Virginia's housing market rebounded strongly in the spring of 2020 after a steep decline. In 2021, the hot housing market continued to be fueled by strong demand, low mortgage rates, and a trend toward working from home. In 2022, it is anticipated that there will be a decrease in sales activity, owing mostly to increased affordability issues, prolonged low inventory, and a major increase in mortgage rates.
In April, the median sales price across the state was $390,000. This is an increase of $100,000 from April of 2018. Compared to last year at this time, Virginia’s median sales price is up just over 9%, a gain of $32,500. The steady upward trajectory of home prices has not been hindered by the slowdown in sales activity or the recent spike in mortgage rates. However, Virginia could see a change in the speed of price growth in the coming months. Let's take a look at what's going on in the state of Virginia and the Richmond metro area's housing markets.
Virginia Housing Market Report & Trends
The Current Market Trends: According to the April 2022 Virginia Home Sales Report released by Virginia REALTORS®, the statewide median home sales price was $390,000 in April. This is $100,000 higher than April of 2018, just four years ago. Compared to last year at this time, Virginia’s median sales price is up just over 9%, a gain of $32,500. Homes sold for 3.4% higher than the list price, on average. In all price segments, the average sold-to-list price ratio was at least 100%.
In April 2022, there were 11,991 home sales in Virginia, a decrease of 11.6% from the previous year. For five consecutive months, sales have decreased year-over-year. This slowdown is a result of buyers' reluctance due to rising home prices, inflation, and mortgage rates. In the coming year, as a result of rising interest rates, housing demand in Virginia will decrease, thereby slowing price growth. However, higher mortgage rates and home prices will continue to be an obstacle for purchasers.”
According to the national property broker, Redfin, the home prices in the Virginia housing market were up 8.7% year-over-year in April. The number of homes sold fell 11.1% and the number of homes for sale fell 22.7%.
- 64.1% Homes Sold Above List Price.
- 15.9% Homes Sold with Price Drops.
- Sale-to-List Price was 103.4%
- The housing supply is scarce in the Virginia housing market.
- # of Homes for sale were down 11.1 percent year-over-year.
- # of newly listed homes for sale were also down 12.2 percent year-over-year.
- Months of supply is just 1.0 months.
- The median days on market were 12, down 8 percent year-over-year.
Top 5 Metros in the Virginia housing market with the Fastest Growing Sales Price:
- Woodlawn, VA (+68.2%): In April 2022, Woodlawn home prices were up 68.2% compared to last year, selling for a median price of $421K. On average, homes in Woodlawn sell after 16 days on the market compared to 20 days last year. There were 32 homes sold in April this year, up from 27 last year.
- Wintergreen, VA (+65.0%): In April 2022, Wintergreen home prices were up 65.0% compared to last year, selling for a median price of $410K. On average, homes in Wintergreen sell after 3 days on the market compared to 54 days last year. There were 25 homes sold in April this year, down from 32 last year.
- Loudoun Valley Estates, VA (+41.4%): In April 2022, Loudoun Valley Estates home prices were up 41.4% compared to last year, selling for a median price of $808K. On average, homes in Loudoun Valley Estates sell after 5 days on the market compared to 11 days last year. There were 20 homes sold in April this year, down from 21 last year.
- Waynesboro, VA (+40.3%): In April 2022, Waynesboro home prices were up 40.3% compared to last year, selling for a median price of $265K. On average, homes in Waynesboro sell after 6 days on the market compared to 63 days last year. There were 34 homes sold in April this year, down from 39 last year.
- Yorktown, VA (+32.3%): In April 2022, Yorktown home prices were up 28.5% compared to last year, selling for a median price of $453K. On average, homes in Yorktown sell after 10 days on the market compared to 17 days last year. There were 46 homes sold in April this year, down from 58 last year.
Virginia Housing Forecast 2022
In 2022, Virginia REALTORS® is forecasting that sales activity will be down by just about a tenth of a percent as compared to last year, due primarily to rising affordability challenges, continued low inventory, and a huge uptick in mortgage rates. Virginia home prices will continue to rise in 2022, though the rate of price growth will slow as demand softens and inventory expands a bit.
The group is forecasting that prices will be up by about 4.1% in 2022, making it a more typical year for price appreciation. New construction is expected to stabilize in 2022 with just a modest increase in the number of new homes built. According to Virginia REALTORS, real estate in Arlington and other parts of Northern Virginia has been in high demand for years, fueled by strong job growth and high household incomes in the metropolitan Washington, D.C. area.
