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While housing prices have skyrocketed across the country, new data shows a far less dramatic spike in the Richmond region from 2022 to 2023.
The metropolitan statistical area saw an average monthly apartment price of $1,380 and an average housing price of $385,817 in 2023, according to Council for Community and Economic Research data provided by the Greater Richmond Partnership. That’s up from $1,334 and $383,637 in 2022. Across America, the 2023 averages are $1,512 and nearly $489,924, respectively. Since 2018, the cost of rent has risen about 37% and the price of a house is up 28%; nationally, those rates are 38% and 41%.
According to the 2022 American Community Survey, a monthly mortgage cost $1,000 to $1,499 for 29% of Richmond MSA residents, while it cost $1,500 to $1,999 for 26% of them. Statewide, 20.8% and 21.4%, respectively, spent that much. And while just 8.5% of locals spent over $3,000 monthly, that figure is 19.1% for all of Virginia. For 41% of Virginians in Richmond-area apartments, rent ranged from $1,000 to $1,499. Statewide, just 27.4% of renters fall in that range.
“Money in Greater Richmond stretches farther than it does elsewhere in the nation, which is one reason why people are moving to our area,” Greater Richmond Partnership President and CEO Jennifer Wakefield said in an email. “The migration trends indicate that people want affordable living and job opportunities mixed with a high quality of life — and Greater Richmond is benefiting. In addition to attracting residents, company executives are attracted to the Richmond MSA’s affordability for their potential workforce, along with the region’s business advantages.”
The Richmond MSA includes the cities of Richmond, Petersburg, Colonial Heights and Hopewell and the counties of Amelia, Charles City, Chesterfield, Dinwiddie, Goochland, Hanover, Henrico King and Queen, King William, New Kent, Powhatan, Prince George and Sussex.
Although rent is lower in Richmond than elsewhere, it has reached levels that are problematic for many. More than half of the 162,000 renters in the MSA are putting more than 30% of their income toward rent, the ACS reports, making them cost-burdened as defined by the U.S. Department of Urban Development. Worse, 45% of them, or 73,000 residents, are spending more than 35% of their income on housing. Those who live in the region’s 253,000 housing units with a mortgage are faring much better: Just over half are paying under 20% of their income toward selected monthly owner costs as a percentage of household income, or SMOCAPI, which includes mortgage, real estate taxes, insurance, utilities, condominium fees and other costs.
Economists have blamed the price increases on heightened demand during the COVID-19 pandemic and underbuilding in the 2010s. The housing market is also affected by interest rates — the federal funds rate is currently 5.25% to 5.5% — and falling inflation, which has proved to be stubborn in its descent toward the Federal Reserve’s goal of 2%, according to January data. “It definitely did not make things easier,” for decision-making, Richmond Fed President Thomas Barkin told SiriusXM. “It made things harder.”
Participants in a January Federal Open Market Committee meeting, which included Barkin, “indicated that they expected core nonhousing services inflation to gradually decline further as the labor market continued to move into better balance and wage growth moderated further,” according to minutes released Feb. 21. The document notes that “financing conditions for households and businesses continued to be moderately restrictive, as borrowing costs remained elevated” and that “house prices increased to the upper end of their historical range.”
After increased and intense demand for housing during the pandemic, Barkin said in a February speech to The Economic Club of New York, “the market has since cooled somewhat, but with limited supply, prices remain high. If housing supply continues to be short, that could mean further pressure on prices and rents in coming years.”
