Comprehensive Housing Market Analysis for the United States Virgin Islands

COMPREHENSIVE HOUSING MARKET ANALYSIS

United States Virgin Islands

As of August 1, 2017

U.S. Department of Housing and Urban Development Office of Policy Development and Research

St. Croix

St. Thomas

St. John

Puerto Rico

Caribbean Sea

Atlantic Ocean

Market Details

Economic Conditions ............... 2

Population and Households

..... 6

Housing Market Trends

............ 7

Data Proﬁle

............................. 12

The United States Virgin Islands

(hereafter, USVI) is approximately 40

miles east of Puerto Rico in the Carib-

bean Sea. The territory encompasses

more than 50 islands, although the

islands of St. Croix, St. Thomas, and

St. John account for approximately 48,

48, and 4 percent of the total popula tion,

respectively. Tourism is a significant

economic driver in the USVI. In 2016,

the territory welcomed 2.57 million

visitors and benefited from $1.34 billion

in tourism-related revenue (USVI Bu-

reau of Economic Research [BER]).

During September 2017, two hurricanes,

Irma and Maria, impacted the USVI,

with Maria being the more damaging

storm. Approximately 16,550 housing

units, or more than 28 percent of the

total housing inventory, are estimated

to have sustained moderate or major

damage or have been destroyed by

the hurricanes (Federal Emergency

Management Agency, as of January 2,

2018). Due to the large number of

housing units and businesses that

sustained damage, the U.S. Department

of Housing and Urban Development

(HUD) Economic and Market Analysis

Division (EMAD) is unable, at this

time, to produce any estimates of the

demand for additional sales or rental

housing within the territory during the

next 3 years. This report will serve as a

baseline report of the housing market

conditions that existed at the time of

the hurricane impacts for HUD to use

to gauge the progress of the recovery

efforts. EMAD will produce another

report on the USVI in the near future

that will discuss the impacts of the

hurricanes and provide a forecast of

housing needs as the territory recovers

from this natural disaster.

Summary

Economy

Economic conditions in the USVI

improved modestly during the most

recent 24 months, although nonfarm

payrolls remain well below the pre re-

cessionary high. During the 12 months

ending July 2017, nonfarm payrolls in

the territory averaged 38,200 jobs, an

increase of 100 jobs, or 0.3 percent,

from the previous 12 months (U.S.

Bureau of Labor Statistics [BLS]). By

comparison, nonfarm payrolls in the

territory averaged 45,800 jobs during

2007, prior to the national recession.

The unemployment rate in the USVI

was 10.7 percent during the 12 months

ending July 2017, down from 11.3 percent

during the 12 months ending July 2016

(USVI Department of Labor [DOL]).

Sales Market

The sales housing market in the USVI

is currently soft, with population

out flows caused by weak economic

conditions, leading to increased numbers

of vacant for-sale homes. Despite the

United States Virgin Islands • COMPREHENSIVE HOUSING MARKET ANALYSIS

soft sales market, significant demand

from nonresidents for seasonal and

second homes has kept home prices

higher than economic and demo-

graphic factors indicate. The current

sales vacancy rate is estimated at 3.8

percent, up from 3.7 percent in April

2010. Not included in the vacancy

rate are an estimated 10,700 other

vacant units that are not actively on

the market at this time. An estimated

130 housing units intended for the

sales market are currently under

construction in the territory.

Rental Market

The rental housing market in the

USVI is currently soft. Although the

number of rental households in the

territory has increased since 2010, the

number of vacant units has increased

at a faster rate. The overall rental

vacancy rate is currently estimated at

15.0 percent, up from 13.8 percent in

2010. An estimated 110 rental units

are currently under construction in

the territory.

Economic Conditions

he USVI added jobs during

the most recent 24 months,

although economic conditions in the

territory have yet to recover from the

impact of the 2007–2009 recession

in the United States and the 2012

closure of the Hovensa oil refinery

on the island of St. Croix. Nonfarm

payrolls in the territory averaged

38,200 jobs during the 12 months

ending July 2017, after increasing by

100 jobs, or 0.3 percent, during both

of the two most recent 12-month

periods (Table 1). The current number

of jobs in the territory is 16.5 percent

below the high of 45,800 in 2007.

The unemployment rate in the USVI

has declined each year since reaching

a high of 13.4 percent in 2013 but

remains more than double the rate

in the United States. During the 12

months ending July 2017, the unem-

ployment rate in the USVI was 10.7

percent, down from 11.3 percent dur-

ing the 12 months ending July 2016

(USVI DOL). By comparison, the

rate was 4.6 percent for the United

States during the 12 months ending

July 2017, down from 5.0 percent

during the previous 12 months (BLS).

