attributed to low levels of multifamily construction and increased growth in rental household growth. The apartment market is slightly tight with a vacancy rate of 3.1 percent, which is a decrease of 1.1 percent from the previous year. The decline in the vacancy rate is attributed to the slowing of net out-migration and reduced number of completed units.
For more detailed economic and housing market activity, see the Comprehensive Housing Market Analysis on the Virginia Beach HMA.