The Roanoke real estate market is both stable and growing. If you’re an investor who is looking for a new market or an opportunity to grow your portfolio, this is the place to be. If you’re a new investor wondering whether it’s time to buy your first rental property – it is.
Let’s talk about Roanoke.
Located in the Blue Ridge Mountains of southwestern Virginia, Roanoke is a cosmopolitan city that manages to feel like a small town. With just under 100,000 residents, the city has been shifting its identity from that of a traditional industrial town to a hub for high-tech industries and outdoor recreation.
Does this have an impact on the real estate market?
Of course it does. We’re talking about the latest Roanoke real estate market trends. Some of them are pretty standard across the country, but many of them are unique to this local market. Think about how you can best position your investment property to manage these trends and shifts. It’s important to be adaptable when you’re a real estate investor.
A good Roanoke property manager can help.
What to Know About Roanoke Market Trends
There’s a growing demand for well-maintained rental properties in good locations. One of the most significant trends in the Roanoke real estate market is the growing demand, even as rental values have risen and many residents have struggled to find housing they can afford.
With a low vacancy rate of around 3%, rental properties in Roanoke offer a stable and reliable source of income for investors. Roanoke’s low unemployment rate has helped keep demand for rental properties high, and with a growing number of people moving into the city, the demand for rentals is expected to continue to rise.
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Roanoke Sales Market and Real Estate By most estimations, the market in Roanoke remains a seller’s market. If you have decided to sell your investment property, you’re still likely to get pretty close to your asking price. You can expect a reliable pool of buyers, even with rising interest rates making mortgages more expensive. According to the Zillow Home Values Index, the average Roanoke home value is $248,284, which is up 6.4% over the past year and goes to pending in around 8 days. In August of 2023, nearly half of the homes on the market were sold at over list price, and around 30% of the homes on the market were sold at below list price. |
Roanoke Rental Market and Real Estate If you’re renting out a home, you’re bringing in high rents and holding onto reliable tenants. According to Zumper, the median rent on a three-bedroom apartment in Roanoke for October, 2023 was $1,567. A one-bedroom averages $1,134 per month. This is an increase of 27% over the last year. The rental market is possibly even stronger and more competitive than the sales market. Several factors will contribute to the continued strength of our rental market, including inflation, the inaccessibility of the sales market for many would-be home buyers, and the strong local economy. |
Housing in Roanoke Remains Affordable
Rental increases are consistent with how the national market has responded over the last year or two. While prices have gone up, compared to other nearby cities like Richmond and Washington, DC, Roanoke offers an affordable housing market for renters, buyers, and investors.
The median home value in Roanoke is around $175,000, which is much lower than the national average of $285,000. This affordability has helped draw many investors to the area, particularly those interested in long term residential leases.
Vacancy and Turnover Trends
Generally, the vacancy rate throughout the Roanoke rental market is manageable. With more properties available than a year or two ago, things are feeling more competitive for owners. However, there’s still a large pool of tenants, and most of those tenants are likely to renew their lease agreement rather than look for a new rental home.
As we said, rents have increased over the last couple of years, and so has the cost of just about everything. This has left tenants feeling like they’re spending more on the same goods and services they’ve always bought. They’re deciding what they’re willing to spend on rent, and they’re willing to pay for value. Tenants are more educated than ever. This means you have to know your numbers and study the market in order to attract them to your property.
Remote Work and the Rental Market
Think about the tenants you might currently have in place. Do they go to work every day or are they mostly working from home? It’s quite likely that you’re renting a home to remote workers. Even before the pandemic, many people working in specific industries had the opportunity to work from home at least a few days a week. Now, even with the worst of the pandemic over and things having returned more or less to “normal,” more and more companies are embracing a remote workforce in order to cut down on overhead and retain a mobile team of employees.
Remote work is more than a trend; it’s a reality for a lot of people. Companies have noticed that their employees are happier and more willing to be productive when they don’t have to commute into the office every day. Meetings are taking place online via Zoom and in large virtual conference rooms. New technology is enabling collaboration in creative ways.
Remote work is absolutely here to stay, and it’s having an impact on the Roanoke rental market. You may have noticed that tenants are looking for new features and amenities in rental homes. Prices are higher. On applications, you’re verifying employment from companies that may not be local to Virginia.
What does the remote work trend mean for real estate in general and for you and your investment property? How does the remote work trend impact the entire housing market in Roanoke and property management services in Virginia?
This is actually a benefit, especially for a market like Roanoke. We aren’t a huge city that’s plagued with traffic, congestion, and a freakishly high cost of living.
The increase in remote working has a positive impact on our housing market even as it contributes to higher prices across the board. This is because the ability to work from anywhere is drawing people to the region. There’s plenty of entertainment, natural recreation, and a great scene for art, food, nightlife, and fun. The natural blend of urban and rural activities fit the needs and desires of nearly every tenant demographic, and it’s far enough outside of major cities like Washington, D.C. to ensure there’s a lower cost of living and a higher quality of life.
