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. The current Richmond housing market exhibits elements of competitiveness, driven by factors such as increased buyer demand and limited inventory.
While there has been a steady influx of new listings, particularly in the single-family home segment, the pace of sales and rising prices indicate a level of competition among buyers. However, the increase in inventory, especially in the condo/townhome segment, suggests a potential shift towards a more balanced market. This could provide buyers with more options and alleviate some of the pressure on prices.
Richmond Housing Market Trends in 2024
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 February 2024. Let's delve into the statistics to gauge the current state of affairs released by the Richmond Association of REALTORS®.
Richmond Single Family Homes
New Listings: The market witnessed a 4.8% increase in new listings compared to the previous year, signaling a steady flow of properties entering the market. This surge in listings could offer more options for prospective buyers, potentially easing competition.
Pending Sales: There was a 9.7% uptick in pending sales, indicating heightened buyer interest and activity in the market. This surge in pending sales suggests a strong demand for single-family homes in Richmond.
Closed Sales: Despite a modest 2.6% increase in closed sales year-over-year, there was a 4.2% decrease in closed sales for the year through February 2024. This discrepancy could be attributed to various factors influencing buyer behavior and market dynamics.
Days on Market Until Sale: The average days on market until sale saw a 3.4% increase compared to the previous year. This indicates that properties are taking slightly longer to sell, potentially providing buyers with more time to make informed decisions.
Median Sales Price: Both median and average sales prices experienced significant increases, with the median sales price rising by 6.7% and the average sales price by 8.4%. This surge in prices could be reflective of high demand and limited inventory, leading to competitive bidding among buyers.
Inventory and Months Supply: While the inventory of homes for sale increased by 4.2%, the months' supply of inventory also saw a 20.0% increase. This suggests a potential shift towards a more balanced market, providing buyers with more options and possibly alleviating some pressure on prices.
Richmond Condo/Townhomes
New Listings: The condo/townhome segment experienced a slight decline in new listings, with an 8.6% decrease compared to the previous year. This reduction could impact the availability of options for buyers in this segment.
Pending Sales: Despite a 13.0% decrease in pending sales, the year-to-date figures show only a 1.9% decline. This suggests a potential resurgence in buyer interest as the year progresses.
Closed Sales: The number of closed sales for condo/townhomes saw a substantial increase of 22.1% year-over-year, indicating robust activity in this segment of the market.
Days on Market Until Sale: The average days on market until sale for condo/townhomes rose by 19.4% compared to the previous year. This indicates a slight slowdown in the pace of transactions in this segment.
Median Sales Price: Both median and average sales prices for condo/townhomes experienced steady increases, reflecting a 7.8% rise in the median price and a 6.5% increase in the average price. This upward trajectory in prices could be driven by demand outpacing supply.
Inventory and Months Supply: The inventory of condo/townhomes for sale saw a significant increase of 19.4%, accompanied by a 13.3% rise in months' supply of inventory. This increase in supply may offer buyers more choices and potentially moderate price growth in this segment.
READ: Virginia Housing Market Forecast
Richmond VA Housing Market Forecast 2024 and 2025
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 reflects a median home value of $335,618, marking a 4.2% increase over the past year. Homes in Richmond tend to go pending in around 9 days, indicating a swift market turnover. As of February 29, 2024, the inventory of homes for sale stood at 418, with 194 new listings added in the same month.
The median list price reached $326,333, slightly higher than the median sale price of $312,150 recorded in January 31, 2024. Moreover, 45.0% of sales were made over the list price, while 34.6% were under the list price during the same period.
Richmond MSA Housing Market Forecast
Richmond, VA, Metropolitan Statistical Area (MSA) encompasses a cluster of counties within Virginia, serving as a pivotal economic and residential hub for the region. Consisting of Henrico, Chesterfield, Hanover, and the City of Richmond, this MSA stands as a critical center for commerce, culture, and community life. The housing market within this MSA is substantial, characterized by a diverse array of properties ranging from historic homes to modern developments, catering to various lifestyle preferences and income brackets.
When delving into the MSA forecast for Richmond, the data suggests a promising trajectory. As of February 29, 2024, the forecast predicts a 0.4% increase in housing market performance by March 31, 2024. Looking further ahead, the forecast indicates a 1% growth by May 31, 2024, and a 1.1% rise by February 28, 2025. These projections hint at a positive outlook for the Richmond MSA, underlining its resilience and potential for sustained real estate growth amidst broader economic fluctuations and market dynamics.
Is Richmond a Buyer's or Seller's Housing Market?
Currently, the Richmond housing market leans towards being a seller's market, characterized by low inventory levels and high demand from prospective buyers. With homes selling swiftly and often at or above listing prices, sellers hold the advantage in negotiations. Buyers may encounter competitive bidding situations and limited options, necessitating swift decision-making and strategic offers to secure a property.
Are Home Prices Dropping in Richmond?
Despite fluctuations in market conditions, there is no indication of significant drops in home prices within the Richmond area. The steady appreciation observed over recent years, coupled with sustained demand, suggests that home prices are likely to remain relatively stable in the near term. However, local factors and broader economic trends can influence pricing dynamics, underscoring the importance of ongoing market monitoring and analysis.
Will the Richmond Housing Market Crash?
While no market is immune to fluctuations, there is currently no imminent risk of a housing market crash in Richmond. The region's strong economic fundamentals, coupled with prudent lending practices and manageable levels of housing inventory, provide a foundation of stability. Additionally, proactive measures by local authorities and industry stakeholders help mitigate systemic risks. However, monitoring factors such as interest rate movements, employment trends, and housing supply dynamics remains crucial to identify and address any emerging vulnerabilities.
Is Now a Good Time to Buy a House in Richmond?
For prospective buyers considering entering the Richmond housing market, the decision hinges on various factors including personal circumstances, financial readiness, and long-term goals. Despite the competitive landscape, opportunities exist for buyers with preparation and strategic planning.
With mortgage rates remaining favorable as compared to last year and a diverse range of properties available, now could indeed be a favorable time to purchase a home in Richmond. However, prospective buyers should conduct thorough research, assess their financial position, and engage with experienced real estate professionals to navigate the market effectively.
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 March 2024, the median rent for all bedroom counts and property types in Richmond, VA is $1,500. This is -24% lower than the national average. Rent prices for all bedroom counts and property types in Richmond, VA have decreased by 6% in the last month and have increased by 2% in the last year.
The monthly rent for an apartment in Richmond, VA is $1,495. A 1-bedroom apartment in Richmond, VA costs about $1,380 on average, while a 2-bedroom apartment is $1,632. Houses for rent in Richmond, VA are more expensive, with an average monthly cost of $2,030.
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
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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