“Inventory low in Roanoke Valley; sellers rushing to list homes” is the way one local TV news station recently described the real estate market in Roanoke. According to Realtor.com, the median list price of homes in Roanoke has risen by nearly 9% year-over-year, despite the current economic times.
Roanoke is the largest metro area in Southwest Virginia and is the commercial and cultural center of the southwest part of the state and of Southern West Virginia. Roanoke was founded in the 1850s and quickly became an important transportation hub for the railroad, mining, and manufacturing industries thanks to the city's central location in the Roanoke Valley between Maryland and Tennessee.
Nicknamed the “Capital of the Blue Ridge,” Roanoke’s cultural events include the Chili Cook-Off, Big Lick Blues Festival, and Festival in the Park. The Roanoke River flows through the city, and the downtown cultural site Center in the Square is home to art galleries, restaurants, museums, and the Hopkins Planetarium.
Keep reading to learn why investors should consider investing in the Roanoke real estate market in 2020.
Roanoke’s population has exceeded 100,000 people for the first time since the early 1980s, gaining more than 3,000 residents over the last ten years. According to The Roanoke Times, the significant redevelopment and investment in Downtown Roanoke have created new housing options and amenities that make the city an attractive place to live, work, and play.
Key Population Stats:
- Roanoke is the 9th largest city in Virginia with a population of 100,033 in the city and more than 314,500 in the Roanoke metropolitan area.
- Metro area of Roanoke consists of the cities of Roanoke and Salem, and the counties of Botetourt, Craig, Franklin, and Roanoke.
- Roanoke has grown by 3.1% since 2010, and last year had a net migration gain of 270 people, according to Forbes.
- Median age in Roanoke is 43.1 years.
- 59% of the population is between the ages of 18 and 64.
Job growth in the Roanoke Region is outpacing the entire State of Virginia average. According to the Roanoke Regional Partnership, employment levels in the Roanoke metropolitan area recently reached 11-year highs with most of the job gains coming from the professional and business services, education and health, leisure and hospitality, and retail and wholesale trade sectors.
Key Employment Stats:
- GDP of the Roanoke MSA is more than $17 billion, according to the Federal Reserve Bank of St. Louis, and has grown by nearly 21% over the last ten years.
- Unemployment in Roanoke is just 3.0% while job growth last year was 0.6%.
- Median household income in Roanoke is more than $55,000 while per capita income is nearly $32,000.
- Household income growth was 1.69% last year with 50% of the households in the Roanoke metro area earning between $50,000 and $200,000 per year.
- High-tech employment in Roanoke has grown by 1.9%, according to Forbes.
- Key industries in the Roanoke Region include transportation and manufacturing, life science, and food and beverage.
- Carilion Clinic health care, Kroger, Wells Fargo Bank, HCA Health System, Walmart, and Advance Auto are among the largest employers in the Roanoke metropolitan area.
- More than 100,000 undergraduate and graduate students in 25 colleges and universities are within a 60-mile radius of Roanoke.
- The Roanoke Region has a higher concentration of undergraduates per capita than Boston-Cambridge, San Francisco-Oakland, Raleigh-Durham-Chapel Hill, and Austin, Texas.
- Largest public and private four-year colleges in metropolitan Roanoke include Virginia Tech, Radford University, Liberty University, and American National University.
- Nearly 90% of the residents in Roanoke are high school graduates or higher, while nearly 30% hold a Bachelor’s degree or postgraduate degree.
- Roanoke is equidistant from New York City and Atlanta and within a one-day drive of two-thirds of the U.S. population.
- Interstates 581 and 81 pass through the Roanoke city limits.
- Amtrak provides passenger service from Roanoke to major metro areas including Chicago, Washington D.C., Philadelphia, and Boston.
- Roanoke-Blacksburg Regional Airport (ROA) with non-stop flight service to major Midwest and East Coast cities including Atlanta, Chicago, Charlotte, Orlando, St. Petersburg, New York City, and Washington, D.C.
Real Estate Market
Roanoke is still a seller’s market, according to WSLS 10 News. Low inventory in the Roanoke Valley is seeing a surge in listings as buyers continue to make offers. The Roanoke Star newspaper suggests the real estate market in Roanoke will only get stronger over the next several months, due to the continuing imbalance between supply and demand.
Key Market Stats:
- Median listing price of a house in Roanoke is $193,000 while the median price of homes sold in Roanoke is $187,700, according to Zillow (as of January 2020).
- Square foot listing price of a home in Roanoke is $93 vs. $120 per square foot in the Roanoke Metro area.
- Homes values in Roanoke have increased by 5.2% last year and by nearly 22% since December 2012, based on the Zillow Home Value Index.
