Back to the Future – The Fan District

Editors Note – this article was originally posted March 1 and the market has moved slightly forward since that date.  If you are interested in the data used in the computations for this article, you may request a client gateway here.  Additionally, inventory statistics that auto-update every 30-45 days, may be found here…

back to the futureEarlier today, Scott Garnett (Associate Broker and one of One South’s ‘Original 5’) called me and asked my opinion on the pricing of a home his client had made an offer on.  The home was purchased in the spring of 2006 and was located in the Near West End.  The home had not sold in 2 weeks it had been on the market and his client’s offer was approximately 95% of the asking price.

He asked the simple question, ‘How are we on pricing now compared to 2006?’

Sometimes the simplest questions are the best questions.

After looking at a few metrics and doing some quick ‘back of napkin’ math, we arrived at the answer of $5/SF less.  I found that a bit surprising…so I tested another area and found quite a different answer.   It got me thinking that it would be very valuable to know how each individual area had recovered from the roller coaster that 2004-2013 had been.   I decided to task myself with figuring it out.

This ‘Back to the Future’ series/study will examine multiple areas of Richmond to see how pricing has rebounded.  This methodology of the study is either quite appropriate of hugely flawed depending on how many graduate degrees in statistics you have.  I happen to think that while it is a very primitive comparison, it is revealing and will tell an interesting story about the RELATIVE strength of each market.  If you really study the Richmond housing market (or any market for that reason) you will know that all segments behave differently based on a set of dynamics unique to each.  Suburban housing behaves differently than historic housing than condos than waterfront…and so on.

So here goes with installment number one…

Richmond’s Fan District – Where Are We Now?

I wrote a piece called ‘How Did The Fan District Survive The Bursting Bubble‘ a while back that discussed the market dynamics driving values in the Fan District.  As a mature neighborhood with excellent walkability and proximity to entertainment and culture, The Fan is underpinned by more stable inputs (mostly the inability to add NEW inventory easily) than many suburban neighborhoods.

[ For a list of homes for sale in the Fan, click here ]


case shiller


The chart above is the gold standard for home pricing.  The Case Shiller Index measures both the Top 10 and Top 20 largest metro markets in the US and tracks both the prices of the homes as well as the appreciation rates in each market. It should be noted that Richmond is NOT one of the cities in the index (the two geographically closest markets that are measured are Washington DC and Charlotte NC, in case you were wondering…) It is also worth noting that the CS Index measures home pricing and not the Price Per SF.  When the market soared, many large homes were built that skewed the appreciation and depreciation within each market.  Secondarily, some of the largest price increases occurred in markets that became the most overbuilt, also skewing down the average.

While the latest press release from CS shows the national average at a 2003 level, the per foot data of Richmond’s Fan District suggests something different (and by different, I mean BETTER)

The Fan, as defined by a boundary line drawn down Harrison, Main, Broad and the Boulevard for this exercise, yielded the following ‘Per Square Foot Averages’ by year from 2005-2102:

  • 2005 – $170/SF
  • 2006 – $185/SF
  • 2007 – $194/SF
  • 2008 – $186/SF
  • 2009 – $171/SF
  • 2010 – $178/SF
  • 2011 – $172/SF
  • 2012 – $180/SF

This would suggest that by the end of 2012, prices in Richmond’s Fan District were approaching the prices we saw between 2005 and 2006.  This is 3 years ahead of the national average.


Now get this – tracking the pending inventory from January and February in 2013, there have been 19 properties pend and sell.  If a the properties going under contract are selling at 97% of the asking prices (the data suggest is could be closer to 98%), then the average Per Square Foot price in 2013 is $198.85 (using the $205 per foot price x 97% ask/close ratio)…  As anyone who has helped a client buy a home in the Fan recently would tell you, the spring of 2013 has felt a lot like 2007 with multiple offer situations common and ‘Days on Market’ well below the Metro average.

Has pricing returned to 2007 levels in the Fan?  I am not ready to admit that we are back to the top of the curve in Richmond’s Fan as this is partially…or perhaps largely…driven by lack of inventory but it does warrant discussion when pricing the property for sale.

