RICHMOND, Va. (WRIC) — The market is out of reach for first-time home buyers in almost every large city across the country. But how does Richmond fare against its neighbors?
A report released this month by the personal finance site NerdWallet claims that first-time home buyers should plan to purchase homes that cost no more than three times their income.
The median household income for Richmonders aged 25 to 44 — the typical age range for first-time home buyers — is $78,909, according to NerdWallet. In the Richmond region, the average listing cost for homes in the fourth quarter of 2022 was $376,871.
According to the “three times” rule, there is an estimated $46,715 difference in the median cost of housing compared to what it should be for Richmonders in that typical first-time home buyer range.
Nearby cities like Virginia Beach and Washington, D.C. have a similar deficit. Virginia Beach currently has a median household income of $72,481 but $119,554 would be needed to comfortably afford the median listing price of $358,661. Washington currently has a median household income of $112,032 but would require $187,769 to afford the average listing price of $563,308.
Over the last three years, the number of active listings of houses for sale in Richmond has also changed substantially. In the fourth quarter of 2019 there were 3,894 active listings, by the fourth quarter of 2022 there were only 1,973 — a decrease of about 49%.
In Virginia Beach, the number of active listings has encountered a decrease of about 56.5% over the past three years — 8,142 to 3,540. In Washington, there has been a decrease of about 26.5% — from 13,393 to 9,839.
There are currently only two cities in the U.S. that are affordable for first-time home buyers, according to the NerdWallet report. Pittsburgh and Cleveland had listing prices in the fourth quarter of 2022 that were under three times the median income for residents aged 25-44.
Pittsburg’s median household income was recorded at $82,170 with an average listing price of $214,011 and Cleveland had a median household income of $68,897 with an average listing price of $199,410.