Richmond Housing Market Update - July 2025: Your Guide to Building Custom in a Competitive Market
Richmond Housing Market Update - July 2025
Richmond has become one of the hottest real estate markets in the nation. Both Zillow and Axios have recognized Central Virginia as a standout performer, and if you've been house hunting recently, you've seen it firsthand. Homes are selling in under three weeks, buyers often face bidding wars on nearly every property, and prices keep climbing month after month.
But here's what most buyers don't realize: while everyone else is fighting over the same limited inventory of existing homes, there's a smarter way. Custom home building isn't just for the ultra-wealthy anymore—it's becoming the savvy buyer's strategic choice to avoid the competition and get precisely what they want.
At Keel Custom Homes, we've been closely monitoring these market trends, and we're noticing more buyers than ever opting to build instead of compete. In this detailed market update, we'll explain exactly what's happening in Richmond's housing market, what it means for your homebuying experience, and why building a custom home might be your best choice in today's competitive market.
Richmond Housing Market: What Every Buyer Needs to Know Right Now
Church Hill
Let's get straight to what matters most: this is unquestionably a seller's market, and that isn't changing anytime soon. Recent data from Rocket Homes shows homes in Richmond are spending an average of just 20 days on the market, while some areas like Henrico County are seeing properties sell in as little as 13 days. When we say "fast," we mean lightning fast.
The competition is fierce. Redfin reports that Richmond scores 86 out of 100 on their market competitiveness scale, with the average home receiving two offers and nearly 30% of Virginia properties selling above asking price. Translation? You'll lose out if you're not prepared to move quickly and potentially pay more than the asking price.
Mortgage rates Trend
But here's where custom home construction totally changes the game. When you build custom, you're not competing against other buyers — you're creating exactly what you want on your schedule. No bidding wars, no compromises on must-have features, and no settling for someone else's design choices.
The timing aspect is also essential. With our typical 6-9 month construction timeline, buyers who start their custom home process now will move into their dream home by early 2026, just when market experts predict some relief in mortgage rates and continued strong appreciation in home values.
Home Prices in Richmond: What to Expect When House Hunting
The price growth across Central Virginia has been remarkable, with trends varying greatly by county. According to May 2025 market data, Richmond City leads the region with a median home price of $390,380, a strong 9% increase compared to last year. At $248 per square foot, city properties command a premium price for their urban location and walkable neighborhoods.
Moving to the counties, the landscape becomes even more interesting. Henrico County homes average $414,000 with solid 7.5% annual appreciation, while Chesterfield County matches that price at $414,999 but shows a more modest 3.7% growth. Hanover County stays the most stable, with homes averaging $418,000 and only 0.7% appreciation—indicating market maturity in this established suburban area.
Goochland County presents a different picture, with median prices of $590,000 but showing a 7.9% decline compared to last year. Homes in Goochland are taking slightly longer to sell, at 24 days on the market, and sales volume has decreased, with 34 homes sold in May compared to 47 the previous year. This suggests some cooling in this premium market segment, possibly due to affordability constraints at higher price points.
For perspective, these price points reflect what you'll pay for existing homes with all their compromises—outdated layouts, older systems, and someone else's design choices. When you include the renovation costs that most existing homes require, custom construction often offers better value while delivering exactly what you want.
Our communities strategically fit into this pricing landscape. Summer Lake in Chesterfield offers luxury custom homes starting at about $800,000, while our other communities in Tarrington and Maple Grove offer options across different price ranges and lot sizes.
Inventory Reality: Why Finding the Right Home is Harder Than Ever
The inventory shortage isn't just a headline—it's a daily reality for buyers. Current market data show Richmond has only 1.8 months of housing supply, well below the 4-6 months that define a balanced market. If no new homes were listed, everything would sell in about seven weeks.
Although Rocket Homes data show some progress with 1,639 active listings as of May 2025, the reality is still stark. Good homes receive multiple offers within days, and buyers often waive inspections or offer well above the asking price just to stay competitive.
Here's what this means in practical terms: you might spend months looking at homes, only to lose out repeatedly to cash buyers or those willing to take bigger risks. Even when you get an accepted offer, you often buy someone else's problems—deferred maintenance, outdated systems, or layouts that don't suit your lifestyle.
This inventory shortage is prompting more buyers to consider custom home building as an alternative. Instead of competing for scarce existing homes, choosing to build custom allows buyers to select from available homesites in established communities or use their own land. This approach avoids bidding wars and the compromises that come with limited housing options.
Our current communities offer immediate solutions. Whether you're drawn to the lakefront lifestyle at Summer Lake, the established charm of Tarrington, or the convenient location of Chesdin Landing, we have lots ready for your custom home.