Amazon added fuel to this fire a few years ago, but it is no longer the only factor. Amazon has brought new workers to the region. The company announced that it would ultimately bring 25,000 to the Amazon HQ2 headquarters. Amazon has hired more than 3,000 HQ2 employees and was actively hiring another 2,500 workers. These new Amazon jobs tend to be higher-paying jobs—the average annual salary is $150,000. In April 2022, the median sales price in Arlington County was $645,000. The average single-family detached home sold for over $1.2 million.
In April, the median sales price in 22202, which includes National Landing, was $662,500. The majority of the surrounding region has experienced double-digit price increases. Over the past year, the median price of a home in Arlington and Alexandria has decreased due to a greater proportion of condominium sales than single-family homes. Home prices have actually risen much faster in neighboring Fairfax and Loudoun counties, where the median prices were up 10.1% and 18.0% year-over-year, respectively, in April.
Richmond Housing Market Trends (Latest Statistics YTY)
Richmond metro is a hot housing market in Virginia. Forbes ranked Richmond #55 as the best place for business and careers in the U.S. Richmond's real estate market remains brisk, with buyers willing to pay more for homes than sellers are asking. Richmond homes are getting sold quickly and the metro area’s housing inventory has been squeezed significantly over the last two years.
There is a dearth of housing supply in the Richmond Metro. Over the last two years, available homes for sale have dropped by more than half. As of April 2022, the Months Supply of Inventory for the Richmond Metro Area has decreased by 33.3 percent for single-family homes, according to the Richmond Association of REALTORS®. It has dropped to a low of 0.6 months, which means that’s how long it would take to deplete the inventory to zero at the current sales pace.
For condos and townhomes, the inventory would also dwindle away in just 0.6 months, if no new listings are put on the market. From January through April, 3,989 single-family homes were sold in the Richmond metro area, a 9.7 percent decrease over last year's busy market. April sales posted a decline of 6.4% over last year for single-family homes
The new listings were down 21% and the total inventory dropped by 36.6% pushing the home prices up 11.8 percent to a median of $379,950. The difference between this April and last April's median home price is $40,000. Pending Sales (forward-looking indicator) decreased by 11.1 percent which shows that buyers are pulling back due to rising prices and high mortgage rates.
The following real estate statistics are collected by the Richmond Association of REALTORS® for the time frame April 1 through April 30, 2022. It shows the percentage change of some of the key housing indicators of the Richmond Metro Housing Market (Chesterfield, Hanover, Henrico, and Richmond City), when compared to April 2021.
The direction and rate of change in home prices are indicators of the housing market's health and whether homes are becoming more or less affordable. Looking at these trends, it's a seller's market in the Richmond Metro Area. Strong buyer demand is likely to continue into what is typically the slowest time of year. With inventory remaining constrained in most market segments, sellers continue to benefit from the tight market conditions.
- New Listings decreased 21.0 percent for Single Family homes and 9.2 percent for Condo/Town homes.
- Pending Sales decreased 11.1 percent for Single Family homes but increased 1.2 percent for Condo/Town homes.
- Inventory decreased 36.6 percent for Single Family homes and 48.5 percent for Condo/Town homes.
- Median Sales Price increased 11.8 percent to $379,950 for Single Family homes and 20.7 percent to $321,500 for Condo/Town homes.
- Days on Market decreased 14.3 percent for Single Family homes but increased 38.9 percent for Condo/Town homes.
- Months Supply of Inventory decreased 33.3 percent for Single Family homes and 45.5 percent for Condo/Town homes.
Richmond VA Real Estate Market Forecast 2022
What are the Richmond real estate market predictions for 2022? Virginia Beach is the biggest city in the state. It is followed by Norfolk on the shores of the Chesapeake. These large, dense housing markets attract attention, but it is Richmond, Virginia you should be thinking of. Yet few do beyond memorizing their state capitals. Richmond is home to roughly a quarter-million people.
The Richmond VA real estate market is actually several times larger than this. If you include the suburbs around it, the Richmond housing market contains nearly one and a half million people. This makes the Richmond area the third-largest metropolitan area in the state of Virginia. Richmond has a mixture of owner-occupied and renter-occupied housing. Single-family detached homes are the single most common housing type in Richmond, accounting for 48.72% of the city's housing units.