Overall, the takeaways are as follows:

  • Pricing property correctly requires far more analysis than it did previously
  • If you bought prior to 2007, you are pretty close to being back where you started
  • If you live in the Fan District, you are probably better off than in may other areas of the country

Next up, Midlothian.

Why the Demographics Say ‘FAN!’

America is getting older and younger at the same time.

The effect of the baby boomer population explosion during the post war period of the 1940’s and 1950’s is now being felt as strongly as ever.  It is manifesting itself in a need for housing for the younger demographic now entering and the retirees now exiting the US workforce.

Lets look at both groups…

  • What mentality do they both share?  Environmental responsibility.
  • What cost do they both bear?  Expensive gasoline.

Both the Boomers and the Echo Boomers, despite a generation of age difference, share much in common.  The Boomers (and their ‘Echo’ counterparts) enter the 2010’s seeing the world through the filter of the 2008 bubble collapse.  From 2008-2010, both groups saw the financial landscape change…dramatically.  The excess in the middle 2000’s marketplace became the norm and when the market collapsed, a debt-ridden and excess-filled middle class collapsed along with it.  Left in the market collapse’s wake was a feeling of disenfranchisement and distrust and a vow that to never allow it to happen again.

Enter the Fan District.

Built largely in the early 1900’s, the Fan was designed to accommodate a lifestyle NOT dependent on automobiles.  Corner markets and service providers interwoven into the fabric of the neighborhood have survived nearly a century of change due to balance and proximity.  Having many options for dining, entertainment and daily needs close by meant walkability.  When gas was $1.00 per gallon, walkability was less important.  With gas prices approaching (and sometimes exceeding) $4.00 per gallon, living in walkable neighborhoods and close to mass transit has become a strong market preference.  No neighborhood is as walkable as the Fan.

While the Fan is the most walkable neighborhood in Richmond, it is also one of the most responsible.  While being ‘Green’ can mean many things as it relates to energy efficiency and the use of better and more responsible materials, the ultimate green technique is using (or re-using) what has already been built.  The Fan District, despite some older homes that could use some extra insulation and upgrades in mechanical systems, taxes our planet the least in that it is already built.  No new trees need be harvested, no new roads built, no highways expanded and no landfills crowded because of the Fan.  In many ways, it is the ultimate ‘Green Richmond Neighborhood’ and both Boomers and Echo Boomers see Green as mandatory.

The Fan District, with its smaller and more responsible footprint for its homes and its walkable elements, make it a neighborhood that will be increasingly more in demand than any other Richmond neighborhood for the foreseeable future.  A combination of reasonable home size, retail services close by, cultural and entertainment options throughout and authentic feel mean Fan homes will continue to rise in value relative to the rest of the market.

This combination of factors will mean many segments of the buying public, both young and old, will seek the benefits provided by neighborhoods such as the Fan.

How VCU’s Growth Impacts The Fan

Gilbane Development’s project along Belvidere is one of several new housing options for VCU students outside of the Fan District

Virginia Commonwealth University is important to Richmond. With total enrollment in excess of 30,000, VCU’s economic engine drives a disproportionate percentage of the Metro’s income and impacts much of Richmond in increasingly deep ways. Educating many in our workforce, incubating many entrepreneurial efforts, fostering much of our creative spirit and providing some of our most gripping athletic accomplishments, VCU is more integral to Richmond than arguably any other entity.

The Fan District, VCU’s first neighborhood to the west, shares a somewhat contentious and suspicious relationship with its large and powerful neighbor.  In the early 1990’s, Dr. Eugene Trani was named president and brought with him a vision for VCU that included growth in both academic fields and physical space.  It also included heavy reliance on the private sector to provide housing for the student population.

