Unless you’ve been living in a cave without access to the internet, radio or TV, you are probably aware that the real estate market in the U.S. has been extremely competitive. Richmond is not much different than the rest of the country in terms of competition but the relatively low cost of living compared to other nearby cities makes it even more attractive to buyers moving out of those other cities.
Well before COVID, Richmond had become a competitive market where multiple offers on a property within the first few days of listing were not uncommon. COVID created opportunities for many people to move out of larger, more expensive cities and work remotely almost anywhere. There are MANY factors contributing to the state of the market but here’s a round up of just a few:
1. Low Inventory:
Before COVID, when looking at the number of houses available for sale at any given time, the number was very low compared to previous years. Inventory was consistently and historically low. When COVID struck, the number of houses for sale dipped a bit further.
2. High Number of Buyers:
Low interest rates have fueled an increase in the number of ready, willing and able buyers across the board, such as first time buyers, buyers looking to upgrade, and buyers moving to a new location. While COVID definitely affected the seller side of the market in various ways, it did not seem to reduce the number of buyers actively shopping.
There were a lot of buyers considering a move to Richmond from larger cities well before COVID. They were attracted to a lower cost of living and less hectic city that’s still very close to much larger cities. Many were or are planning to retire in the next few years and wanted to escape the taxes of New York, New Jersey, etc. Others were already working remotely or in a hybrid role where they only needed to be physically in an office sporadically. When COVID came along, the number of remote workers relocating here grew even more. Many of those relocating from other cities see the prices in Richmond and are amazed at what they can get for their money here. A buyer moving from Seattle or New York might be able to buy a beautiful 3000sf house here at the top of the market and STILL be paying significantly less than they would have for a tiny 1000sf fixer-upper in those cities. In fact, I have some clients from Seattle that recently relocated to Richmond. About 6 months ago, they paid a significant amount over the asking price for a house here and are planning a major remodel. Even after buying a bigger house and remodeling costs, they still feel like they have a ton more disposable income than they did in Seattle.
The combination of low interest rates, very few houses available for sale and relocating buyers has made the Richmond market extremely competitive. Those variables are NOT unique to Richmond. However, I do believe Richmond’s relatively low real estate prices, even with the increases over the last 5 years and overall cost of living, could mean less risk and more opportunity for pure appreciation over the long term than you would find in many other cities.
“Real estate first became a passion for me in my early 20s when I bought my first house, renovated, and converted it into an income-producing duplex. It was that experience that put me on the path I am on today. “