Other types of housing that are prevalent in Richmond include large apartment complexes, duplexes, and a few row houses. According to Zillow, a leading real estate marketplace, the typical value of homes in the Richmond metro is $320,654, and in May 2012 it was $189,000. Since then, home values have appreciated by nearly 70%. Richmond metro home values have gone up 13.2% over the last twelve months.
According to NeighborhoodScout's data, appreciation rates for homes in Richmond have been tracking above average for the last ten years. The cumulative appreciation rate over the ten years has been 88.39%, which equates to an annual average appreciation rate of 6.54%. During the latest twelve months, Richmond's appreciation rate has been 18.12%, and in the latest quarter, it's been 6.70%, which annualizes to a rate of 29.64%. Hence, it is expected that the Richmond home prices will rise by double-digits over the next twelve months.
Here is a short and crisp housing market forecast for Richmond City, Chesterfield, Hanover, and Henrico Counties — all of which are part of the Richmond Metro Area Housing Market.
- Richmond Metro home values have gone up 13.2% over the past year and they will continue to rise over the next 12 months.
- Richmond City home values have gone up 15.0% over the past year (current value = $321,052) and will continue to rise over the next 12 months.
- Chesterfield County home values have gone up 15.0% over the past year (current value = $343,033) and will continue to rise over the next 12 months.
- Hanover County home values have gone up 10.9% over the past year (current value = $366,737) and will continue to rise over the next 12 months.
- Henrico County home values have gone up 11.9% over the past year (current value = $322,894) and will continue to rise over the next 12 months.
Housing inventory remains low in many major cities across the nation, and this region is no exception to that. The supply and demand dynamics will likely put the negotiating power in the hands of sellers, pushing prices north again over the next 12 months. There exists a limited supply of homes and buyers are forced to compete often resulting in higher prices and/or quicker sales that tend to benefit sellers. Looking at these statistics, it is no brainer that Richmond home prices will continue to rise in 2022. Clearly, for the long-term investment, you cannot ignore underestimating investing in the Richmond metro area.
The chart below, created by Zillow, shows the growth of median home values since 2012.
Richmond Real Estate Investment Overview 2022
Many real estate investors have asked themselves if buying a property in Richmond is a good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead. We have already discussed the Richmond housing market forecast for answers on why to put resources into this market. Although, this article alone is not a comprehensive source to make a final investment decision for Richmond we have collected some data for those who are keen to invest in Richmond real estate in 2022.
Being the capital of Virginia is not reason enough to make a real estate investment. However, being a capital city results makes it a good housing market to invest in. For example, government employment for better or for worse is relatively high in state capitals. That creates a large number of good-paying jobs, raising property values.
You see the same thing on a grander scale in the wealthy suburbs around Washington, D.C. Being the state capital and the central transportation hub for the region resulted in it being a center of commerce and trade. This led to many law firms and banks having their headquarters here. That is aside from the hospitals and educational institutions in the area. This contributed to the average salary hovering around 50,000 dollars a year. In 2017, Richmond made multiple lists of the best places to retire in the United States as well as top places to live.
Points in favor of the Richmond VA real estate market included its intellectual and creative life, affordability, and quality of healthcare. This has led to a spate of new construction for active adult communities. Investing in Richmond real estate will fetch you good returns in the long term as the home prices in Richmond have been trending up year-over-year. Let’s take a look at the number of positive things going on in the Richmond real estate market which can help investors who are keen to buy an investment property in this city.
Richmond's Large Student Market For Rentals
The Richmond VA real estate market is perfect for those who want to cater to the student market. It is incredibly diverse. The Virginia Commonwealth University campus is home to roughly 30,000 students. That’s aside from the University of Richmond satellite campus. Virginia Union University hosts nearly two thousand college students.
Small private schools like Virginia College and Fortis College host just a few hundred students. There are Baptist, Presbyterian, and several other seminaries in the city, as well. You could find a Richmond real estate investment property near any of these campuses (or in easy reach of several) and rent it out to a steady stream of students.
The main reason you would buy a Richmond real estate investment property is for the rental income. However, the more important factor is the return on the investment. In this regard, the Richmond housing market shines. The median rental rate is roughly 1300 dollars a month for an apartment.
Rental rates are increasing year-over-year due to demand. This will result in continued increases in rents for the foreseeable future. If the economy were to decline (due to unforeseen things like this pandemic), the fact that there are so many students in the area will bolster rental rates in the Richmond real estate market.