In order for VCU to realize its goals of growth, it needed to figure out which direction it should grow.  The Fan District, with the highest property values of any bordering neighborhood and most organized and vocal neighborhood association, did not offer the wide swath of undeveloped (or underdeveloped) property upon which VCU could vastly increase its footprint.  VCU saw opportunity to the north (Carver) and to the east (Monroe Ward) despite having to cross major thoroughfares (Broad Street and Belvidere Street, respectively) to accomplish their objectives.  The Siegel Center and School of the Arts were built along the north side of Broad Street (Carver) while both the new Business School and the East Engineering School (Monroe ward) were built across Belvidere.  As the school expanded, so did the need and corresponding development of housing for VCU students.

For much of its existence, housing for VCU’s students was provided by the older tenement styled walk up apartment buildings throughout the Fan.  Most of the student population gravitated to the lower end of the apartment market and inhabited the unrenovated (or poorly renovated) properties throughout the district.  Students are never the most responsible tenants and landlords with little incentive to renovate or enforce responsible behavior created tension amongst those in the Fan who sought stability and a more serene urban experience.

With the aggressive expansion, private housing development followed the academic and athletic development and created more viable housing options in both Carver and Monroe Ward.  These new housing options outside of the Fan combined with the condominium conversion movement of the later 2000’s meant a change in student behavior and a removal of many substandard Fan apartments from the mix.  This migration of the student population elsewhere was a positive for the Fan and is in the process of spurring growth in other neighborhoods that had languished without development momentum for decades.

The bottom line is that VCU’s influence on the Fan is far more positive than the prior decades.  While students still populate many apartments throughout the district, the density is far lower than it was and the combination of more diligent enforcement of responsible student behavior and newer housing options in other neighborhoods has largely decreased tensions.  VCU is a big neighbor whose positives now greatly outweigh the negative influences of yesteryear.

Rick Jarvis is one of the Founders of the One South Realty Group in Richmond, Virginia. He can be found at Google+ and Twitter

Choosing an Architect

Each and every year, all of the major league teams sit down, once their season is over, and begin to think about ‘next year.’  They take a look at what they did well, what they did poorly, who is coming back and who is likely to leave (or who they are going to ask to leave…) and develop a strategy to improve.

The good teams embrace the process and figure out a way, each and every year, to find the best players to build their roster.  The bad ones always seem to figure out how to not do it well and they tend to wallow in mediocrity year upon year.

In real estate, the same holds true.  Those that understand how the game is played choose a team that knows their market.  Whether or not it is the Realtor, Home Inspector, Attorney, Lender, Contractor or ESPECIALLY an Architect, a buyer or seller should seek to understand the skill sets of their potential team and choose accordingly.  While true in all areas of real estate, it is even more so in older, urban and/or historic neighborhoods.

Working in an environment that is historic adds another level regulation to the process.  A neighborhood with historic designation means that programs may be available to offset renovation costs.  However, these programs come with the caveat that much of what will be allowable is governed by an alphabet soup of agencies designed to protect the fabric of the neighborhood.  CAR, DHR, NPS are just a few of the governing agency initials that may need to approve drawings for additions or renovations.  Make sure your architect is both highly familiar with those at the City (or county) that review plans and that they can engage in a very specific conversation about how the programs such as the Historic Tax Credit program, Tax Abatement program and/or enterprise zones can help.

It is also worth an few minutes to try and figure out who is on the relevant review boards, look for the architects that serve and consider using them.  Generally speaking, architects will be members of a wide variety of panels within any local government from City Council to Architectural Review to Planning Commission.

Another idea in architect selection is talk with the Association that represents the neighborhood.  Most well organized associations have a committee that hears inquiries on real estate issues.  Meeting with these folks will usually indicate their trust levels with certain architects.  Some architects have pushed through controversial projects or been involved with properties whose renovation results were less than well received.  Inheriting the baggage from a project that went poorly by using a certain architect (or contractor) may be counter productive.  The real estate committees within the neighborhood association will be more than happy to let you know if they do not approve of a certain individual or group.

Remember that ultimately the success or failure will largely be determined by the collective knowledge of the team.  Correctly choosing the team members will best create the groundwork for a successful outcome.

Love it or List It

Creativity conceptI love that show.

