The Big Shortage

Rates are down, sellers are up — but RVA’s housing supply is still slim

by

Features

Hollie Woodruff and her partner bought a home last year near Bon Air in Chesterfield County. Their ranch-style house cost over $500,000, factoring in the money the couple spent to make necessary upgrades.

Woodruff, who had previously lived in Oregon Hill, says they picked the house because they liked it and it was in an established community. 

Although she says her house hunting experience wasn’t terrible, Woodruff acknowledges that buying in the current climate is no picnic. “It would not be possible for me as a solo person to have purchased a house,” says Woodruff, a reverend and co-pastor at Richmond’s Seventh Street Christian Church. “I don’t know how people compete with all-cash [offers].”

Finding affordable housing remains a challenge for many in the Richmond area. Local real estate experts say the biggest issue is a lack of housing supply, exacerbated by rising construction costs, older adults remaining in their homes and “aging in place,” and transplants moving into the region.

A Demanding Market

“This is the strongest [first quarter] the region has seen in terms of closed sales in four years and is in line with totals seen about a decade ago,” according to the “RAR Richmond Region Market Indicators Report” published in April by Virginia Realtors and the Richmond Association of Realtors. 

The median sales price for homes across the region — which encompasses Richmond and the counties of Charles City, Chesterfield, Goochland, Hanover, Henrico, New Kent and Powhatan — rose to $415,000 over the same period last year, while the average sales price rose 4.1% to $485,342, driven by jumps in Charles City and Goochland counties. Sales and pending sales have increased everywhere, except in Goochland. 

“Multiple offers continue to be a significant portion of the market,” says Laura Lafayette, chief executive of the Richmond Association of Realtors. “It’s still a seller’s market. That hasn’t changed at all. Buyers have to be prepared to make their best offer right out of the gate.”

With demand strong, the challenge becomes supply. Active listings have grown by 9%, according to the report, but a key metric, months of supply, has dipped, and most houses are selling in about two weeks. “The only thing holding the market back is the lack of inventory,” Lafayette says. “Even with interest rates where they are, I think you would see plenty of buyers if we had more inventory.”

Although average mortgage interest rates are hovering around 6.3% as of press time, rates have eased since 2022 and are in line with the 50-year average of 7.7%. But they’re still twice the historic lows posted during the COVID-19 pandemic, when rates briefly fell below 3%.

The problem is compounded for empty nesters looking to downsize. Their homes may be paid off, but given current housing prices, that doesn’t mean they can afford to move. The metro area doesn’t have enough affordable single-family homes, apartments or progressive care facilities for older adults looking to relocate, Lafayette says. “Why would I downsize and take a mortgage when I could stay in place?” she says of the conundrum. Meanwhile, she adds, homeowners aging in place are inadvertently removing first-time homebuyer inventory from the market.

It’s still a seller’s market. That hasn’t changed at all. Buyers have to be prepared to make their best offer right out of the gate.

—Laura Lafayette, CEO, Richmond Association of Realtors

Those who do choose to sell become buyers with an advantage: cash in hand. With multiple offers on the table, sellers often prefer cash offers because the transaction requires less documentation, making it faster and easier, and doesn’t carry the risk of loan denial.

Cash also tends to be an advantage for transplants, another group of buyers contributing to the inventory shortage. Not only does the region offer strong public schools, a central location and other lifestyle amenities, Lafayette says, “our housing stock is more affordable. If you have a house in D.C. [and] you sell that, you can come to Richmond and make a cash offer on a home.”

Moving is especially attractive for those who have been working remotely since the pandemic, she adds, because those newcomers have “D.C. wages with Richmond costs.”

Even after the pandemic, the trend continued. Since 2020, roughly 60,000 people have moved to the Richmond region.

The Slow Zone

In theory, one way to increase the supply of houses for sale is to build more. However, the market for new homes is facing its own challenges.

Approximately 4,000 new homes were sold across the region in 2025, according to figures provided by the Home Building Association of Richmond. That’s slightly less than in 2024 and markedly fewer than the 4,269 and 4,536 new homes sold in 2020 and 2021, respectively, at the height of the pandemic.

In the metro region, Chesterfield and Henrico counties had by far the most new-home sales in 2025, according to HBAR. The two counties each had more than 1,000 sales last year, while Richmond was a distant third with 350. 

