Oct 3, 2022 - Real Estate

Huge sections of Richmond are unaffordable for buyers

Illustration of four different people's hands reaching to grab one suburban house.

Illustration: Annelise Capossela/Axios

Homes in huge swaths of the Richmond area are no longer affordable for the average Richmonder to buy.

Driving the news: Overall home sale prices have surged in recent years, but the increases have been the highest and most dramatic in the once most affordable parts of Richmond, Chesterfield and Henrico, a three-year study of Richmond's real estate market released last week found.

  • Institutional investors have driven much of the increase in Richmond's formerly affordable neighborhoods, snapping up as much as a quarter of every home sale over the past three years.
  • Meanwhile, mortgage applications have been denied at a higher rate in these areas than in other parts of town.

Why it matters: Richmonders who make the area's median household income of $66,719 a year or less cannot afford to buy a house in most of the city.

  • The market is even less affordable for Black and Latino homebuyers because of existing racial pay disparities, per the study.

What they're saying: "We're talking about moderate-income people — not poor people — who have nowhere to go," an author of the study, Ira Goldstein of Reinvestment Fund, said in a presentation of the data.

What's happening: A coalition of nonprofit equity and housing groups studied three years (2018-2021) of residential real estate transactions in Richmond, Henrico and Chesterfield, plus census and other public data to create the 2022 Richmond Market Value Analysis.

  • An MVA is a type of detailed real estate study used by communities across the country to determine key characteristics of an area's housing market for local policymakers and housing leaders.

The 2022 Richmond MVA was created by three mission-driven nonprofits — PlanRVA, Richmond Memorial Health Foundation and the Philadelphia-based Reinvestment Fund — with funding from Virginia Housing.

2022 Richmond Market Value Analysis. Image courtesy of Reinvestment Fund

Zoom in: Home sale prices have risen higher than wages in Richmond, Chesterfield and Henrico in the last five years, the study found, but sections of South Richmond, the East End and Highland Park saw the biggest jump.

  • Looking at districts labeled by color and letter in the above chart, which breaks Richmond down into nine districts based on housing characteristics, sales prices jumped the most in the F, G, H and I districts between 2015-2016 and 2019-2021.
Changes in home sales price since the 2017 Richmond MVA. Image courtesy of Reinvestment Fund

Of note: Districts F, H and I also had a significantly higher percentage of sales where homeowners sold to investors, representing 13%, 18% and 25% respectively of all home sales there in 2018-2021.

  • Comparatively, districts A, B and C saw 3%, 5% and 3% of those sales go from homeowner to investor.

Threat level: The high percentage of sales to investors from homeowners in the once most affordable sections of town suggests those owners may not being getting the best price for their house, but rather are being targeted and possibly taken advantage of by investors, the study said.

  • Further, those neighborhoods are also home to primarily Black and Latino Richmonders, putting these residents at higher risk of possible displacement as rising home values trigger higher taxes, the study found.

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