Richmond is one of the most historical cities in the country. It served as one of the most important towns for the Powhatan Confederacy and was briefly housed by English colonists. Since the city’s founding, numerous notable events occurred here: the capital of the Colony and Dominion of Virginia, Patrick Henry’s “give me death or give me liberty” speech, the passage of the Virginia Statute for Religious Freedom, and the capital of the Confederacy during the American Civil war.
After playing a pivotal role in the country’s history, the city continuously thrived and is now home to over 234,000 residents, making it the fourth most populous city in the state. Despite this, the city has a thriving, diverse economy buoyed by the financial, law, and government sectors. Richmond was dubbed as the “River City” as local news stations describe it as “flowing” with job opportunities. The city’s strategic location — within proximity to the Atlantic beaches, the Blue Ridge mountains, and Washington D.C. — attracts various businesses to relocate, along with the city’s tax incentives and booming startup scene. While Downtown Richmond serves as the central hub for over 50% of the jobs in the city, the suburbs are also growing as more people relocate to start their businesses. Additionally, this flourishing city was listed as one of Forbes magazine’s top 10 cities for the “up and coming” entrepreneurs.
The Cost of Building a Home in Richmond
Buying a house may seem easier for the most part, but it may not fulfill a homeowner’s desire as much as building their own home would. Homes in the market won’t be able to tick off every single thing on a homeowner’s wishlist because it was made for another family. Building a home from scratch lets owners customize it however they want, from the home layout to the littlest details like doorknob selection. They can focus on creating a space that works well with their lifestyle while incorporating their wants.
According to the online contractor platform BuildZoom (BZ), the national average cost to build a new custom home ranges from $140 to $320 per square foot or about $350,000 to $800,000 for a 2,500-square-foot home. The estimate given by the National Association of Home Builders (NAHB) is within that range, with a home building average cost of $485,000.
In Richmond, Virginia, the average home building cost ranges from $100 to $510 per square foot. More specifically, value-conscious homes cost $100 to $155 per square foot, and mid-range homes cost $155 to $325 per square foot. Luxury homes, on the other hand, cost more because of various aspects — size, quality of materials, complexity, and details — and these cost $325 to $510 per square foot, sometimes more. Aspiring homeowners must have an average budget of $250,000 to $1,275,000 to build a 2,500-square-foot home in the city.
Keep in mind that the values mentioned above are only estimates. Aside from the aspects mentioned above, there are often numerous other factors that affect the final cost, and these will need meticulous planning. These factors are separated into two categories: hard and soft costs. Thoughtful consideration of the following factors may lead you to a definitive answer on how much it costs to build a home in Richmond, Virginia.
Hard costs refer to all the fees involved in the actual building of the home. These include the materials used, labor fees, extra amenities, and landscaping.
The average cost of building a custom home in Richmond is $160 per square foot. This price only includes basic constructions and may cost as low as $100 or as high as $230 per square foot. The price differs depending on a variety of parameters, such as material quality, labor expenses, intricacy, size, and design, thus directly affecting the overall building cost. A 2,500-square-foot home will cost between $250,000 and $575,000 to build, excluding site work, land, and other non-construction costs.
House construction costs cover about 54% of the overall building cost. Listed below is the estimated price breakdown of each house work:
- Foundation: $6 to $7 per square foot (4 inch reinforced slab on grade)
- Roofing: Asphalt Shingle – $170 to $270 per 100 square foot
- Tile Roof – $800 to $1, 255 per 100 square foot
- Vinyl Siding: $3 to $4 per square foot
- Flooring: Laminate Flooring – $5.50 to $6 per square foot
- Vinyl and Linoleum – $2.50 to $4 per square foot
- Tile Flooring – $0.60 to $1,000 per square foot
- Wood Flooring – $8 per square foot
- Heating, Ventilation, and Air Conditioning (HVAC): $5,000 to $10,000
- Plumbing: $320 to $650
- Electrical: $430 to $2,700
Soft costs cover all the expenses that go beyond the physical home building. These include acquisition of land, permit fees, and architectural or design fees. Most of these are settled in the pre-construction stage, and some are to be paid upon project completion.
Cost of the Land
Current listings in the real estate marketplace Redfin show that the average cost of land in Richmond is $120,000, or approximately $30 per square foot. The cheapest land available is located about one mile away from the Midlothian Turnpike, Chippenham Medical Center, and Chippenham Parkway. It costs $95,000 for a 37,462-square-foot undeveloped land — around $3 per square foot. On the other hand, the most expensive land available costs $430,000 for a 2,025-square-foot land — about $90 per square foot. It is located near the Virginia Commonwealth University and is within walking distance from various shops and restaurants in the historic district of Church Hill.
According to Richmond’s Zoning Ordinance, the minimum site area for single family detached dwellings ranges from 3,000 square feet to 5,000 square feet. Following this regulation, residential land acquisition in Richmond will cost $90,000 – $150,000.
Permits and Other Fees
Every home construction project involves obtaining a permit from the Department of Building and Housing. This guarantees that homes meet the requirements outlined in the building code, safeguarding everyone’s safety. This will also serve as a signal to initiate construction activities.
