There’s not just a new year upon us, but a new decade. And with new decades come new predictions. Here are some of the things we are keeping an eye on and some trends we are seeing as we move through 2020 in RVA. From development projects to an affordability crisis, there’s plenty going on this year!
Moving East of RVA
Check out this map of Richmond’s development over the years.
Red means old. Green means new. Can you see the difference in the direction of development? The development travels from the fall line of the James River, up the river and out Midlothian Turnpike, Hull Street, Broad Street and along I95. So far, it has been a slow movement toward the east.
There is a reason for this. In the olden days, there was a natural drive upwind and upstream. Air pollution and bad city water were real threats in those days. Thankfully, pollution issues have been minimized, and the main issue facing first time home buyers is reasonably priced housing. This is driving more development toward the east.
So, what do we need to pay attention to here? The chart above illustrates the price per square foot of the two easternmost high schools in Henrico (Highland Springs and Varina) and the two westernmost high schools in Henrico (Godwin and Deep Run.) Pay close attention to the rate of change. The price per square foot for the schools in the east almost doubled in the last five years while the western school’s increases weren’t nearly as dramatic. Pretty interesting.
How about North Church Hill and the neighborhoods east of Chamberlayne between Laburnum and Brookland Parkway?
Yes, you are reading the chart right. Pricing is up anywhere from 3 to 5 times since 2011.
Affordability
With entry home prices continuing to rise, the search for affordable housing has become a challenge. First-timers looking in the Fan, Museum District, the West End, and new home communities simply can’t afford it. The current atmosphere of wanting to remain close to the city is driving buyers to look for other affordable options that meet their criteria.
And that is where the eastern region of Greater Richmond comes in to play. With pricing below $400k, commutes under 15 minutes and an amenity base that continues to grow at a quick pace, we predict the growth in the east will only continue.
Population Growth and Inventory
The Richmond region (City of Richmond and surrounding counties) continues to grow. I can’t tell you how many times I’ve heard from new Richmonders that D.C. just wasn’t for them. They are drawn to the small-town feel with big-city amenities and much better commutes.
There are estimates out there that say the population growth in the region is between 1% and 1.5%. Considering a greater Richmond population of 1.3 million that breaks down to; 13,000 people a year, slightly over 1,000 people per month, and about 35 people per day.
Yes. 35 people are moving to Richmond per day. Where will they go?
Income
The median income in our region is $65,000. Your lender will tell you that translates to approximately $250,000 to $300,000 in buying power. Remember that paragraph about inventory? There are less than two months of inventory below $300,000 in the Richmond region. There is twice as much above $300,000. Months of supply = months it would take for all homes on the market to sell. Four to five months is average. Less than two months’ supply is considered to be very low inventory.
People ask us a lot if we are in a bubble. The primary reason for soaring prices in this market is the lack of inventory, not sketchy lending practices. For 2020, the inventory crisis won’t be solved overnight, so, home prices will continue to spike, specifically in the more affordable areas.
Navy Hill
One of the larger decisions that will be made in 2020 in RVA is the Navy Hill Project. This expansive project would bring an 18,000-seat arena, new residential property, new commercial property, and new retail space. In short order, a developer’s dream. If and/or when the ribbons are cut, it has the potential to be the most transformational project the city has seen in fifty years.
If not now, when?
All development brings about positive and negative reactions. In other words, people either love it or absolutely hate it. The bigger the project, the larger the opposition. Navy Hill’s initial price tag is set at 1.5 billion. So, you can imagine discussions may get a little heated as the city comes closer to making a decision.
6th Street Marketplace Mishap (Some say disaster)
I’m a little too young to have been around for the beginning of this in 1984, but apparently it didn’t go so well… the wrecking ball began demolition in 2003.
Maybe this time could be different. Two remarkably different things are occurring this go around. One, the city is not acting as the developer. They plan to sell the land to a private development group. Two, the development team involved has a track record of successful sports arenas and ballpark redevelopments across the country. So, there’s more to look forward to this time around.
The TIF District
The city has outlined a plan using a Tax Incremental Financing (TIF) Overlay District to finance the project. The land will be sold to the developer and the tax revenues from the increased property values would be used to pay off the debts. Once paid in full, the city would own the arena free and clear and theoretically be making a large amount of money through tax revenue from the improved properties all around the arena.
The Moral Dilemma? Or Is it?
Most of the outspoken critics jump straight to the failing conditions of our Richmond Public School System. Honestly, I don’t blame them. As new parents who live in the city (and plan to stay in the city), we have never been more invested in the state of our schools.
However, the area in and around the coliseum, approximately 10 blocks of prime city real estate, is providing a whopping zero dollars in tax revenue to be used for our schools. On the surface, this project aims to change that and possibly provide much-needed tax revenue.
But, you can’t shut down all government departments to focus on one project. We have to be more efficient. Simply put, I would like to see the city accomplish two things at once. I’m still forming my final opinion, but I urge you to follow this development and educate yourself on the positive and negative aspects.
Topics for Another Day
It would be impossible to cover everything. Manchester, The Sauer Center, Scotts 2.0 and the 2020 Census are all great topics that we could have written about. Keep an eye out for these happenings in the Richmond region as it should be a great year.
With interest rates still low, the economy still strong, and plenty of new Richmonders entering the region, we look forward to earning your business in 2020.