Richmond, Virginia has a diverse economy, a rich history, and a vibrant cultural scene. It is also known for its affordable housing market, which has attracted many homebuyers and investors. With the increase in median and average sales prices, coupled with a decrease in inventory, the Richmond housing market appears to lean towards sellers. However, the longer days on market and reduced percentage of original list price received suggest a nuanced landscape, indicating opportunities for both buyers and sellers.
Current Richmond Housing Market Trends
How is the Housing Market Doing Currently?
The Richmond housing market, encompassing Chesterfield, Hanover, Henrico, and Richmond City, witnessed notable shifts in key metrics throughout December 2023. Let's delve into the statistics to gauge the current state of affairs released by the Richmond Association of REALTORS®.
Single Family Homes
- New Listings: In December 2023, new listings decreased by 8.6%, indicating a potential stabilization in the market.
- Pending Sales: The number of pending sales dropped by 9.9%, suggesting a slightly subdued demand compared to the previous year.
- Closed Sales: Despite a 6.6% increase in closed sales, the overall year-to-date figure reflects a substantial decline of 21.5%, signaling a shift in buyer behavior.
- Days on Market Until Sale: The days on market increased by 22.7%, possibly indicating a more deliberate decision-making process among buyers.
- Median and Average Sales Price: Both median and average sales prices showed positive growth, with 8.7% and 8.4% increases, respectively.
- Percent of Original List Price Received: While the percentage of the original list price received saw a minor uptick, the year-to-date figure suggests a more conservative market, down by 2.0%.
- Inventory and Months Supply: The inventory of homes for sale decreased by 4.9%, potentially contributing to a more competitive market, reflected in a 20.0% increase in months supply of inventory.
Condo/Townhomes
- New Listings: Condo/townhome new listings decreased by 13.5%, indicating a similar trend to single-family homes.
- Pending Sales: The increase in pending sales by 14.4% suggests sustained demand in this segment.
- Closed Sales: A 5.1% decrease in closed sales, coupled with a modest increase in days on market, might imply a more balanced market for condo/townhomes.
- Median and Average Sales Price: Both median and average prices rose, reflecting positive growth in this segment as well.
- Percent of Original List Price Received: The percentage remained stable, with a slight decrease year-to-date.
- Inventory and Months Supply: Condo/townhome inventory increased slightly by 3.0%, maintaining a stable months supply of inventory.
How Competitive is the Richmond Housing Market?
The increased days on market for both single-family homes and condo/townhomes might suggest a somewhat less frenzied atmosphere, providing buyers with additional time for decision-making. However, the overall decrease in inventory, especially in single-family homes, could contribute to a heightened level of competition among buyers.
Are There Enough Homes for Sale to Meet Buyer Demand?
The decreased number of new listings and a notable drop in closed sales, particularly in the single-family homes category, might indicate a potential mismatch between supply and demand. Buyers could face challenges finding suitable options, potentially contributing to a more competitive landscape.
What is the Future Richmond Housing Market Outlook?
While the current data provides insights into the market's recent performance, predicting future trends involves considering various factors such as economic conditions, interest rates, and broader market dynamics. Observing ongoing trends and staying informed about external influences will be crucial in understanding the evolving market outlook.
READ: Virginia Housing Market Forecast
Richmond VA Housing Market Forecast 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.
According to Zillow, the Richmond housing market has witnessed significant changes in recent times. As of December 31, 2023, the average home value in Richmond stands at $329,393, reflecting a 2.5% increase over the past year. Homes in Richmond go pending in approximately 9 days, indicating a dynamic and fast-paced market.
Key Housing Metrics Explained
- For Sale Inventory (December 31, 2023): The housing inventory in Richmond is represented by 452 available homes for sale as of the mentioned date.
- New Listings (December 31, 2023): There were 204 new listings, contributing to the overall housing stock in the region.
- Median Sale to List Ratio (November 30, 2023): The ratio stands at 1.005, suggesting a balanced market where homes are generally selling close to their listed prices.
- Median Sale Price (November 30, 2023): The median sale price in Richmond is $320,417.
- Median List Price (December 31, 2023): The median list price for homes in Richmond is $332,990.
