Richmond, VA Housing Market for 2021 and Beyond

2020 was a rocky year for everyone. While the previous 12 months saw unprecedented economic and job losses, there’s still a resilient surge in the housing market in Richmond, Virginia. 

Real estate agents were able to maintain this growth by adopting new solutions to overcome unique challenges. These new innovative solutions have revolutionized the real estate game, with developments such as virtual viewings becoming a new norm.

This digital pivot meant that the housing market would continue to grow. The majority of the industry can agree that demand for homes has been high, even during the pandemic. 

The drive behind the demand was partly due to the historically low mortgage rates, and have driven prices upwards above the average asking price. 

Also contributing to this rise in prices is a lack of inventory for real estate agents.

Looking at the current market, and predicting the reactions of the economy, is going to be tricky. Even at the best of times, it’s tough to call, but in the current market, it’s more difficult, due mainly to COVID-19.

But what drives these economic factors that affect the first the market in the state of Virginia then Richmond?

Economic factors that affect the housing market in Virginia

There are two main economic factors that will affect the home prices in Richmond, VA.   

These include: 

Employment

Employment is still lower today in 2021 than it was in 2007, before the recession.

At the end of 2020, there were a total of 3.88 million jobs in Virginia. This is up compared to the 2020 summer figures, although they were still below the pre-2008 recession levels.

Even with the pandemic 2021 promises to deliver more employment opportunities in Virginia, with the number climbing to 3.91 million. This is up 2.2% over the previous year. 

However, this is still below the 2019 level, and we could only see proper gains coming in 2022 with a possible return to the pre-recession levels. 

The next indicator is the unemployment rate.

Unemployment rate

The peak unemployment rate in Virginia was in April 2020, at around 11.2%. This is still below the national rate, but unemployment in the state surged from below 3%, the unemployment rate which was maintained in 2019. 

This unemployment rate has decreased steadily over the last year and is expected to improve even more in 2021. It is projected that the unemployment rate in Virginia will drop to 5%. 

While we’ve spoken about the main economic factors, we need to dive into the housing market indicators and what it means for the Richmond area. 

Housing market indicators in Richmond, VA

There are a number of factors that drive the housing market. These include: 

Home Sales

The demand for homeownership will continue to be a strong trend in Virginia in 2021. The lack of inventory, though, will be the biggest hurdle over the next year. 

In some instances, homebuyers might become discouraged at the limited selection of homes on the market and put off their search until the inventory improves. This being said, waiting for new houses to hit the market means witnessing the prices on current housing inventory escalate. 

Escalating home prices create a large problem for home buyers, especially first-time buyers, who are just trying to get their foot in the door. 

Home Prices

Prices are being driven upwards in Virginia. The lack of supply, growing demand, and low mortgage rates have all contributed. All these factors will continue to drive home prices higher in 2021. 

Increased demand in smaller markets will ultimately lead to very strong growth in the median statewide home sales price in 2021. 

So, those located outside of the main metropol hubs will see increases as well, and arguably better growth. 

New Housing Permits

Taking on a construction project during 2020 would have been a headache. But in the second part of the year, there was an increase in applicants looking for permits for new housing construction. 

This uptake in permits was taking place even with the higher costs of lumber, a lack of labor, and COVID-19 regulations remaining in place, and constraints on new residential construction. 

In 2021, we’re bound to see an upward trend in new home construction projects.

Mortgage Rates

During 2020 the rate on 30-year fixed-rate mortgages hit historic lows, plunging to new lows 13 times over the summer and fall. 

Even with the economy improving in 2021, there is no sign that the mortgage rates will move higher within the next few months. 

As we peer into the future, it might not be 100% clear what will happen but the outlook for 2021 looks to be positive for the economy and housing market. 

While this is a general overview, what does the overall view of the Richmond housing market look like?

Richmond housing market forecast  

As with the rest of the state of Virginia, interest rates are at an all-time low, demand is strong, and selling prices are higher than average. 

In River City, local news sources say that jobs are flowing in and the real estate market is red hot. 

Our predictions for the Richmond area housing are:  

Asking price in Richmond to remain high 

House values in the city have increased by 7.9% year-over-year and are predicted to grow by another 10.2% in the next 12 months. This isn’t a new trend with home values in the area increasing by more than 45%. 