Figure 1 shows trends in the labor

force, resident employment, and the

average unemployment rate in the

USVI from 2000 through 2016.

After adding an average of 1,000 jobs,

or 2.2 percent of total nonfarm payrolls,

each year from 2004 through 2007,

Table 1. 12-Month Average Nonfarm Payroll Jobs in the United States

Virgin Islands, by Sector

12 Months Ending

Absolute

Change

Percent

Change

July 2016 July 2017

Total nonfarm payroll jobs 38,100 38,200 100 0.3

Goods-producing sectors 2,100 2,200 100 4.8

Mining, logging, & construction 1,500 1,600 100 6.7

Manufacturing 600 600 0 0.0

Service-providing sectors 36,000 36,000 0 0.0

Wholesale & retail trade 6,600 6,600 0 0.0

Transportation & utilities 1,400 1,400 0 0.0

Information 700 600 – 100 – 14.3

Financial activities 2,100 2,100 0 0.0

Professional & business services 3,400 3,300 – 100 – 2.9

Education & health services 2,400 2,500 100 4.2

Leisure & hospitality 7,600 7,700 100 1.3

Other services 1,000 1,000 0 0.0

Government 10,700 10,900 200 1.9

Notes: Numbers may not add to totals because of rounding. Based on 12-month

averages through July 2016 and July 2017.

Source: U.S. Bureau of Labor Statistics

Summary Continued

United States Virgin Islands • COMPREHENSIVE HOUSING MARKET ANALYSIS

Figure 1. Trends in Labor Force, Resident Employment, and Unem-

ployment Rate in the United States Virgin Islands, 2000

Through 2016

Unemployment rate

Labor force and

resident employment

60,000

55,000

50,000

45,000

40,000

35,000

2000

2002

2004

Labor force Resident employment Unemployment rate

2006

2001

2003

2005

2007

2009

2010

2008

2012

2013

2015

2016

2014

2011

15.0

12.0

9.0

6.0

3.0

0.0

Source: U.S. Bureau of Labor Statistics

the USVI had a relatively mild eco-

nomic downturn. Nonfarm payrolls

in the territory declined by an average

of 1,000 jobs, or 2.3 percent, a year

during 2008 and 2009 compared

with an average annual decline of 2.5

percent each year in the United States

during the period. The number of

jobs in the United States declined 0.7

percent in 2010, while the territory

added 500 jobs, or 1.1 percent of

total nonfarm payrolls. A decline of

400 jobs, or 0.9 percent of nonfarm

payrolls, largely offset those gains

in 2011. During 2012, the Hovensa

refinery—the largest private employer

in the territory at the time—closed,

laying off 2,000 workers. Nonfarm

payrolls in the USVI declined by an

average of 2,000 jobs, or 4.8 percent,

each year from 2012 through 2014.

Most of the 2,000 jobs at the Hovensa

facility were in the manufacturing

sector, which declined by an average

of 500 jobs, or 33.1 percent, annually

during the period. The impact of the

closure was also notable in the other

services and the mining, logging, and

construction sectors that included

many businesses associated with the

refinery. From 2012 through 2014,

the two sectors declined by averages

of 300 and 200 jobs, or 20.6 and 12.6

percent, annually. In total, the closure

contributed to a 15-percent decline

in the gross product of the territory,

which fell from $4.24 billion in 2011

to $3.62 billion in 2014 (USVI BER).

The USVI benefits significantly from

tourism. The leisure and hospitality

sector, with 7,700 jobs, accounted for

20.1 percent of total nonfarm payrolls

in the territory during the 12 months

ending July 2017 compared with only

10.9 percent of total nonfarm payrolls

for the United States during the period.

Improving economic conditions

through out much of the world, particu -

larly the United States, have contrib-

uted to a general trend of increased

visitor spending since the late 2000s,

and the sector added jobs during 6 of

the past 8 years. The leisure and hos-

pitality sector accounted for much of

the job growth in the territory during

the most recent 24 months. The sector

expanded by 100 jobs, or 1.3 percent,

during the 12 months ending July

2017, after increasing by 300 jobs,

or 3.8 percent, during the 12 months

end ing July 2016. Visitors spent $1.34

billion in the territory during 2016, a

1.5- percent increase from $1.32 billion

in 2015 and 31.3 percent higher than

the recent low of $1.02 billion spent

during 2009 (USVI BER). Total visi-

tor expenditures increased during 5 of

the past 8 years but remain well below

the peak level of $1.51 billion in 2007.

