Richmond Housing Market Trends
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. In August 2022, the Months Supply of Inventory for the Richmond Metro Area decreased by 10 percent for single-family homes, according to the Richmond Association of REALTORS®. It has dropped to a low of 0.9 months, which means that’s how long it would take to deplete the inventory to zero at the current sales pace.
<<<READ: Virginia Housing Market Forecast 2023>>>
For condos and townhomes, the inventory would also dwindle in just one month, if no new listings are put on the market. From January through August, 9,329 single-family homes were sold in the Richmond metro area, a 13.4 percent decrease over last year's busy market. August sales posted a decline of 20.7% over last year for single-family homes.
The new listings were down 29.6% and the total inventory dropped by 19.1% pushing the home prices up 10.1 percent to a median of $380,000. The difference between this August and last August's median home price is $35,000. Pending Sales (forward-looking indicator) decreased by 22.2 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 August 1 through August 31, 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 August 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 tight market conditions. However, higher mortgage rates are impacting home sales and moderating home price gains.
- New Listings decreased 29.6 percent for Single Family homes and 13.7 percent for Condo/Town homes.
- Pending Sales decreased 22.2 percent for Single Family homes and 12.2 percent for Condo/Town homes.
- Inventory decreased 19.1 percent for Single Family homes and 27.2 percent for Condo/Town homes.
- Median Sales Price increased 10.1 percent to $380,000 for Single Family homes and 14.2 percent to $317,500 for Condo/Town homes.
- Average Sales Price increased 12 percent to $436,056 for Single Family homes and 10.9 percent to $329,972 for Condo/Town homes.
- Days on Market increased 8.3 percent for Single Family homes and 15 percent for Condo/Town homes.
- Months Supply of Inventory decreased 10 percent for Single Family homes and 23.1 percent for Condo/Town homes.
Richmond VA Real Estate Market Forecast 2022 & 2023
What are the Richmond real estate market predictions for 2022 and 2023? 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, 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 $337,047. 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 14.67%, and in the latest quarter, it's been 1.78%, which annualizes to a rate of 7.29%.
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. Housing inventory remains scarce. The supply and demand dynamics will likely push prices north again over the next 12 months.
- Richmond Metro home values have gone up 13.2% over the past year.
- Zillow predicts that Richmond Metro home values will rise by 0.8% between Aug 2022 to Aug 2023.
- Richmond City home values have gone up 14.1% over the past year.
- Chesterfield County home values have gone up 14.5% over the past year.
- Hanover County home values have gone up 9.6% over the past year.
- Henrico County home values have gone up 12.2% over the past year.
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 in 2023.
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 September 19, 2022, the average rent for an apartment in Richmond, VA is $1,366 which is a 28% increase from last year. Over the past month, the average rent for a studio apartment in Richmond increased by 2% to $1,365. The average rent for a 1-bedroom apartment increased by 1% to $1,366, and the average rent for a 2-bedroom apartment increased by 3% to $1,575.
- Two-bedroom apartment rents average $1,575 (a 19% increase from last year).
- Three-bedroom apartment rents average $1,899 (an 8% increase from last year).
- Four-bedroom apartment rents average $2,100 (a 2% increase from last year).
Top Neighborhoods include Jackson Ward, Westover Hills, Manchester, The North Side, Three Corners, and Oregon Hill.
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