RICHMOND, Va. (WRIC) — The results of a new housing study are clear, and they paint a grim picture not only for aspiring homeowners. Richmond, Henrico and Chesterfield are increasingly split between wealthy enclaves and private investors, with little room left for working-class homeowners.
The 2022 Market Value Analysis study, led by PlanRVA, the Richmond Memorial Health Foundation and the Philadelphia-based Reinvestment Fund, gives insight into housing across most of the Richmond area, highlighting areas of concern, including increased risk of displacement for low-income residents and the transfer of many homes out of the hands of residents.
“We know that access to and availability of affordable housing is a growing need in our region,” said Martha Heeter, executive director of PlanRVA. “The MVA gives us an opportunity to build a shared understanding of our region’s housing market so the focus can be on working together to create equitable and sustainable solutions.”
One graphic illuminates the central fact of housing in Richmond: in most of the city, it’s simply unaffordable. And the crisis is much worse for the city’s Black and Hispanic residents.
At the average household income level, just a few pockets of housing remain within reach. And for Black and Hispanic residents, who have similar income levels, lower than the regional average, the opportunities are even narrower.
“These are just typical income people!” said Ira Goldstein, head of policy at the Redevelopment Fund. “Your region becomes very, very constrained.”
Tale of Two Richmonds
A glance at the MVA’s map makes clear the stark geographic and economic divides in the Richmond region. The wealthiest resident’s all cluster at the Western end of Richmond, Henrico and Chesterfield, while the region’s poorest residents are concentrated at the East end and along the I-95 corridor.
“You can think about those A and B markets really as the strongest — economically strongest — most opportune places within the region,” said Goldstein. “You can think of those Gs, Hs and Is as places that manifest varying levels of economic distress.”
Above: The Market Value Analysis goes into granular detail, dividing the region’s neighborhoods by characteristics such as average home price and proportion of renters. Below: This chart from PlanRVA details the characteristics of each color grouping. Generally, the purple end of the spectrum encompasses well-off areas, while the orange end denotes economically-distressed areas.
In focusing on Richmond City proper, the wealthiest areas — areas that see fewer foreclosures, fewer people receiving rental assistance and much higher rates of homeownership — are concentrated in predominantly white areas of the city, including the West End, the Museum District, and the Fan.
There are no public housing projects in these areas, and very few renters there use subsidies like Section 8 vouchers to pay their rent.
The most distressed areas, meanwhile, are concentrated in Richmond’s Southside and East End neighborhoods — areas wracked by decades of racist policy decisions, including “redlining” maps that made it difficult for some residents to receive the generous financial support granted to white residents after the Second World War.
One of the primary concerns raised by the study was a rising affordability crisis, measured through something called the “Displacement Risk Ratio.”
It’s based on the ratio between the average home price and the average household income. In other words, a high or rising DRR means homes are becoming less affordable.
But the affordability crisis didn’t touch all neighborhoods equally. The biggest increases from 2014 to 2021 were concentrated in those same distressed neighborhoods highlighted by the MVA study’s economic analysis.
One factor that may contribute to the rising crisis in distressed neighborhoods is the increasing number of investors snapping up cheap properties in the areas.
Goldstein cautioned that investor purchases weren’t always a bad thing, but the impact depends on what’s done with the properties afterward.
“Is the renovation actually being done properly?” he said. “And then the second question is, are these properties then being made available at a price point that’s commensurate with the existing residents as opposed to new people with higher means?”
The concern is most acute in areas where owner-to-investor sales are significantly higher than investor-to-owner sales. Such an imbalance, as seen in the I market group, suggests that instead of renovating a home and selling it back to a new resident, the investors are converting it into rental housing – a trend that undermines the ability of residents to build wealth.
“You’re seeing larger concentrations of families of color,” Goldstein said. “And those are places you’re seeing that loss of ownership at much higher rates.”
Calling to Action
Michael Smith, a representative of the Richmond Memorial Health Foundation, said the RMHF was using the data gathered in the study to improve its outreach to communities in need.
“It’s a tool for us to better understand how we weave together the intersection of health and housing, and really get a sense of where the impacts are happening most acutely in our region,” Smith said.
That can be a very large impact indeed. A recent VCU study found that negligent corporate landlords — concentrated in many of the same neighborhoods marked as distressed in the MVA — are linked to community violence.
But Goldstein said there were some positive lessons to take from the MVA as well, especially in the C, D, E and F markets.
“Those middle market areas — as segregated as the Richmond area is racially and ethnically — those middle market places really are the integrated parts of the Richmond market,” he said. “And those are the neighborhoods that stand as a living breathing example that multiple racial groupings of people can live together in communities.”
As for what Henrico, Chesterfield and Richmond can do, Smith and Goldstein said they couldn’t make specific policy recommendations, because that would be up to the local communities and leaders. But Goldstein did point to some proposals that have shown promise in other areas.
“Proactive code enforcement is a nice local thing to make sure that when these properties are flipping — whether or not people are buying them or are renting in them — they’re getting a safe, sound, properly redone, properly modernized, updated, upgraded property,” he said. “That’s sort of a no-brainer.”