Overall sales have been steady in the first few months of 2026, but there have been some moments of volatility, says Danna Markland, chief executive of HBAR. “One weekend, you can have great sales and traffic, and another weekend, there are not,” she says. “There’s really no rhyme or reason to what’s going on. There’s a lot of volatility in the economy right now, and you have different products and different buyer pools.”

We’re [selling] the new-home inventory at a higher rate than we’re putting back into the market, so that’s why you’re going to continue to see these increases in prices.

—Danna Markland, CEO, Home Building Association of Richmond

Markland is concerned because demand continues to outpace supply. She pins the blame, in part, on the lack of rezoning cases in the region. Residential rezonings — wherein property owners petition the local government to reclassify land for housing — are a key indicator of future supply. Last year, metro Richmond localities approved 1,273 new homes through rezonings, according to HBAR, which is only about a quarter of the number approved in both 2021 and 2022 in Richmond, Chesterfield, Henrico, Hanover, Goochland and New Kent.

“We’re [selling] the new-home inventory at a higher rate than we’re putting back into the market,” Markland says of the supply woes, “so that’s why you’re going to continue to see these increases in prices.”

So far this year, builders are working in an average of five communities, down from six last year, Markland adds. Those figures are based on a sampling of more than 20 builders who are also HBAR members. “That drop is significant, and it tells us the supply reduction is a very real scenario,” she says.

The number of homebuilding permits has also declined 27% over the past few years, from about 5,500 in 2021 to just under 4,000 in 2025, according to HBAR.

‘Addressing Affordability’

Against the backdrop of surging pricing and economic volatility, a few ongoing measures are underway to help both buyers and renters find housing.

“There are concerted efforts at the local government level, state and regional level — both private and public — focused on addressing affordability,” says Jovan Burton, executive director of the nonprofit Partnership for Housing Affordability.

Richmond, for example, received about $20 million from the state last year to help finance affordable housing throughout the city. Much of that money is going to various rental projects aimed at families earning at or below 60% of area median income. 

In addition, the city is undergoing a zoning ordinance rewrite called Code Refresh. The undertaking is intended to modernize zoning and make it easier to build affordable housing. An early iteration of Code Refresh, however, hasn’t gone over well with many neighborhood associations, who fear the city is prioritizing developers over existing homeowners.

In Henrico County, officials created a housing trust fund in 2024 to reduce the cost of new housing for first-time homebuyers. Using property tax revenue generated by data centers in the county, Henrico invested $60 million in the fund in its first year.

Just over 400 units have been approved, many of which are already under construction, says Burton, whose organization helps administer the program. So far, he says, the trust fund has assisted roughly three dozen buyers purchase new homes in the county. 

“We’ve awarded more than $32 million of that fund so far,” Burton says. “[Henrico County] saw this as an opportunity to say, ‘Hey, we can do something transformative here in an area that’s a pain point for us right now.’”

There are concerted efforts at the local government level, state and regional level — both private and public — focused on addressing affordability.

—Jovan Burton, executive director, Partnership for Housing Affordability

Another measure Burton mentions is legislation that supporters say would make it easier to build affordable housing on land belonging to churches and certain nonprofits. The so-called Faith in Housing bill, which Gov. Abigail Spanberger signed in April, allows faith-based organizations to build housing “by right,” so long as 60% of the units are affordable for families making up to 80% of the area median income. The new law goes into effect next year and sunsets in January 2031.

“As some faith communities are seeing declining membership and wondering what to do with land that might now be in excess, ... some congregations are thinking about building affordable housing,” says Sheila Herlihy, director of Faith Organizing at the Virginia Interfaith Center for Public Policy. “This idea of shelter and hospitality has deep roots in so many faith traditions, so this isn’t new.”

Herlihy says the legislation gives builders more flexibility. Eliminating the uncertain, lengthy rezoning process is a huge money saver. “Of course, they still have to build safely. Of course, they still have to follow building codes and site plans and environmental regulations. But it removes the uncertainty of, ‘We’re going to apply to build this project and not know for sure if we have permission to do so for another six months to four years,’” Herlihy says. “That’s an expensive and time-consuming process.”

Despite these efforts, the affordability crisis isn’t going anywhere anytime soon. Unless the inventory situation improves in short order, Markland says, she expects home prices to continue to rise.

“I get so many questions from people about when prices are going to come down. They have somewhat stabilized, so we’re not seeing this exponential acceleration, but I have zero anticipation of prices coming down,” she says. “We’re just going to continue to see them go up.”