The sector includes several resorts

that are spread among the three major

Economic Conditions Continued

United States Virgin Islands • COMPREHENSIVE HOUSING MARKET ANALYSIS

islands. Frenchman’s Reef & Morning

Star Marriott Beach Resort and The

Ritz-Carlton on the island of St.

Thomas and The Buccaneer hotel on

the island of St. Croix are among the

largest employers on their respective

islands, and Caneel Bay Resort is the

single largest employer on the island

of St. John (Table 2).

Tourism also contributed significantly

to the trade sector in the territory,

which averaged 6,600 jobs, or 17.2

percent of total nonfarm payrolls dur-

ing the 12 months ending July 2017.

The retail trade subsector averaged

5,900 jobs, or 89 percent of payrolls

in the sector during the most recent

12 months. The territory offers up to

$1,600 of tax-free purchases for United

States residents, and during 2016, gifts

shops alone accounted for 1,125 jobs,

or 14 percent of all tourism-related

employment (USVI BER). After reach -

ing a high of 7,100 jobs in 2007, the

trade sector declined by an average of

100 jobs, or 1.9 percent, a year from

2008 through 2010 due largely to the

decreased visitor spending as a result

of the recession in the United States.

As economic conditions in the United

States improved, the sector expanded

by 300 jobs, or 4.5 percent, in 2011. The

number of jobs in the sector remained

stable at 7,000 in 2012, although the

impact of the Hovensa closure contrib-

uted to job losses during 3 of the next

4 years. The average of 6,600 jobs in

the trade sector during the most recent

12 months represents a total decline

of 400 jobs, or 5.7 percent, since 2012

and is lower than every annual figure

for the territory since the average of

6,500 jobs in 2000.

The government sector is the largest

sector of the USVI, accounting for

28.4 percent of total nonfarm payrolls

(Figure 2); however, the number of

payrolls in the sector has trended

downward since 2010. A declining

population and weak economic con-

ditions reduced the operating budget

of the government of the USVI and

resulted in net job losses in the sector

during 5 of the past 7 years. During

the 12 months ending July 2017, the

number of jobs in the government

sector rose to 10,900, an increase

of 1.9 percent from the previous 12

months but 16.2 percent below the

13,100 jobs in 2010. The government

of the USVI represents approximately

92 percent of the jobs in the sector

and has accounted for nearly all the

decline since 2010. The number of

USVI government jobs averaged

10,000 during the 12 months ending

July 2017, an increase of 200 jobs,

or 2.0 percent, from the previous 12

Table 2. Major Employers in the United States Virgin Islands

Name of Employer Nonfarm Payroll Sector

Number of

Employees

Government of U.S. Virgin Islands Government 10,000

United States Government Government 701–900

Frenchman’s Reef & Morning Star Marriott

Beach Resort

Leisure & hospitality 501–700

Gov. Juan F. Luis Hospital & Medical Center Education & health services 501–700

Kmart Wholesale & retail trade 501–700

The Ritz-Carlton Leisure & hospitality 501–700

Schneider Regional Medical Center Education & health services 501–700

The Buccaneer Leisure & hospitality 301–500

Caneel Bay Resort Leisure & hospitality 301–500

Note: Data include military personnel, who are generally not included in nonfarm

payroll survey data.

Source: U.S. Virgin Islands Department of Labor, eld work by analysts

Figure 2. Current Nonfarm Payroll Jobs in the United States Virgin

Islands, by Sector

Government 28.4%

Leisure & hospitality 20.1%

Other services 2.6%

Education & health services 6.5%

Professional & business services 8.6%

Wholesale & retail trade 17.2%

Manufacturing 1.6%

Mining, logging, & construction 4.3%

Information 1.6%

Transportation & utilities 3.7%

Financial activities 5.5%

Note: Based on 12-month averages through July 2017.

Source: U.S. Bureau of Labor Statistics

Economic Conditions Continued

United States Virgin Islands • COMPREHENSIVE HOUSING MARKET ANALYSIS

months but down 17.4 percent from

12,100 jobs in 2010. The operating

budget for the government of the

USVI was most recently reported

at $754.4 million during fiscal year

2016, a 2-percent increase from

$741.5 million during fiscal year 2015

but 13 percent below $869.7 million

during fiscal year 2010 (USVI BER).

