Chesterfield County housing market feeling the pressure, as lot closings decrease and home prices increase

Chesterfield County

(Photo: Alex Thorson)

CHESTERFIELD COUNTY, Va. (WRIC) — Chesterfield County was the only locality in the region that saw a decrease in lot closings from the first quarter of 2020 to the first quarter of 2021, a sign of the challenges the county’s housing market is facing.

According to Home Building Association of Richmond (HBAR) CEO Danna Markland, this can be attributed to builders and developers running out of plots of land upon which to replenish housing inventory.

“This is our biggest challenge,” Markland said before the Board of Supervisors at its Wednesday meeting. “We have to work together to really rezone inventory to deliver to Chesterfield residents.”

Markland also said that builders are battling the increasing costs of material, particularly lumber. She said that while lumber futures have dropped in recent weeks, prices are still approximately 210% higher than they were at this time last year. Markland said that the latest decrease in prices can be attributed to builders being forced to delay contracts and some even stockpiling inventory.

From April to May 2021, Markland said that the county saw a 15% increase in the rate of cancellations. These were individuals who signed a contract for new a home several months ago and can no longer afford the home they intended to move into this summer.

“We have reached a point where buyers are saying, ‘I can no longer afford this,'” she said.

According to Markland’s Wednesday presentation before the Board of Supervisors, the average new home price in Chesterfield County in the first quarter of 2021 is $404,164.

For a home of that price, with a 30-year conventional mortgage rate of 3.125%, Richmond Association of Realtors CEO Laura Lafayette said that a potential homebuyer would need an annual income of roughly $66,442. However, when compared with the average incomes of essential workers in the county, only dental hygienists earned enough to be able to afford a home.

“Housing is really the foundation of a community of opportunity,” Lafayette said. “We want every child born in this community today to have a chance at thriving.”

In fact, the average sale price of housing units in Chesterfield County increased by 17% from 2020 to 2021, according to data that Lafayette presented to the Board of Supervisors. That was the highest year-over-year increase, compared to the City of Richmond, Hanover County and Henrico County.

Although Board members agreed that they wanted to work with local housing market experts to resolve these issues, Matoaca District Representative Kevin Carroll said that there needs to be a balance of new homes and lots with infrastructure — there must be enough schools, fire stations, police departments, et cetera to service the growing community.

Compared to Lafayette’s estimation of the annual income needed to afford a home in Chesterfield County, dental hygienists are the only essential workers that make enough.

“The essence of what we have to do is drive down costs,” Board of Supervisors Chair and Dale District Representative James Holland said.

Working to do just that is the Better Housing Coalition, which, President and CEO Greta Harris said is in the process of developing several affordable housing units in Central Virginia.

“It doesn’t really matter what your income is,” Harris said. “You need housing that’s affordable to your income.”

Harris said that the greater Richmond region is in need of approximately 20,000 affordable housing units. In 2021, she said that there has been $150 million of project investments to bring those units to life.

“We can and must do better,” Harris said. “Working in partnership with localities to create quality and affordable housing for families to thrive is what we’re striving to do.”

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