Northern Virginia’s high cost of living is driving more residents to leave for areas where their money stretches further, a new report shows.
The report, published this month by the Northern Virginia Regional Commission, found that nearly 158,000 people moved out of the region in 2022, nearing a record set during the pandemic in 2020. At the same time, only 128,000 people moved in — a sharp drop compared to pre-pandemic years.
Those leaving are often young adults, middle-income families and first-time homebuyers, many of whom are struggling to afford housing in the region. The report notes that remote and hybrid work has made it easier for residents to relocate to areas with lower costs and larger homes. Meanwhile, new arrivals to the region tend to have lower incomes, widening the economic gap.
The report warns that if the trend continues, Northern Virginia’s economy could feel the strain, with businesses facing challenges hiring workers and local governments losing tax revenue needed to fund public services.
“The issue of retaining young, highly educated workers in the region becomes even more critical as these people reach the stage in their lives where they want to settle down and start a family,” the report states. “Without continued hybrid work that allows people to live in more affordable places further from work, along with more housing incentives for first-time home buyers and more incentives for builders to develop affordable housing suitable for young adults, the problem with retaining young workers is bound to escalate.”
Housing costs are driving residents away
At the heart of the issue, the report says, is Northern Virginia’s housing market, where median home prices rank among the highest in the nation. These costs, coupled with stagnant wage growth for many residents, have created barriers for middle-income families and first-time buyers, leaving them with few affordable options in the region.
According to the report, young adults aged 25 to 44 are leading the charge out of the region. With limited options for first-time buyers and escalating prices, some are moving farther away from D.C., trading proximity to work for lower costs.
Median home prices in Prince William, Fairfax and Arlington counties range from $500,000 to $800,000, according to the 2023 American Community Survey. Falls Church tops the region, with a median home value over $1 million.
The report states:
“Post-pandemic, there is a marked decrease in moves to the costly, core metropolitan jurisdictions of Washington D.C., Prince George’s County, MD, and Montgomery County, MD. On the upside, there has been substantial growth in household migration to more ex-urban, affordable areas such as Spotsylvania County, VA, and Frederick County, VA, which experienced increases of 56% and 49%, respectively, in the 2020 to 2022 two-year period compared to the 2017 to 2019 two-year period.”
Renters aren’t faring much better. Many spend far more than 30% of their income on housing, leaving little room for other necessities like healthcare, childcare or savings. This growing financial pressure, the report claims, combined with a lack of affordable buying options, is squeezing younger and middle-income residents out of the area.
The report also highlights a widening income gap between those leaving and those moving in. In 2022, the average adjusted gross income (AGI) for those leaving Northern Virginia was $121,875, compared to $99,641 for those moving in. With higher earners leaving, local governments face shrinking tax revenues, which could affect funding for schools, transportation, and other critical services.
Migration trends could spell trouble for local budgets
The departure of young professionals and middle-income families is more than just a demographic shift — it’s an economic warning sign.
Many businesses in Northern Virginia depend on those demographics to fuel their workforce, particularly in industries like technology, government contracting and healthcare. The report warns that losing those workers could make it harder for businesses to attract and retain talent, potentially stifling innovation and economic growth.
“If young worker out-migration continues at elevated rates and in-migration is suppressed due to being priced out of the region, this will result in businesses struggling to attract and retain their workforce,” the report says. “Young workers are crucial for the success of businesses as they bring fresh perspectives, innovative ideas, and eventually grow into leadership positions.”
Between 2018 and 2022, Northern Virginia’s net income loss from people moving out grew from $1.95 billion to as much as $3.5 billion annually. This shrinking tax base could leave local governments with fewer resources to fund essential public services, including schools, transportation and infrastructure.
Decreasing residential tax revenue could further squeeze localities already grappling with declining commercial tax bases. Fairfax County, for example, is facing a nearly $300 million budget shortfall for the second year in a row.
The shortfall has led county leaders to make tough decisions, from delaying school renovations and scaling back park services to struggling with employee recruitment and retention. There have also been talks of potentially implementing a meals tax and other levies, which could generate up to $226 million in additional revenue for the county.
While Fairfax County leaders have argued they’re getting insufficient funding from the state, the NVRC report says budget pressures are likely to worsen if the region doesn’t address its affordability challenges and stem the exodus of higher-income residents.
Localities look for solutions to affordability crisis
Addressing Northern Virginia’s affordability crisis won’t be easy, but the report outlines several strategies that could help turn the tide.
One major recommendation is streamlining zoning and permitting processes to speed up the construction of new housing, which could alleviate some of the pressure on the housing market by increasing supply and potentially stabilizing prices.
The report also suggests offering tax incentives to developers, with a focus on creating homes that are affordable for middle-income families and young professionals. Such measures could encourage builders to prioritize affordability rather than exclusively targeting high-end markets, which often dominate new construction in the region.
Expanding programs for first-time homebuyers is another key strategy. The report recommends raising the price limits on these programs to better reflect current market conditions, making homeownership a more realistic option for young families who want to stay in the area. This approach could help retain residents who are otherwise priced out of the market.
Public-private partnerships are highlighted as a particularly promising avenue. Arlington County’s collaboration with Amazon to preserve affordable housing at the Barcroft Apartments is cited as a model example. By working with private companies, the report notes that local governments can leverage additional resources to address housing challenges more effectively and at scale.
“By collectively addressing the regional housing issues, Northern Virginia can ensure a prosperous and sustainable future,” the report says.