Despite an overall decline in the

popu lation of the USVI, the education

and health services sector has been

the fastest growing sector in the terri-

tory since 2000 (Figure 3). During the

12 months ending July 2017, payrolls

in the sector averaged 2,500, an increase

of 100 jobs, or 4.2 percent, from the

previous 12 months. The current

number of jobs in the sector is down

from 2,600 in 2011 but is 41.2 percent

higher than the average of 1,700 jobs

in 2000, as the aging population of

the territory contributed to job growth

in the sector in the early 2000s. The

Schneider Regional Medical Center

and the Gov. Juan F. Luis Hospital &

Medical Center are the largest medical

employers in the territory. The latter

is on the island of St. Croix, and the

former consists of two facilities on

the island of St. Thomas and one on

the island of St. John. The Roy Lester

Schneider Hospital, which opened in

1982, and the Charlotte Kimelman

Cancer Institute, which opened in 2005,

are both on the island of St. Thomas.

The Myrah Keating Smith Community

Health Center, which opened in 1983,

is on the island of St. John.

Figure 3. Sector Growth in the United States Virgin Islands, Percentage Change, 2000 to Current

Total nonfarm payroll jobs

Goods-producing sectors

Mining, logging, & construction

Manufacturing

Service-providing sectors

Information

Financial activities

Professional & business services

Education & health services

Government

Other services

Leisure & hospitality

Transportation & utilities

Wholesale & retail trade

– 20

– 10 200 10– 30

– 80 – 40– 50– 60– 70

30 40 50

Notes: Current is based on 12-month averages through July 2017. During this period, payrolls in the nancial activities sector

showed no net change.

Source: U.S. Bureau of Labor Statistics

Economic Conditions Continued

United States Virgin Islands • COMPREHENSIVE HOUSING MARKET ANALYSIS

Population and Households

he population of the USVI

declined for much of the past

2 decades due to significant out-

migration (Figure 4). From 2000 to

2005, the population of the territory

declined by an average of 160, or 0.1

percent, each year (2000 Census Bureau

and United Nations [UN] population

estimates as of July 1). Strong job

growth in the United States attracted

residents from the territory, and average

net out-migration of 1,025 people a

year exceeded net natural change

(resident births minus resident deaths)

of 870 people a year during the period.

Although net natural change increased

to an average of 920 a year from 2005

to 2010, the effects of the Great Reces -

sion worsened economic conditions in

the territory, and as net out-migration

accelerated to an average of 1,200 a

year, the population declined by an

average of 290, or 0.3 percent, each

year (UN population estimates and

2010 Census data). As of August 1,

2017, the population of the USVI is

estimated at 105,000, an average annual

decline of 190, or 0.2 percent, since

April 1, 2010. Due in part to the job

losses associated with the Hovensa

refinery closure, average net out-

migration of 800 people exceeded

average net natural change of 610

people each year during the period

(Figure 5). Improving economic con -

ditions slowed out-migration during

the past 24 months, however. The

population of the USVI remained

relatively unchanged from July 2015

to August 1, 2017, as net out-migration

averaged only 420 and net-natural

change averaged 430.

Due in part to the general scarcity of

high-paying jobs in the USVI, out-

migration from the territory has been

heavily concentrated among the

working-age population. As a result,

the median age has risen sharply

relative to the United States. From

2000 to 2010, the median age in the

USVI rose from 33.4 to 39.2, an

increase of 5.8 years, while the median

age for the United States rose from

35.3 to 37.2, an increase of only 1.9

years (2000 and 2010 Census data).

That trend continued into the 2010s,

with the prolonged recession in the

territory further limiting job opportu-

nities for skilled workers. As of 2013,

the median age in the territory was

estimated at 40.0 years, and the median

age for the United States was estimated

at 37.5 (2013 Virgin Islands Community

Survey [VICS] and 2013 American

Community Survey [ACS] 1-year data).

Despite a population decline, the

territory has had modest household

growth since 2000 due in large part to

significant decoupling by larger

households. As of August 1, 2017,

Figure 4. Population and Household Growth in the United States

Virgin Islands, 2000 to Current

Population Households

300

200

100

– 100

– 200

– 300

2000 to 2010 2010 to current

Average annual change

Note: The current date is August 1, 2017.