Love It or List It’ is a show on HGTV where people who are dissatisfied with their current home invest in a renovation at the same time they begin looking at other homes.  At the end of the show, they decide if their renovated home is worth keeping or do they sell it and buy another one.  It is fun to watch and listen to the concerns of the owners…some of which are quite realistic and others, well, maybe not as much.

Right before the owners make the decision to either list or stay, they get an opportunity to see the renovation (which is usually a dramatic improvement) and its effect on market value.  The cost of the renovation usually comes in somewhere between $30k and 75k and involves maximizing/capturing some space (typically attic or basement), opening up some rooms and a kitchen/bath re-do and the obligatory paint job to bring the colors up to date.   Usually, the improvements made to the homes increase the value of the home by an amount greater than the cost and everyone is happy.

The show is engaging and fun but I think would be a lot more effective and educational if they spent some more time on the math behind the decision(s).

When the market stopped in 2008, people became trapped in their homes.  The ability to secure a mortgage became as challenging travelling to Mars and thus, improving one’s current home became a more realistic option.  While a renovation or addition is usually driven by need, the investment needs to make sense.  Simply adding to an existing home or putting in a new kitchen is pointless unless there is a financial benefit in doing so.

How do you determine whether or not renovating or adding (or both) is the right idea?  Ask yourself the following:

  • What is the ‘price per foot’ range in my neighborhood?
  • How does my home compare?
  • What is the average size of the homes in my neighborhood?
  • What is the ratio of land/improvement within your neighborhood?

Simply put, the decision to move, renovate or add begins and ends with those questions.

If the ‘per square foot’ value of your home is at or below the average within your neighborhood, then there is financial room to improve.  How much money can be spent will be determined by how far you are from the line.  The easiest way to think about it is to find the per foot difference between your home and the renovated homes and multiply it by the size of your home.

If you live in a 3500 SF home worth $180/SF and homes in your neighborhood contains renovated homes with $210/SF values, then the math looks like this:

  $ 210/SF for a renovated home
– $ 180/SF for your home
$ 30/SF difference
  x 3500 SF
  $ 105,000 renovation budget

If the average home in your neighborhood is worth $180/SF with comparable sales for renovated homes trading closer to $210/SF and you live in a 3500 SF home, then you have $30/SF x 3500 SF or $105k.  If you feel that the improvements required are less than $100k, then renovate.  If not, be careful.

Likewise, if you live in a neighborhood where property values are trading at $160/SF with additions costing in $125/SF, then you are probably in good position to add some space.  Be mindful of creating adding too much as you need to keep your eye on the size of the home.  Adding 2000 SF to a 2500SF home in a neighborhood where the average size is closer to 3000 SF may not be wise.  Additions usually work best where the value of the land is a larger percentage of the homes value and in older neighborhoods where floor plans are less open.

Regardless of whether or not you decide to renovate, add or sell, there is math to be done.  A good first step is investing time in truly understanding the market values in your neighborhood.  Appraisers, Realtors and public records are all sources you can use to help you gain insight into market value of your home and those around you.  Do your homework, do the math and make your decision.

Floors Tell The Story

Seaming new flooring into old flooring will minimize (but not completely hide) the impact of the repair.

Floors are incapable of lying.

Wood floors, especially those in homes as old as the homes in The Fan District, tell a story. The large majority of the homes in The Fan were built in the period between 1900 and 1930 making these homes literally a century old. Over their lifespan, a home will have had multiple owners and each one will have cared for the home differently.  The floors will go a long way in telling you about the how the home was treated and what has been done to the home throughout its history.

Using the floors as a guide will help an inspector in identifying potential issues during the course of the inspection.  The first thing floors will indicate is whether a space is part of the original home or if it was added and/or captured.  For the most part, it is impossible to perfectly match floors.  New wood does not match old wood and the new stain never quite matches the old stain.  Likewise, where the floors meet, usually near the door jamb, will show either a transition strip (always a giveaway) or a different pattern than elsewhere.   When an inspector sees a change in floor patterns, they know to pay special attention to how the space is heated, cooled, insulated and how the roofs are joined.  Additions, if not properly integrated into the original envelope, will tend behave differently from a temperature standpoint.  Likewise, the roof, if over an addition, will usually be a different age or type and will require different maintenance techniques or schedules.  The floors will tell you that some additional sleuthing is required.