- Average days on market is 52, according to Realtor.com.
- Sales-to-list price ratio is 100%, meaning homes in Roanoke are selling for approximately the asking price.
- 9.2% of the homes in Roanoke have a negative equity vs. 8.2% U.S. average.
- 0.9% of the homes in Roanoke have a delinquent mortgage vs. 1.1% nationally.
- Daleville, Troutville, and Bent Mountain are cities in the Roanoke metro area with the highest median Zillow Home Value Index.
- Suburban cities of Goodview, Vinton, and Callaway have the lowest median Zillow Home Value Index.
Attractive Renters’ Market
Redevelopment and investment in Downtown Roanoke has resulted in more city renters, with much of the new housing in the neighborhood created with renters in mind, according to The Roanoke Times.
However, that may not be enough. There are about 108,900 single-family homes in Roanoke, accounting for 74% of the total housing inventory. Out of those, Trulia shows only two dozen houses for rent in the City of Roanoke.
The shortage of rental property helps to explain why the demand for real estate in Roanoke keeps growing. Virginia Business recently observed that “People are parking money in real estate because they’re worried about the volatility on Wall Street and they know that their returns on bond yields are not very good right now.”
Key Market Stats:
- Median rent in Roanoke is $1,184 per month versus $998 per month in the Roanoke metro area.
- Rents in Roanoke increased by 4.4% last year, according to Zillow.
- 41% of the households in Roanoke rent rather than own.
- Average rent for a 3-bedroom home in Roanoke is $1,114.
- Average rent for a 4-bedroom home in Roanoke is $1,221 per month.
- Popular neighborhoods in Roanoke include Old Southwest, Cave Spring, Downtown Roanoke, and South Roanoke.
Historic Price Changes & Housing Affordability
The rise or fall in home prices and the affordability of housing are two data sets real estate investors use to help forecast the demand for rental property.
Historical price changes may be an indicator of future property values. As home prices continue to rise, they become less affordable for people to buy, which in turn can create a stronger demand for rental housing.
Freddie Mac publishes a monthly House Price Index (FMHPI) that tracks the price inflation for houses in all major real estate markets in the country. The Index uses December 2020 as a benchmark of 100, then measures the change in housing prices in each market to 100.
The most recent FMHPI for Roanoke, VA shows that:
- House Price Index for the Roanoke metro area is 161.36 through April of 2020
- One year ago, the HPI for Roanoke was 155.97
- Year-over-year home prices in the Roanoke metro area have increased by 3.5%
The Roanoke Regional Partnership recently compared housing prices in Roanoke to other cities in the U.S.
The report found that Roanoke, VA has a housing cost index (HCI) of 82.2 compared to the national average of 100. Housing costs in Roanoke are more affordable than nearby Charlottesville with an HCI of 116.1, and coastal cities such as Boston and San Diego, both with housing costs indexes above 200.
Quality of Life
Roanoke is rated by Forbes as one of the most affordable places for doing business in the U.S. Nicknamed the Capital of the Blue Ridge, Roanoke also receives high rankings for job growth, education, and is among the best places for business and careers.
Key Quality of Life Stats:
- Cost of living in Roanoke is 7% below the national average, according to Forbes.
- Livability recently named Roanoke as the best affordable place to live and one of the best places on the East Coast for outdoor recreation.
- Roanoke lies between the Allegheny and Blue Ridge Mountains, with the Appalachian Trail running just seven miles north of the city.
- Mill Mountain, located within Roanoke’s city limits, is home to the Roanoke Star, Mill Mountain Zoo, and the Discovery Center interpretive building.
- Roanoke receives above-average ratings from Niche.com in all key quality of life measures including housing, public schools, family living, diversity, and nightlife.
- The city has a dense suburban feel with a lot of parks and restaurants, making Roanoke perfect for families and young professionals alike.
- Climate in Roanoke is humid subtropical with generally mild seasons all year round.
- Downtown Roanoke is home to dozens of museums and theatres, including the Taubman Museum of Art, Opera Roanoke, and the History Museum of Western Virginia.
- Carilion Roanoke Memorial Hospital is ranked as the 3rd best hospital in Virginia by U.S. News & World Report.
Get Out the Map
Where to begin your search? Roofstock created a heat map of Roanoke based on our Neighborhood Rating, a dynamic algorithm that enables you to make informed investment decisions by measuring school district quality, home values, employment rates, income levels, and other vital investment criteria.
DARK GREEN: 4-5 star neighborhood
LIGHT GREEN: 3.5-4 star neighborhood
YELLOW: 2.5-3 star neighborhood
ORANGE: 2-star neighborhood
RED: 1-star neighborhood
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