Richmond, Virginia is a thriving city with a diverse economy, rich history, and a vibrant cultural scene. The city is also known for its affordable housing market, which has attracted many homebuyers and investors. In this blog post, we will explore the current trends in the Richmond housing market, including house prices, market activity, and the factors driving the market. We will use data from the Richmond Association of REALTORS®, to provide an accurate picture of the Richmond housing market.
Richmond Housing Market Trends 2023
The Richmond housing market, which includes Chesterfield, Hanover, Henrico, and Richmond City, has witnessed notable trends and changes in 2023. These trends are vital indicators of the market's health and can influence both buyers and sellers. Let's delve into the key metrics and understand the dynamics shaping the housing market.
Single Family Homes – August & Year to Date
New Listings: In 2023, there were 1,059 new listings, marking an 8.3% decrease compared to 2022. This decline suggests a potential shift in supply or demand dynamics within the market.
Pending Sales: The number of pending sales decreased by 18.5%, indicating a potential slowdown in the sales pipeline. Factors such as economic conditions or changes in buyer behavior could be contributing to this trend.
Closed Sales: Closed sales decreased by 27.8%, indicating challenges in finalizing transactions in the current market. This could be due to a variety of factors, including financing issues or a buyer's market.
Days on Market Until Sale: The days on market until sale increased by 15.4%, suggesting properties took longer to sell in 2023 compared to the previous year. This could be influenced by changes in buyer preferences or market saturation.
Median Sales Price: The median sales price showed a 6.9% increase, reaching $405,000 in 2023. This growth indicates an appreciation in property values within the Richmond Metro area.
Average Sales Price: The average sales price increased by 8.5%, reaching $472,515 in 2023. This suggests a general upward trend in property values in the region.
Inventory and Months Supply: The inventory of homes for sale decreased by 10.6%, influencing the months' supply of inventory which increased by 18.2%. This suggests a reduced supply of homes in the market, potentially impacting buyer options.
Condo/Townhomes – August & Year to Date
New Listings: Condo and townhome listings increased by 11.8% in 2023, compared to the previous year. This suggests a growing interest in these property types.
Pending Sales: Pending sales increased by 10.3%, indicating a healthy demand for condo and townhome properties in the Richmond Metro area.
Closed Sales: Closed sales saw a 1.8% increase, showcasing steady transactions in the condo and townhome market.
Days on Market Until Sale: The days on market until sale increased by 13.0%, indicating a slightly longer selling period compared to the previous year.
Median Sales Price: The median sales price for condo/townhomes showed a 14.0% increase, suggesting growing property values in this segment.
Average Sales Price: The average sales price increased by 13.8%, reflecting the upward trend in condo and townhome property values.
Inventory and Months Supply: The inventory of condo and townhome properties for sale increased by 16.7%, affecting the months' supply of inventory which increased by 25.0%.
Richmond VA Housing Market Forecast 2023-2024
What are the Richmond real estate market predictions? 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 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.
Zillow provides a comprehensive view of the Richmond housing market, including key metrics and forecasts that shed light on the current and potential future state of the market.
Current Market Snapshot:
The average home value in Richmond stands at $332,467, reflecting a modest increase of 1.1% over the past year. Properties move quickly in this market, going to pending in an average of 6 days, indicating a high demand for homes.
Market Performance Metrics:
- Median Sale to List Ratio (July 31, 2023): The median sale to list ratio is 1.034, indicating homes are often sold close to their listed prices.
- Percent of Sales Over List Price (July 31, 2023): About 66.6% of sales are transacted over the list price, showing competitive bidding and demand.
- Percent of Sales Under List Price (July 31, 2023): 20.6% of sales are under the list price, suggesting some room for negotiation in specific cases.
- Median Days to Pending (August 31, 2023): Homes typically go to pending status within 6 days, underlining the fast-paced nature of the market.
Market Forecast for Richmond MSA:
Zillow's forecast for the Richmond Metropolitan Statistical Area (MSA) indicates a positive trajectory. The forecast predicts a 0.4% increase in home values by 30-09-2023, 1% increase by 30-11-2023, and a notable 4.4% increase by 31-08-2024. These projections suggest a promising outlook for the Richmond housing market.
Is the Housing Market Slowing Down in Richmond VA?
Despite a modest 1.1% increase in home values over the past year, the Richmond housing market does not exhibit significant signs of slowing down. The fast pace at which homes go to pending status and the high percentage of sales over list price suggest continued demand and a competitive market.
Is Richmond VA a Buyer's Market?
Richmond, with its high percentage of sales over list price (66.6%), suggests a market that favors sellers. However, the 20.6% of sales under list price also indicates some opportunities for negotiation, offering a balanced environment for both buyers and sellers. Overall, while competitive, the Richmond housing market still provides potential opportunities for buyers.
In conclusion, the Richmond housing market shows resilience and growth potential, offering a dynamic landscape for those looking to buy or sell properties. Staying informed about these trends and forecasts is essential for making well-informed decisions in this market.
Richmond Real Estate Investment Overview
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.
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.
The rental market in Richmond, VA, presents an interesting landscape with notable changes in rental prices and demand patterns. Let's delve into the key metrics that define the current rental market scenario in Richmond.
As of September 2023, the average rent for a 1-bedroom apartment in Richmond stands at $1,329, reflecting a 3% decrease compared to the previous year. In the past month, the average rent for a studio apartment increased by 1% to $1,275. However, the average rent for a 1-bedroom apartment remained flat, and for a 2-bedroom apartment, it increased by 2% to $1,575. These figures provide an insight into the rental trends and variations in different housing types.
The rental market in Richmond sees a higher percentage of 56% of renter-occupied households, indicating a significant portion of the population opts for renting. Conversely, 44% of households are owner-occupied, portraying a diverse mix of housing tenure within the city.
The popularity of neighborhoods plays a crucial role in understanding the preferences of renters. In Richmond, the most popular neighborhoods based on listing data are:
- Shockoe Bottom: This neighborhood boasts 264 listings, indicating a high level of demand and popularity among renters.
- Old Town Manchester: With 232 listings, this neighborhood is also in high demand, offering a range of rental options.
- The Fan: This neighborhood features 167 listings, further showcasing the diversity of choices available to potential renters.
These neighborhoods likely offer attractive amenities, convenience, and a desirable lifestyle, making them sought-after by renters in the Richmond area.
The Richmond rental market is dynamic, with shifting rental prices and preferences. Understanding these trends is crucial for both landlords and renters to make informed decisions in this evolving market.
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.
Consult with one of the investment counselors who can help build you a custom portfolio of Richmond turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Richmond
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Some of this article's information came from referenced websites. Norada Real Estate Investments provides no express or implied claims, warranties, or guarantees that the material is accurate, reliable, or current. All information should be validated using the below references. Norada Real Estate Investments does not predict the future US housing market. This article educated investors on Richmond real estate. Buying a rental property needs research, planning, and budgeting. Not all investments are good. Always do research and consult a real estate investment counselor.
Market Data, Reports & Forecasts
Student Market & Rental Trends