According to the city of Richmond’s Fee Schedule, the cost of building permits for one- and two-family residential homes starts at $63. The final price is determined depending on the estimated value of the project. For plans valued over $2,000, there will be an additional $6.07 for every thousand or fraction thereof. Additionally, the city government set a 2% surcharge for every building permit issued, which will be added to the final calculated fee.
Assuming that building a 2,500-square-foot home in Richmond costs $400,000, this project’s total building permit fee will land at roughly $2,600.
Architecture and Design Fees
A complete plan must be prepared before making final judgments. Without one, there is no guarantee that the home will be finished the way that the homeowners desire. Architects support them in this area by creating designs and guides that are appropriate for the client and the home. It also ensures that the house will be built in accordance with city laws.
Architects charge their clients in a variety of methods, the most prevalent of which are percentage and hourly charges. The percentage is the most often used method. Architects generally charge 5 to 15% of the building cost for new home development, depending on the complexity and scope of work. Using the figures in the hard costs, the architectural fees for a 2,500-square-foot residence in Richmond will cost $20,000 to $60,000.
In comparison to the percentage, the hourly rate is a less common method. Depending on the architect’s experience and expertise, the price ranges from $100 to $250 per hour. A basic architectural service can take anywhere from 480 to 600 hours to complete, while a comprehensive service might take up to 1,095 hours. Using a median hourly rate of $175, the architectural and design charge will range between $84,000 to $190,000.
How do Richmond’s custom home building costs compare to nearby cities?
Virginia is part of the Southern Region of the United States. Constructing a home in the south is anticipated to be roughly $110 per square foot — nearly 15% less than the national average — making it the cheapest among the four regions. According to Business Insider, the state of Virginia has a typical home value of $163 per square foot. Virginia is now the fourth most costly state in the Southern area, trailing only Washington, D.C., Maryland, and Florida.
Homes from cities and suburbs surrounding Richmond have a home value ranging from $200,000 to $450,000. These homes have increased over the years, notably more in the previous year because of the high demand for housing. These areas and their respective home value for single family units are as follows, according to Zillow’s Home Value Index (ZHVI). Also included is their percentage of increase and price point difference compared to Richmond. For context, homes in Richmond are valued at around $355,000 and increased by 16.9% in the past year.
- East Highland Park: $230,000 — 23.5% increase, 55.8% cheaper
- Mechanicsville: $370,000 — 12.6% increase, 4% more expensive
- Lakeside: $270,000 — 13.1% increase, 31.8% cheaper
- Tuckahoe: $420,000 — 10.8% increase, 19.9% more expensive
- Bon Air: $340,000 — 14.7% increase, 2.6% cheaper
- Highland Springs: $210,000 — 21.5% increase, 68.4% cheaper
- Chesapeake: $380,000 — 15.6% increase, 7.1% more expensive
- Virginia Beach: $410,000 — 15.6% increase, 15.6% more expensive
- Norfolk: $285,000 — 14.5% increase, 23.5% cheaper
- Hampton: $245,000 — 17.4% increase, 44.9% cheaper
The Future of Richmond’s Residential Construction Industry
The pandemic brought on a new normal for everyone wherein people are now spending most of their time staying indoors. Spending so much time inside may have helped homeowners realize where their homes have been lacking or where they want to upgrade. With the growing desire to upgrade or build, many are also seeking to sell their homes for a new one.
The sudden surge of home interest was seen across the nation, including Richmond, Virginia, which brought an uncontrollable demand in the real estate market and construction industry. Bidding wars are happening left and right, and buyers seem unfazed by the increasing prices. This demand, coupled with the historically low inventory of homes, spiked home values. As mentioned earlier, Zillow reported that homes in Richmond increased by 16.9% in the past year. When compared to the start of the pandemic, single family homes increased by 27% — valued at roughly $280,000 in March 2020. Fortunately, the frenzy in the city’s real estate market is starting to slow. Homes are now selling for about 1% over the asking price, a 2% difference from last year. Experts advise buyers that this can be a potential window for waiting buyers and investors. Although the market is showing signs of stabilization, they’re predicting there still won’t be much change in the following months.
As for the construction sector, the most significant difficulties are supply chain issues and a labor shortage. This resulted in a 4.5% increase in construction expenses and labor wages, coupled with a 23% increase in material prices. Experts expect that by 2022, it will increase by another 4 to 7%. Despite significant price inflation, home construction demand is still strong. There hasn’t been a pattern of project cancellations due to cost overruns in the construction industry.
Unfortunately, despite builders’ efforts to speed up construction, supply concerns are still causing major delays in projects. Project owners are forced to accept that constructions may not be completed within the set timeframe. On the bright side, nearly 1.5 million new home construction permits were issued as of October 2021, according to the U.S. Census Bureau. The majority of those homes are scheduled to be finished by 2022, thus alleviating the high demand for housing. Additionally, the economy is steadily improving, which may play a big role in pricing stability in the construction industry.
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