Stock will be in demand 

According to Forbes, the average days of houses on the market in Richmond during 2020 was 10 days. Which for those looking for a super quick sale might be too long, and this is especially true if owners are facing new financial situations where they need cash. 

But with skyrocketing home prices most will be looking for attractive rental property investment. 

Rental investments

Homes in Richmond are a hot asset with the city being named in the top 15 housing markets by Forbes. 

According to the article, 

“…in 2020, with normalcy out the window, Richmond homes are getting sold in record time and not during May or June. Instead, in September 2020, Richmond area homes spent an average of only 10 days on the market before being bought up.”

With this boom, many homeowners are deciding that holding onto their asset is better than selling it. 

The rental market has seen an increase of 14% year-over-year. And in the past five years, rentals have grown by more than 26%.

But what trends will we see in the area?

Richmond, VA real estate trends 

Over the last 12 months, a few trends will affect buyers’, sellers’, and even investors' choices. These include: 

Housing affordability 

Kiplinger’s Personal Finance surveyed home prices in the top 100 largest metro areas in the United States of America. The survey ranked metro’s affordability on a scale of 1 to 10, with one being the most affordable market to buy in and 10 being the least affordable. 

Richmond's real estate market indexed a 7 out of 10. This means that the metro is a less affordable area. 

Even with the historically low-interest rates in 2020 helping keep these repayments lower and more affordable for buyers, there’s a limited inventory. 

With little room left for interest rates to drop, rising home prices will mean many potential buyers may see themselves priced out of the market. This is especially true for first-time buyers who will prefer to rent. 

Millennials searching for quality of life

With the entry price for homes in the Richmond housing market being too high, most millennials will only be able to rent. But this being said, the city receives high ratings for value, desirability, job market, and overall good quality of life. 

Richmond was listed as one of the 13 major U.S. cities where you can live well on less than $50,000 a year. Also, according to Time, Richmond is the #2 city that millennials are moving to. 

And there’s a wide variety of lifestyle and housing options in the city from suburban living, renovated warehouse apartments, historic townhomes, and waterfront communities.

Also, the city boasts the Virginia Museum of Fine Arts, Richmond Symphony, and the American Civil War Museum, just to name a few of the countless cultural attractions in Richmond. 

A return to seasonality 

In 2020 the Richmond real estate market behaved oddly, mainly due to the COVID-19 global pandemic. While spring and summer are usually the busier seasons, fall and winter were far more active in 2020. In 2021, experts predict that this pattern will return to normal. 

But what type of market is in Richmond currently? 

What type of market is Richmond currently in?

Recent data reveals that home prices in Richmond have skyrocketed and in some instances, houses have sold above their asking price. 

Richmond is currently a seller’s market as there are more buyers looking for homes than those willing to sell. 

As discussed, this is down to the price, owners’ willingness to hold onto their investments and high desirability. 

But what if you’re a seller who is looking to sell their home as-is?

Sell your Richmond home with House Buyers of America

There’s nothing more frustrating than not being able to act on your desire to sell your home. With numerous hurdles to overcome, you’ll be tempted to your home on your own.

This route is labor-intensive and doesn't guarantee you’ll get your house sold fast and hassle-free.

Sell your home to us! House Buyers of America will buy your Richmond, Virginia home for cash. But how does House Buyers of America work? 

How House Buyers of America works

We buy houses in Richmond. Since 2001, House Buyers of America has been perfecting and streamlining every step of our home buying process. 

It starts when you contact us. Our Real Estate Consultants are ready to take your call at 855-659-3289, or you can use our online form , to get started!

As the perfect buyer for your house, we’re going to give you a fair cash offer within 10 minutes of your first phone call. 

If you accept the offer, you will be assigned a dedicated Real Estate Consultant who will organize a time to meet at your house, who will also bring along the paperwork to sign. 

House Buyers of America will handle all of the paperwork and we’ll do it quickly if you’re ready to sign on the dotted line. Once you’ve signed the contract, you will see the cash in your account in a matter of days. 

Currently, House Buyers of America will buy homes in  Washington DC, virginia house buyers, sell house fast in Maryland, and all throughout the Mid-Atlantic. 

Ready to sell your house fast in Richmon? Give House Buyers of America a call today!