Current Rental Market Trends: Before the pandemic, the average rent for an apartment in Richmond was growing at 6% annually (source: RENTCafe). The average size for a Richmond, VA apartment is 862 square feet, but this number varies greatly depending on unit type. Studio apartments are the smallest and most affordable. Around 55% of the households in Richmond, VA are renter-occupied while 44% are owner-occupied.
As of May 26, 2022, the average rent for an apartment in Richmond, VA is $1,200 which is a 12% increase from last year. Over the past month, the average rent for a studio apartment in Richmond increased by 4% to $1,279. The average rent for a 1-bedroom apartment remained flat, and the average rent for a 2-bedroom apartment increased by 3% to $1,495.
- Two-bedroom apartment rents average $1,495 (a 12% increase from last year).
- Three-bedroom apartment rents average $1,995 (an 11% increase from last year).
- Four-bedroom apartment rents average $2,400 (a 9% increase from last year).
Top Neighborhoods include Jackson Ward, Westover Hills, Manchester, The North Side, Three Corners, and Oregon Hill. These are some of the most affordable neighborhoods where rents are on the lower side:
- Monroe Ward ($687)
- Union Hill ($930)
- Fulton ($1,095)
- Northern Barton Heights (($1,095)
The Tourist Market Boosts Short-Term Rentals
Yes, Richmond, Virginia has a tourist market. More than seven million people a year pass through. They may be visiting one of the oldest cities in the United States to tour the Revolutionary era or Civil War sights. Others attend weddings and graduations in the area. The city is considering becoming more friendly to short-term rentals, something that has been illegal.
Short-term rentals have been illegal under local law, but under the new ordinance, property owners can list with sites like Airbnb if they pay an annual $300 permitting fee. That fee would go toward a 3rd-party monitoring program. The city is also requiring short-term rental operators to live in the home for 185 days each year.
Certificate of Zoning Compliance (CZC) for Short-term Rental (Short-Term Rental Permit) is to be obtained on a biennial basis. The ordinance to permit short-term rentals was adopted by City Council on June 22, 2020. The effective date of the ordinance is July 1, 2020.
The Relative Landlord-Friendly Regulations
The Richmond housing market is quite landlord-friendly. There is no limit on late fees as long as they are written into the lease. Written leases aren’t required unless for more than 12 months. There is no notice of entry law in the state. The only area where Virginia falls short is the long, complex eviction process. The average Richmond real estate investment property owner offsets this by having a large security deposit and thorough background checks. Security deposits are typically limited to two months’ rent. You can charge an application deposit on top of the security deposit.
Unemployment in the Richmond area hovers around three percent, half a point or so below the national average. More importantly, the area has seen better than average job growth over the past few years. In 2017, they were among the top 25 metro areas with the fastest job growth. Future job growth is expected to be 35 percent over the next ten years, several percentage points higher than the national average.
This will contribute to steady population growth as college graduates find jobs in the area and end up raising their families here. Virginia’s economy has benefitted in recent years from increased federal government spending as well as improvements in its business climate. CNBC named Virginia the top state for doing business in 2019, a point driven home by Amazon’s selection of Northern Virginia for its HQ2 in November 2018.
Richmond’s ties to Northern Virginia are strengthening, helping Virginia’s capital city attract a wide range of new business development. Growth along the coast has been more modest but rising defense spending is finally providing a boost to the Norfolk area. Charlottesville and Harrisonburg are also hot spots.
Richmond has crafted a 1.5 billion dollar redevelopment plan for the area around Richmond Coliseum. Large sections of downtown will be renovated and redeveloped to include new condos, retail and commercial space. It will be home to a new transit building, arena, and mixed-use developments. This will increase the value of all properties in the Richmond housing market in and around downtown.
The Richmond Metro Area is historic, but it is already a modern city embracing smart growth and development. It is a stable housing market that offers good returns without massive regulation or heavy taxes.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Richmond.
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Please do not make any real estate or financial decisions based solely on the information found within this article. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US. This article aimed to educate investors who are keen to invest in Richmond real estate. Purchasing an investment property requires a lot of study, planning, and budgeting. Not all deals are solid investments. We always recommend doing your research and taking the help of a real estate investment counselor.
Market Data, Reports & Forecasts
Student Market & Rental Trends