Sources: 2000 and 2010—2000 Census and 2010 Census; current—estimates by

analysts

Figure 5. Components of Population Change in the United States

Virgin Islands, 2000 to Current

1,000

500

– 500

– 1,000

– 1,500

2000 to 2010 2010 to current

Average annual change

Net natural change Net migration

Note: The current date is August 1, 2017.

Sources: 2000 and 2010—2000 Census and 2010 Census; current—estimates by

analysts

United States Virgin Islands • COMPREHENSIVE HOUSING MARKET ANALYSIS

the number of households in the

USVI was estimated at 44,250, an

average annual increase of 0.3 percent

since April 2010 (Table DP-1). By

comparison, household growth in the

territory averaged 0.6 percent a year

from April 2000 to April 2010. As the

population declined during both

periods, declines in the average

household size, which fell from 2.64

in April 2000 to 2.41 in April 2010

and is currently estimated at 2.32,

entirely drove household growth.

Decoupling of large households

contributed significantly to the trend.

The percentage of households in the

USVI that had five or more people

declined from 13 percent in April

2000 to 8 percent in April 2010, while

the figure for the United States

remained largely unchanged at 11

percent (2000 and 2010 Census data).

As of 2013, an estimated 5 percent of

all households in the territory

consisted of five or more people

compared with 10 percent for the

United States (2013 VICS and ACS

1-year data).

Housing Market Trends

Sales Market

The sales housing market in the USVI

is soft with an estimated sales vacancy

rate of 3.8 percent as of August 1, 2017,

up from 3.7 percent in April 2010. A

declining population and significant

jobs losses in the early 2010s have

contributed to declining homeowner-

ship since 2010. As of August 1,

2017, the homeownership rate in the

USVI was estimated at 47.1 percent,

down from 47.9 percent as of April

2010 (Figure 6). By comparison, the

homeownership rate for the United

States declined from 66.9 percent dur-

ing the second quarter of 2010 to 63.9

percent during the third quarter of

2017. Approximately 62 percent of all

owner-occupied homes in the USVI

have no mortgage compared with

only 36 percent for the United States

(2013 VICS and ACS 1-year data).

The largest cause of this discrepancy

is the high cost of homeowner’s insur-

ance in the territory, which is approx-

imately four times more expensive than

in the United States. To avoid the

lender requirement to purchase home

insurance, home sales in the USVI are

often cash transactions among family

and friends. This aspect of the market

may have muted the effects of the

foreclosure crisis in the territory.

Despite weak economic conditions

and declining homeownership, a

sig nificant amount of demand by

nonresidents has contributed to higher

home sales in the USVI since 2013.

The number of homes sales on the

islands of St. Thomas and St. Croix,

which comprise more than 95 percent

of the territory population and housing

Figure 6. Number of Households by Tenure in the United States

Virgin Islands, 2000 to Current

2000

2010

Current

Renter Owner

25,000

20,000

15,000

10,000

5,000

Note: The current date is August 1, 2017.

Sources: 2000 and 2010—2000 Census and 2010 Census; current—estimates by

analysts

Population and Households Continued

United States Virgin Islands • COMPREHENSIVE HOUSING MARKET ANALYSIS

stock, increased by an annual average

of 110 homes, or 36 percent, from 260

in 2012 to 470 in 2014 (Virgin Islands

Territorial Association of Realtors

Multiple Listing Service [MLS]). Home

sales increased despite the significant

job losses associated with the closure

of the Hovensa refinery, because many

former workers, particularly on the

island of St. Croix, were forced to

leave the territory and sell their homes,

often to nonresidents. During the

period, home sales increased faster on

the island of St. Croix, where home

sales rose 49 percent annually to 270

in 2014, than on the island of St.

Thomas, where the number of home

sales rose 22 percent annually to

200. The combined number of home

sales on the two islands increased an

average of 6 percent annually during

the next 2 years to 520 in 2016, as

labor market conditions stabilized.

Separate price data for the islands

of St. Thomas and St. Croix are not

available for 2012 through 2014,

although the combined median home

price for the two islands decreased

from $265,000 to $215,000 despite the

increase in sales during the period.

The median home sales price rose

an average of 3 percent annually

during the next 2 years to $225,900

in 2016, as demand increased, but

supply remained limited due to the

extremely high construction costs in

the territory.

The sales market on the island of St.

John accounts only for about 10 per-

cent of all home sales in the territory.

The Virgin Islands National Park

covers approximately 60 percent of

the island, making developable land

scarce but very desirable, and homes

prices are notably higher than on the

islands of St. Thomas and St. Croix.