Mortgage Rates and Affordability: Making Your Dream Home Financially Feasible
The mortgage rate landscape has stabilized somewhat after the volatility of early 2025. As of writing, current 30-year fixed rates hover around 6.77%, down from peaks above 7% earlier this year. Although still higher than pandemic-era lows, this marks a meaningful improvement, and industry forecasts suggest rates could drop to 6.1-6.5% by year-end.
The affordability challenge is real. According to a recent housing market report, the income needed to afford Richmond's median-priced home has nearly doubled from $62,005 in 2020 to $122,866 today. This fundamental shift has made homeownership more difficult for many families, but for those thinking about custom homes, the financial picture often looks better than it first seems.
The key is understanding the total cost of ownership. While custom homes require a higher upfront investment, you're getting brand-new everything—HVAC systems, roofing, plumbing, electrical, and appliances that won't need replacement for years. Compare this to existing homes where you might face $20,000-$50,000 in immediate updates or repairs, and the value proposition becomes clearer.
When it comes to custom construction financing, Keel Custom Homes provides transparency and confidence that you won't find in the resale market. Our detailed pricing process eliminates surprises. Unlike bidding on existing homes, where you might pay thousands over asking price, you know exactly what your custom home will cost from day one.
We collaborate with preferred lenders who understand construction financing and can guide you through the process. With our established timelines and proven track record, lenders see Keel projects as lower-risk investments, often resulting in better terms for our clients.
Why Richmond's Economy Makes This the Right Time to Build
James River Richmond VA
Richmond's strong economic fundamentals are fueling this housing demand, and understanding these trends helps explain why building now puts you in a good position for the future. The Richmond metro area added 22,400 jobs over the past year—a 3.1% growth rate that more than doubles the national average of 1.4%.
The job growth isn't just about numbers; it's about quality. Healthcare and education sectors added 9,300 jobs, while major employers continue strategic expansions. VCU Health's approved acquisition of the former Altria research building, valued at $275 million, will establish a large new facility for the School of Pharmacy and the School of Public Health. Capital One employs over 13,000 people in Richmond, with more than 800 current job openings, and Amazon's ongoing expansion has created over 1,000 positions since 2022.
This economic strength directly boosts housing demand. Population data show over 52,000 new residents have moved to the Richmond area since 2020, with Chesterfield County alone adding 30,277 people—a 9.5% increase. These aren't just any residents; they're often high-skilled professionals earning good salaries and seeking quality housing.
The demographics are especially favorable for custom home builders. The 25-34 age group has increased by over 10% in the last five years, showing peak millennial household formation. These buyers often prefer modern layouts, energy efficiency, and smart home technology—precisely what custom construction provides.
Virginia's unemployment rate of 3.4% remains well below national levels, which increases pressure on wages and supports ongoing income growth. Additionally, with Richmond's cost of living being 10% lower than national averages, the region offers an attractive value for relocating professionals and expanding families.
Looking Ahead: Market Forecast for the Rest of 2025
The outlook for Richmond's housing market through the remainder of 2025 suggests continued strength with some moderation in growth rates. Industry forecasts anticipate continued price appreciation, while Richmond's fundamentals suggest the metro area will continue outpacing state averages due to strong employment growth and population increases.
Virginia Realtors project a 9.8% rise in home sales for 2025, driven by modest mortgage rate relief and ongoing job growth. However, the seller's market will continue due to the long-standing supply-demand imbalance that has defined the region for several years.
New construction activity remains robust despite material cost pressures, with persistent high demand for new homes supporting builder confidence and ongoing development projects.
This forecast suggests that acting now offers several advantages for custom home buyers. Construction beginning in summer 2025 will likely be completed during a time of expected rate relief and continued appreciation. You'll be ahead of buyers who wait for "perfect" market conditions that might never happen.
Ready to Build Your Dream Home? Next Steps with Keel Custom Homes
Build Your Dream Home
If you've been frustrated by the current housing market—losing bidding wars, settling for features you don't want, or just not finding what you need—it's time to try a different approach. Building a custom home with Keel Custom Homes provides the certainty, quality, and personalization that today's market can't deliver through existing inventory.
Our process begins with understanding your vision and budget, then matching you with the perfect homesite in one of our established communities or working with land you already own. From there, we guide you through our design process, making sure every detail reflects your lifestyle and preferences.
Custom Home in Richmond
The numbers make sense, too. With our transparent pricing and proven construction timelines, you can confidently plan your housing investment. There will be no surprise costs, no bidding wars, and no settling for someone else's choices.
Most importantly, you're not just purchasing a house—you're building a home that is truly yours. In a market where good existing homes are rare and costly, custom construction often offers better value while providing exactly what you want.
Ready to explore your options and avoid the competition? Contact Keel Custom Homes today to schedule a consultation. Let's discuss your vision, tour our available communities, and show you why building a custom home is the smart choice in today's Richmond market. Your dream home is waiting—and we're here to build it.