Nov 3, 2020

Richmond: A Big City??

I’m from Richmond.

I was born at MCV.
Then went to Bon Air Elementary.
Then Robious Middle…
Monacan High…
University of Richmond…

And I even did some graduate work at VCU.

Our own Greg Montalto of PiperBear Properties shot this AMAZING drone video of the apartment tower being constructed on the former Reynolds South Plant site in Manchester. The site will be a 10 story tower with commanding views of the City skyline when complete. But more on development in Richmond later in the post.

Then toss in the fact that I got my real estate license fresh out of college and you’ve got yourself a Richmonder who has known nothing but real estate.

Lifetime Richmonder. Long time Realtor.

So what does a lifetime Richmond Realtor think of what is going on right now in the market? It is the most bizarre and insane set of market conditions I have seen since I have been in the business (and I got my license in 1993, if you wanted to know how long I have been doing this.)

Was 2006 through 2008 intense? Yes, but not in comparison to the past several springs.

Since the height of the market in 2008, the stock of housing has plummeted by as much as 90% in some of Richmond’s sub-markets. That complete reversal of conditions has occurred in the past 3-4 years and is wholly unprecedented.

And guess what? There is no relief in site.

Everybody Loves Richmond

We could go on and on about the inventory issue we’re facing today, but the bottom line is this: the dramatic spike in demand is driven by a migration back into the city that has been building since the early 2000’s.

There is a three-headed housing monster attacking our inventory:

  • the leading edge of the Millennial population is entering the housing market and they want to buy in the city at a greater percentage than any of the post-automobile generations that preceded them
  • the population who already calls Richmond home is staying longer as the entertainment districts develop, more amenities are added, and the schools improve
  • the retiring Baby Boomers are choosing to live an urban existence, in lieu of the suburban existence they have lived for the last 25-30 years

And guess what that all means? It means that there simply isn’t enough housing to go around.

The Path from Small to Big

So it finally hit me the other day — this inventory condition isn’t a statistical blip, a temporary imbalance, or a pendulum that has swung too far in the other direction — it is a fundamental shift. Richmond, is finally behaving like a big city.

For decades, the City of Richmond lost residents. From the latter part of the 1960’s to the middle 1990’s, Richmond’s population vacated the city and moved to the suburban areas in the surrounding counties. The population of Henrico, Chesterfield, and Hanover all grew substantially during the same period that the city lost a quarter of its population. Poverty, crime, and failed developments — along with the population loss — were the hallmark of 1970’s and 1980’s City of Richmond.

When your population is leaving, there is plenty of housing to go around. But when everyone wants to come back and you can’t build houses for them, the situation is far different.

My, how things have changed.

Counties Can Grow, Cities Cannot

Have you been to Magnolia Green in Chesterfield? Magnolia Green sits on 1,800 acres and will provide 3,500 new homes when completed.

How about Bacova in Glen Allen?
Or Rutland in Hanover?
Or GreenGate in Short Pump?

Even though they are smaller in acreage than Magnolia Green, these neighborhoods individually dwarf the number of new homes built within the city limits in any given year.

Do you know how many ‘new’ homes were sold in the City of Richmond in 2016? 126.
Do you know how many ‘new’ homes were sold in Chesterfield in the same time frame? 828.

That is 650% more, if you are doing the math at home.

For the City of Richmond, development on any scale is next to impossible as vacant land is nearly non-existent. And if you are lucky enough to find a vacant infill piece (or possibly a tear down opportunity) that has somehow gone unnoticed by every other developer looking for land in the city, it is frightfully expensive.

So we can’t build our way out of the problem … just like big cities can’t.

How Can You Tell?

How can you tell that we have become a big city? Look at our problems.

Big cities have housing shortages — Richmond now has one.

Big cities have rapid price appreciation — our prices are shooting up.

Big cities have traffic issues — been on I95 at rush hour lately?

Big cities require public transportation at scale — BRT and high speed rail, anyone?

Big cities face affordable housing issues — the affordable stock of housing is at crisis levels.

Big cities have limited development opportunities — Richmond has very little undeveloped land available.

Big cities face gentrification — many of our neighborhoods are now facing this thorny issue.

And big cities argue about redevelopment — have you watched a City Council meeting lately?

At the end of the day, Richmond is no longer a large town or even a small city. Richmond is a big city and with big city issues. As we move into the future, our leadership and our population needs to understand the importance of making decisions with a new, big city mindset rather than the small town mindset we’ve grown so accustomed to.

RVA.. a big city… Sounds kinda cool, eh?