Floors will also indicate whether a home had a catastrophic event occur and/or a prolonged period of neglect.  If a large swath of flooring differs from flooring near by, then do some harder looking.  Fire, water or termite damage is a most often times the culprit.  Examining the flooring system from beneath will usually tell the rest of the story and most importantly, what was done to remedy the problem.  Floor joists that have been repaired are common in older homes but how the repairs were made is the main issue.  Expecting a century old home to not have needed repair at some point is naive, but expecting those repairs to be made using best practices is not.  Let the floors be your guide.

The last thing to note when looking for clues about a home is to look at the floor where it meets the base trim.  The number of times the floors have been refinished will be evident in the corners.  The floor sanders can never quite get into the corners and the amount of flooring that has been sanded away will be best illustrated there.  If there is a great difference in depth, then the floors have been refinished multiple times and may lack the depth to be refinished again.

Nothing is time proof.  Buying a home in a mature neighborhood like Richmond’s Fan District means accepting age in exchange for proximity, culture and walkability.  Inspect your home well and use the clues provided to help understand what you are buying.

Rick Jarvis is one of the Founders of the One South Realty Group in Richmond, Virginia. He can be found at Google+ and Twitter

The Role of Civic Associations

iStock_000005911836SmallYou might think that you can’t make a difference or help change things in your community, but I’ve learned that this can’t be further from the truth.

Prior to moving to “The Fan” almost 20 years ago, I had never joined a Civic Association or thought that being involved could really make a difference…but I was mistaken.  Becoming an active civic member was the best thing I ever did.  It “fast tracked” me into meeting and making many of the friends I have today and afforded me the opportunity to be part of the continuing process of making my neighborhood the wonderful place it is to live in, work in, and play in.

Being Secretary of the Fan District Association and on the board of the West Grace Street Association enabled me to help introduce and affect changes important to both me and the other members of my neighborhood.   Traffic calming measures, which helped create more of a neighborhood feel and decreased the fears families felt in raising their children, helped provide stability to The Fan.  Providing input for ordinances which helped preserve some of the most beautiful  homes in the nation is also something I took great interest and pride in.  Being an advocate for Urban Business overlays on both Main and Broad Streets helped bring many small businesses to these areas to restore fabric to urban experience.  Also, engaging VCU in an effort to have a more complimentary influence on the neighborhood is both ongoing and incredibly important.

There are many reasons why people choose to live in an urban environment —  the interweaving of all sorts of places such as eateries, shops, places of worship, and of course the enjoyment of walking their children to school.  It is the job of any civic organization to help improve the experiences of those that seek to make the neighborhood their home.

Urban living is unique and rewarding!  It offers a diversity of people bringing  different backgrounds and walks of life, young and old,  varied economic levels, and supports an exciting entrepreneurial  spirit.  Residents who get involved in their city’s life come together as one to make their neighborhoods the best they can be.

Linda Urgo is an agent with One South Realty, has lived in many neighborhoods and a 20+ year resident of Richmond.

Questions Rarely Asked in the Suburbs

Buying housing in the Fan (or other older districts in the City), requires a special skill set from your agent. An agent versed in selling older homes knows that there is a different set of questions asked and guidance offered to help their clients understand the home they are buying. A partial list of questions (and the reasons behind them) are listed below:

Does the Home Have an Abatement (and what type/how long)?  Tax abatement is a program put in place by the city as an incentive to renovate homes.  In effect, the City’s abatement program foregoes taxing the improvements made to a property for a specified period of time.  The abatement attaches to the property (not the individual that performed the work) and thus any abatement remaining transfers to the purchaser for the duration of the abatement.