Home sales on the island of St. John

have been steady, averaging 55 homes

annually from 2013 through 2016.

Median home prices are generally

much higher than elsewhere in the

territory, reaching $690,000 in 2016

but fluctuated significantly during the

previous several years given the low

number of sales.

Second homes comprise a large

portion of the home sales market in

the territory. Since 2015, the first year

of data availability, homes intended

for seasonal occupancy have made

up approximately one-half of all

MLS- registered home sales and almost

two-thirds of all condominium sales

on the islands of St. Thomas and

St. Croix. Compared with primary

residences, median home prices for

seasonal units on the island of St.

Thomas were 25 and 16 percent higher

for single-family homes and condo-

miniums respectively. On the island

of St. Croix, median sales prices for

condominiums were 9 percent higher

for seasonal units, although home

prices for single-family homes were

similar for all intended uses. The island

of St. John has the largest divergence

between primary and second home

prices, with seasonal single-family

homes selling for 173 percent more

than primary residences. Almost all

condominiums on the island of St.

John are sold for seasonal use. Partly

because of the strong demand for

seasonal units, affordability is a sig-

nificant problem for residents of the

territory hoping to purchase a home.

During 2016, the median home price

was 6.8 times higher than the median

household income of $33,050 in the

USVI. By comparison, the median

home price in the United States was

only 4.0 times higher than the median

household income of $57,600 ( National

Association of Realtors

and 2016

ACS 1-year data).

Housing Market Trends

Sales Market Continued

United States Virgin Islands • COMPREHENSIVE HOUSING MARKET ANALYSIS

Construction intended for the sales

market, as measured by the estimated

number of homes permitted, has been

fairly stable in the USVI, averaging

430 homes permitted annually from

2007 through 2016 (Figure 7). During

this period, the composition of the

units permitted shifted toward condo-

miniums, timeshares, and resort-type

units. Single-family home construction,

as measured by the number of homes

permitted, has been relatively low in

the USVI since the economic down-

turn in the late 2000s. During 2007

and 2008, an average of 310 single-

family homes were permitted in the

territory annually. Approximately 80

percent of those homes were on the

island of St. Croix, which has a lower

population density and less moun-

tainous terrain than the islands of St.

Thomas or St. John. The number of

single-family homes permitted in the

USVI subsequently declined to a low

of 200 in 2009, before increasing at

an average rate of 4 percent to 230

in 2013. Home production remained

stable as the labor market began

to improve in 2014 and 2015, then

increased 17 percent to 270 homes

built in 2016. The island of St. Croix

has accounted for only 54 percent of

all single-family homes permitted in

the USVI since 2013, due in part to

the impact of the Hovensa refinery

closure. Almost all single-family home

construction in the territory consists

of individual homes, with few planned

subdivisions.

Although the number of single-family

homes permitted remains low, con-

struction of condominium, timeshares,

and duplexes for the sales market has

increased since the late 2000s, coincid-

ing with the economic recovery of the

United States. An estimated annual

average of 220 such units were permit-

ted in the USVI from 2010 through

2016, double the average of 110 from

2007 through 2009. Resort condo-

miniums and timeshares contributed

significantly to the increase. Approxi-

mately 8 percent of all housing units

in the USVI are currently estimated to

be seasonal homes, up from 7 percent

as of April 2010. By comparison,

seasonal homes represented only

4 percent of all housing units in the

United States in 2016, unchanged from

April 2010 (2016 ACS 1-year data).

In total, approximately 18 percent of

owner-occupied housing units in the

USVI are in structures with two or

more units (2013 VICS). Only 5 percent

of the owner-occupied housing units

in the United States are in structures

with two or more units (2016 ACS

1-year data).

An estimated 130 units intended for

the sales market are currently under

construction in the USVI. In addition

to the units under construction, an

estimated 10,700 vacant units in the

territory are not offered for sale or

rent, many of which are intended

for seasonal use. If the sales housing

market were to tighten, it is possible

that some of these homes would

reenter the market.

Figure 7. Sales Units Permitted in the United States Virgin Islands,

2000 to Current

600

500

400

300

200

100

2008

2009

2010

2011

2013

2016

2017

2015

2014

2012

2007

Notes: Current includes data through July 2017.