- Percent of Sales Over List Price (November 30, 2023): 55.0% of the sales transactions in November saw prices exceeding the listed amounts.
- Percent of Sales Under List Price (November 30, 2023): 27.7% of sales occurred below the listed prices, indicating negotiation possibilities in the market.
Richmond MSA Housing Market Forecast
In terms of the Richmond Metropolitan Statistical Area (MSA) housing market forecast, there is optimism for the coming months. As of December 31, 2023, the forecast predicts a growth rate of 0.1% by January 31, 2024, 0.5% by March 31, 2024, and a substantial 3.4% by December 31, 2024. This indicates a positive trajectory for the region's real estate market, showcasing resilience and potential for substantial appreciation.
The Richmond Metropolitan Statistical Area (MSA) encompasses various counties and plays a pivotal role in Virginia's real estate landscape. The MSA includes counties such as Henrico, Chesterfield, and Hanover, forming a substantial housing market. The forecasted growth reflects the economic vibrancy and attractiveness of the Richmond MSA, making it a key area for real estate investment and development.
Are Home Prices Dropping in Richmond?
As of the latest data, there is no indication of home prices dropping in the Richmond housing market. The 2.5% year-over-year increase in average home value demonstrates a steady appreciation trend. The demand for homes, as reflected in the quick pending time of around 9 days, contributes to the stability in home prices. However, it's essential to monitor the market regularly for any emerging trends.
Will the Richmond Housing Market Crash?
Based on the current data and market forecast, there is no imminent sign of a housing market crash in Richmond. The forecasted growth rates for the coming months project a positive trajectory, indicating resilience and stability. However, real estate markets are inherently dynamic, and external factors can influence outcomes. Continuous monitoring of market indicators and economic conditions is advisable to stay well-informed.
Is Now a Good Time to Buy a House in Richmond?
Considering the seller's market conditions and the steady appreciation in home values, prospective buyers may find it challenging but not impossible to secure a property in Richmond. While the market favors sellers, buyers can still benefit from historically low-interest rates, making it a favorable time to secure financing. Ultimately, the decision to buy a house depends on individual circumstances, long-term goals, and the willingness to navigate a competitive 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.
Rental Prices
As of February 2024, the median rent for all bedroom counts and property types in Richmond, VA is $1,500. This is -22% lower than the national average. Rent prices for all bedroom counts and property types in Richmond, VA have remained the same in the last month and have remained the same in the last year.
Occupancy Statistics
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 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.
Growing Economy
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.
Conclusion
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
Not just limited to Richmond or Virginia but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Richmond turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
References
Market Data, Reports & Forecasts
https://rarealtors.com/housingreports/
https://www.zillow.com/Richmond-va/home-values
https://www.redfin.com/city/17149/VA/Richmond/housing-market
https://www.redfin.com/state/Virginia/housing-market
https://www.neighborhoodscout.com/va/richmond/real-estate
https://www.realtor.com/realestateandhomes-search/Richmond_VA/overview/
Student Market & Rental Trends
https://en.wikipedia.org/wiki/Richmond,_Virginia#Demographics
https://www.collegesimply.com/colleges-near/virginia/richmond
https://www.rentjungle.com/average-rent-in-richmond-va-rent-trends
https://www.rentcafe.com/average-rent-market-trends/us/va/richmond/
Landlord friendly
https://www.avvo.com/legal-answers/va-landlord-tenant-law-question-377594.html
https://www.avail.co/education/laws/virginia-landlord-tenant-law
Economy
https://wtvr.com/2017/08/25/the-25-metro-areas-with-the-fastest-job-growth
https://www.bestplaces.net/economy/city/virginia/richmond
https://www08.wellsfargomedia.com/assets/pdf/commercial/insights/economics/regional-reports/va-economic-outlook-20200310.pdf
Redevelopment
https://www.richmond.com/news/local/city-of-richmond/update-stoney-to-introduce-now–billion-richmond-coliseum-redevelopment/article_3c6d3b83-8c21-5f19-ab73-995b2f57e6a5.html
https://www.wric.com/news/local-news/richmond/how-richmond-plans-to-pay-for-the-navy-hill-redevelopment-project