Updated: Sep 20, 2018
The Greater Richmond area has seen a lot of growth and development over the past two decades. It has also seen gains in personal wealth.
The Richmond area no longer plays second fiddle to Northern, VA and the Metro D.C. Central Virginia is at the center of corporate change. According to Fortune Magazine 6 Fortune 500 companies are in Richmond. What is more impressive is the number of emerging businesses. The Inc.com has 19 local businesses listed as some of the nation’s top 1000 emerging businesses. Those 19 businesses have a combined annual revenue of $526 million bucks a year.
So, if you have seen a spike in housing cost and see development in places that you leave scratching your head wondering who can afford to buy these homes, this is why. The growth is here.
There is a flip side to this growth. In a report prepared by the National Association of Realtors, they found rising home prices are helping owners become wealthy. This is due to fast rising equity in their homes. But and it is an unfortunate but, with fewer people buying homes, those gains are going to a fewer number of people and ultimately contributing to the widening wealth gap in the U.S.
The report found that over 90% of metro areas have seen a decline in homeownership rates. The decline is in direct correlation with home values rising and income for most remaining flat. The findings also show that wealth distribution is seen as most unequal with areas with the lowest home ownership rates including areas like Boston, Los Angeles, New York and
This isn't happening in just the big metro areas. In the Richmond area you are seeing home prices skyrocket it places like Northside, Church Hill, Lakeside and more. The rise in property values are reaching the counties as well. Especially areas close to Richmond. Investors owning more and more homes. They are connecting properties to the needs of emerging businesses and creating a new housing market. For the housing market this is a good thing. But if you aren't part of the new economy and own a home in those areas, affordable housing is becoming more out of reach.
NOT SPREADING THE CHEESE
If we look at our local economy, those companies that were previously listed are the new employers and they are growing. Their growth needs people. Their growth is attracting people and families from outside of Virginia. This is not only blocking current residents from housing but also raising rents to a point where they will have to leave the area. Current residents are at risk of being pushed out to make way for the newbies. This concentration of need results in displacement and poverty.
DEVELOPERS EXCLUDING THE ORIGINAL PEOPLE
Words matter. Up and coming, emerging and revitalization are words that scare residents in communities that see change. They see new businesses that don't sell products they can afford. The see coffee shops selling $3 teas with no refills and $10 sandwiches. Developers and entrepreneurs are looking at areas for future potential and that is their job. But they must also include current residents as part of their plan.
RENTERS NEED A NEW PLAN
The National Association of Realtors, chief economist says the struggle of renter’s inability to buy homes is leaving them behind financially. With lower interest rates, the average home owner will pay less for a home than rent and build equity. If you're renting, you are facing rising rent cost with no relief in site.
“Homeownership plays a pivotal role in the U.S. economy and has historically been one of the primary sources of wealth accumulation for middle class families,” Yun said. “Unfortunately, due to an under-performing labor market, insufficient housing supply and overly-stringent underwriting standards since the recession, homeownership has plunged to a rate not seen in over two decades. As a result, the country has become more unequal as the number of homeowners has fallen while the number of renters has significantly risen.”
Renters must move from being transient and get into ownership. Ownership should be approached from a rent control strategy with investment benefits.
We are going to give 3 solutions just for conversation starting.
Solution # 1: Create a regulation or mandate that will ensure there are affordable homes in high wage metro areas, so people can afford to buy homes. This will increase access to housing and access to wealth through housing.
Solution #2: Earn more. This isn’t a true scientific solution, but if your regular wages aren’t putting you in a position to buy a home and join the current economy, a solution #2 is needed.
Solution #3: Use homeownership as an investment tool. When your money is short, you need to create additional tools to create wealth. Using where you love to create future income is more productive then complaining about rising rents.
Solutions are part of a larger discussion. A discussion that includes better public transportation, schools that are funded, better education system in Richmond and people starting their own businesses. One thing we can be sure of, is that no matter what anyone says, owning a home is the beginning of building your personal wealth.