Sources: U.S. Census Bureau, Building Permits Survey; estimates by analysts

Housing Market Trends

Sales Market Continued

United States Virgin Islands • COMPREHENSIVE HOUSING MARKET ANALYSIS

Rental Market

The rental housing market in the USVI

is currently soft, with an estimated

overall vacancy rate of 15.0 percent,

up from 13.8 percent in 2010 and 10.1

percent in 2000 (Figure 8). Although

the number of renter households

has increased since 2010, net out-

migration has led to a faster increase

in the number of vacant rental units,

particularly in smaller structures.

Approximately 70 percent of the total

rental inventory, including market-

rate and affordable units, consists of

multifamily buildings with fewer than

four units and single-family homes.

By comparison, only 53 percent of

rental households reside in such

structures in the United States. The

few large apartment complexes in the

USVI are almost all public housing or

other below market-rate apartments

and have generally lower vacancy

rates than the overall rental market.

Data regarding market-rate rental

units in the USVI are severely limited

because of the general absence of large

apartment complexes and, subsequently,

private apartment surveys. Available

data suggest that affordability is a sig-

nificant issue with rental households

in the territory spending a notably

larger share of their income on rent

than those in the United States. During

2013, the most recent year of data

availability, median gross rent in the

USVI was $857, an increase of $30, or

4 percent, annually from 2010 (2013

VICS and 2010 Census data). Median

gross rent was highest on the island

of St. John at $1,086, followed by the

islands of St. Thomas and St. Croix

at $872 and $795, respectively. During

2013, the median gross monthly rent

represented 38 percent of median

monthly income for renter households

in the USVI. Comparable data for the

United States show a median monthly

rent of $905, or about 33 percent of

the median monthly income for renter

households (2013 ACS 1-year data).

Subsidized and other low-income rental

housing is particularly important in

the territory given the high cost of liv-

ing and relatively low wages. In total,

below market-rate housing accounts

for approximately 23 percent of the

rental inventory in the USVI compared

with approximately 12 percent in the

United States. The primary provider

of subsidized housing is the Virgin

Islands Housing Authority (VIHA),

which manages 24 public housing

communities with 3,014 units. A 2015

study found a vacancy rate of 8 percent

at VIHA properties, excluding 3 prop-

erties that were damaged and not fully

habitable (Virgin Islands Housing

Finance Authority). The other major

sources of subsidized rental housing

are the Section 8 Project-Based Rental

Assistance program, which provides ap-

proximately 1,275 units at 8 com plexes,

and the U.S. Department of Agri culture

Rural Development Administration

(RDA), which includes 430 units at

11 properties. The vacancy rate at RDA

properties has been under 5 percent

Figure 8. Rental Vacancy Rates in the United States Virgin Islands,

2000 to Current

2000 Current2010

10.1

15.0

13.8

16.0

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0.0

Note: The current date is August 1, 2017.

Sources: 2000 and 2010—2000 Census and 2010 Census; current—estimates by

analysts

Housing Market Trends Continued

United States Virgin Islands • COMPREHENSIVE HOUSING MARKET ANALYSIS

since 2010 and was most recently

reported at 2.3 percent during 2016.

Demand for subsidized rental housing

is substantial, with the waiting list

to obtain Section 8 housing choice

vouchers containing approximately

1,600 families compared with 1,446

vouchers under lease. In addition to

subsidized housing, the Low-Income

Housing Tax Credit (LIHTC) program

solely funds approximately 718 below

market-rate apartments at 8 complexes.

Rental construction activity in the

USVI, as measured by the estimated

number of units permitted, has been

limited since the late 2000s because

of population decline and the existing

inventory of vacant housing units.

From 2007 through 2012, an average

of 210 rental units were permitted

annually. Following the closure of the

Hovensa refinery in 2012, rental con-

struction activity declined to an average

of only 150 rental units annually from

2013 through 2016 (Figure 9). Afford-

able units made up a significant part

of recent rental construction. Since

2007, approximately 25 percent of all

rental construction consisted of apart-

ment complexes financed through the

LIHTC program, with the remainder

mostly rental units in duplexes or other

small multifamily structures. Amalie

Terrace, a 54-unit apartment complex

that opened on the island of St. Thomas

in 2014, offers one-, two-, and three-

bedroom units at below market-rate

rents. Sugar Estate Senior Residence,

the most recent apartment complex

to open in the territory, is also on the

island of St. Thomas. The 80-unit

development, which offers subsidized

housing for eligible seniors, opened in

mid-2016 and is funded through the

Section 8 and LIHTC programs.

An estimated 110 rental units are cur-

rently under construction, almost all

of which are duplexes or quadplexes.