What Parking Zone?  Due to the premium placed on parking in The Fan, permits are issued (with a cost) based on the applicant’s address.  There are two zones more or less divided along the Upper/Lower district line (Lombardy) that govern whether an automobile can be parked daily or hourly.  Residents are required to re-up annually.  More details can be found on the city’s website.

Is there Multi-Family on the Block?  As a early 20th Century urban neighborhood, The Fan is truly a mixed-use AND mixed-income neighborhood.  During its construction, multi-family apartments were interspersed throughout the district and can be found on blocks of widely varied values.  While having a multi-family property on the block does not necessarily mean that the block has less value, it does mean that few questions should be asked.  Knowing the owner and/or the management company will tell you a great deal about the property.  Multi-family can also affect parking ratios and buying a home with no parking on a block with apartments may mean a struggle to find a space within several blocks.  Understanding the effect of multi-family on the block should be part of the analysis.

What is a modified bitumen roof?  And why do all fireplaces and flue convey in ‘as-is’ condition?  A roof on a Fan home really is more of a commercial roof than those on suburban detached homes.  With flatter slopes and gutter systems that are more or less built in, the roofs in the Fan District require additional care and radically different maintenance.  Different materials are used (different metals and composites) that require different care.  Along with roofing systems whose designs are 100+ years old, the fireplaces, chimneys and flues also require maintenance that differs greatly from the suburban housing of the past 30-40 years.  Tying together fireplace flues with furnace flues inside chimneys that are commonly shared with neighbors is quite an undertaking.  Maintaining them is a chore as well.

Does it have a valid C.O.?  Many homes in the Fan District were, at some point, used as income producing property.  Many times the homes that were converted or the basement apartments that were created never went through an official permit process.  Purchasing a home with an extra apartment needs to be verified via Letter of Zoning Compliance.  A good agent knows the process.

Rick Jarvis is one of the Founders of the One South Realty Group in Richmond, Virginia. He can be found at Google+ and Twitter

How Did the Fan Survive the Bursting Bubble?

The short answer is ‘pretty well.’

iStock_000011922921SmallBeginning sometime in 2007 and lasting into early 2011, market values fell, often dramatically, across the board with no one asset or area being immune.  By the time the dust settled, property values had fallen anywhere from 20% to 50% depending on wide and diverse set of factors.  All neighborhoods felt the effect and The Fan was not immune.

In 2011, those that study housing began to change their tone and use words that indicated the market was shifting yet again (and this time, to the positive.)  Markets that had been in freefall were flattening and those that had flattened were showing small levels of appreciation.  The “Sand States” (Florida, California, Nevada and Arizona) were still years away from recovery but the denser, older and economically healthy areas were far better off.

The hardest hit areas during the crash shared a common characteristic: excess.  These excesses in the market took the form of excess size, features, purpose or inventory (and sometimes all of the above.)  The truly large homes that were built on expensive lots throughout the suburbs lost great value.  Likewise, the excess inventory of second homes and resort condos also took a huge beating.  Those homes built with every imaginable bell and whistle became another harshly punished sector of the market.

What forms of excesses are prevalent in The Fan?  Few, frankly.

The Fan is a mature urban neighborhood of large but reasonably sized homes whose scope, while upscale, largely eschews excess.  With parking at a premium, the homes in The Fan do not have 3 and 4 car garages to house multiple cars.  With 2500-4000 SF footprints, the ability to dedicate 1000 SF to a master closet or bath is hard justify.  Likewise, game rooms or other singular purpose entertainment rooms, so common in the McMansions of the suburbs, were not introduced to the homes in the Fan.  Lastly, and perhaps most importantly, with no real land available for expansion, Fan inventory is effectively fixed.

These factors, combined with the fact that The Fan is the most walkable and culturally engaging neighborhood in Richmond, meant that when values fell, Fan District homes held their values at rates far better than the rest of the market.  As we navigate the recovery, those who chose to call the Fan their home will be well rewarded.
Rick Jarvis is one of the Founders of the One South Realty Group in Richmond, Virginia. He can be found at Google+ and Twitter