Low-income housing tax credits have

been allocated for the third phase of

the Louis E. Brown Senior Villas,

which will provide 22 one-bedroom,

46 two-bedroom, and 22 three-

bedroom rent-subsidized apartments

units. The first two phases of the

development, which opened in 2012

and 2013, respectively, represented

the first new public housing units

built on the island of St. Croix in

more than 20 years and replaced The

Brown Villas, which were severely

damaged by Hurricane Hugo in 1989

and Hurricane Marilyn in 1995.

Figure 9. Rental Units Permitted in the United States Virgin Islands,

2000 to Current

350

300

250

200

150

100

2008

2009

2010

2011

2013

2016

2017

2015

2014

2012

2007

Note: Current includes data through July 2017.

Sources: U.S. Census Bureau, Building Permits Survey; estimates by analysts

Housing Market Trends

Rental Market Continued

United States Virgin Islands • COMPREHENSIVE HOUSING MARKET ANALYSIS

Data Prole

Table DP-1. United States Virgin Islands Data Proﬁle, 2000 to Current

Average Annual Change (%)

2000 2010 Current 2000 to 2010 2010 to Current

Total resident employment 44,500 47,272 43,200 0.6 – 1.4

Unemployment rate 6.8 8.1 10.7

Nonfarm payroll jobs 41,600 44,200 38,250 0.6 – 2.2

Total population 108,612 106,405 105,000 – 0.2 – 0.2

Total households 40,648 43,214 44,250 0.6 0.3

Owner households 18,678 20,700 20,850 1.0 0.1

Percent owner 46.0 47.9 47.1

Renter households 21,970 22,514 23,400 0.2 0.5

Percent renter 54.0 52.1 52.9

Total housing units 50,202 55,901 59,900 1.1 0.9

Owner vacancy rate 12.8 3.7 3.8

Rental vacancy rate 10.1 13.8 15.0

Notes: Employment data represent annual averages for 2000, 2010, and the 12 months through July 2017. The current

date is August 1, 2017.

Sources: U.S. Census Bureau; U.S. Department of Housing and Urban Development; 2013 Virgin Islands Community Survey;

estimates by analysts

United States Virgin Islands • COMPREHENSIVE HOUSING MARKET ANALYSIS

Data Denitions and Sources

2000: 4/1/2000—U.S. Decennial Census

2010: 4/1/2010—U.S. Decennial Census

Current date: 8/1/2017—Estimates by the analysts

The territorial definition in this report is based

on the delineations established by the Office of

Management and Budget (OMB) in the OMB

Bulletin dated February 28, 2013.

Other Vacant Units: In this analysis conducted

by the U.S. Department of Housing and Urban

Development (HUD), other vacant units include

all vacant units that are not available for sale or

for rent. The term therefore includes units rented

or sold but not occupied; held for seasonal,

recreational, or occasional use; used by migrant

workers; and the category specified as “other”

vacant by the Census Bureau.

Building Permits: Building permits do not neces-

sarily reflect all residential building activity that

occurs in a housing market. Some units are

constructed or created without a building permit

or are issued a different type of building permit.

For example, some units classified as commercial

structures are not reflected in the residential

building permits. As a result, the analysts, through

diligent fieldwork, make an estimate of this

additional construction activity. Some of these

estimates are included in the discussions of single-

family and multifamily building permits.

For additional data pertaining to the housing

market for this housing market, go to huduser.

gov/publications/pdf/CMARtables_

UnitedStatesVirginIslands_18.pdf.

Contact Information

Adam Tubridy, Economist

Seattle HUD Regional Office

206–220–5339

adam.b[email protected]v

Casey M. Blount, Economist

Los Angeles HUD Field Office

213–534–2622

casey[email protected]

This analysis has been prepared for the assistance and

guidance of HUD in its operations. The factual informa-

tion, findings, and conclusions may also be useful to

builders, mortgagees, and others concerned with local

housing market conditions and trends. The analysis

does not purport to make determinations regarding the

acceptability of any mortgage insurance proposals that

may be under consideration by the Department.

The factual framework for this analysis follows the

guidelines and methods developed by the Economic and

Market Analysis Division within HUD. The analysis and

findings are as thorough and current as possible based on

information available on the as-of date from local and

national sources. As such, findings or conclusions may be

modified by subsequent developments. HUD expresses its

appreciation to those industry sources and state and local

government officials who provided data and information

on local economic and housing market conditions.

For additional reports on other market areas, please go to

huduser.gov/portal/ushmc/chma_archive.html.