Thanks to the popularity of remote work, Roanoke workers no longer feel the need to live within commuting distance of their workplace. That opens up a lot of possibilities for renters who are looking for a new home.
Rental Values in Roanoke
We’ve talked about the median rental values in Roanoke, and while they have increased quite dramatically over the last year, they’re still a lot lower than what tenants are paying in other cities. So, it makes sense that a remote worker would want to move here and continue earning their high salary while paying a lot less for rent.
This increase in rental values is due mostly to a high demand, a low inventory, and of course inflation. Fewer people are finding themselves able to buy a home, thanks to higher interest rates and more expensive mortgages. This is keeping the rental market active and competitive for even well-qualified tenants.
Remote work has impacted prices as well. According to a study produced by the National Bureau of Economic Research, the growth in remote work caused an increase in home purchases that wouldn’t have happened otherwise, and this created higher prices for both home sales and home rentals.
What Else Have We Noticed about Roanoke’s Real Estate and Rental Market?
- Tenant experience is important. Whether you’re renting out your own property or working with a Roanoke property manager, you need to treat your tenants as your customers. They are. Invest in a good relationship with your renters because it’s more than a trend: it’s a good business practice.
- Multifamily new construction is leading to market growth. There’s a huge demand for multi-family housing right now. Single-family homes will always make great rentals, but in order to meet the demand for high-quality rental housing, new buildings are going up in and around Roanoke. This is a great opportunity for investors looking to grow or diversify their portfolios. It’s also offering affordable options for tenants who may not be able to afford a single-family rental.
- Owners are more willing to invest in their properties. Maintenance is more expensive and vendors are harder to find, but improving and upgrading properties is necessary. It attracts better tenants and increases your rental values.
- There’s competition among investors. Nationally, rental property investors are less likely to be individuals and more likely to be corporate entities or institutional investors. There’s been some consolidation and if you’re an independent real estate investor, many of your competitors are large, well-funded corporations.
Embrace Opportunities to Attract Remote Workers as Tenants to Your Roanoke Property
We have been tracking data and gathering analytics as the workplace shifts and the rental market changes. We’ve managed to gain an understanding of what remote workers are looking for when they rent a home. If you want to take advantage of this opportunity, you’ll make sure your property is attractive to this growing pool of tenants who will be working from home. When you have a fantastic property to offer, you won’t have any trouble attracting these remote workers to your rental home.
Here are some of the things we recommend, based on what these types of tenants are looking for in a rental home.
| Dedicated work spaces attract remote workers
The remote working renters you’re advertising to will want to know they can comfortably work and live in the property that they choose. Show off your extra bedroom or den which could be used as an office. Maybe there’s a loft space that can be spruced up as a potential home office. When you’re looking for your next investment property, think about buying something that will have the space and the privacy to accommodate a remote worker. |
| Good technology is critical to remote worker tenants
Remote working tenants will need high-speed internet. While you likely don’t provide internet, you can have some good options for internet providers that will help them set up service. If your rental home or building is older, there might be thicker walls that make internet services more difficult. Be aware of your strengths and weaknesses when it comes to the internet and technology. |
| Creative design and structure
Remote working tenants will have specific ideas about how they want their living and working space to look. Perhaps they’d like to paint the walls a different color in their workspace. Maybe they’d like to move in with their pets. They might want a shorter or longer lease term, depending on their travel plans. Be open to their requirements. |
Remember that remote workers move to Roanoke for affordability, among other things. Make sure you’re renting your home at an amount that earns you money and keeps up with the market but also attracts good tenants who are seeking value.
Roanoke Property Management as Your Source of Information and Data
Working with a Roanoke property manager can ensure you’re up to date on all the latest real estate trends. Make sure you choose a management partner who is in-the-know.
Things rarely stay stagnant in our industry. Laws, best practices, rental values, home prices, and trends are all changing quickly in the real estate market and the rental market, and you don’t want to be blindsided.
Keep high expectations for your property manager. Of course, you want them to lease, manage, and maintain your home with expert efficiency. You should expect a bit more than that, however. You partner with a management company because you don’t have time to stay up to date on everything that could potentially impact your investment property.
Here’s how staying up-to-date on market trends will benefit property investors like you.
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Property Management Data Helps you Make Better Investment Decisions You need to understand market trends and data so you can make smarter decisions about your business. By staying informed, you can work with your management team to identify opportunities faster and with more clarity. You’ll also see potential threats and setbacks coming before they trap you into shock and inaction. When you have access to goods from your local property manager, you can make decisions based on the information that’s been gathered. It’s going to cut down on expensive mistakes and increase the profitability of your portfolio. |
Roanoke Property Managers Collect Information that Help You Earn More and Spend Less `Real estate investments often come down to what you’re earning and what you’re spending. Those are the basics. Missing out on more income because you didn’t raise the rent enough at renewal time is also bad for your cash flow and your return on investment (ROI). Staying ahead of market trends ensures that you’re charging what you should, making the updates that you need, and following all the rules, laws, and requirements. You need to know how inflation is impacting maintenance prices so you can adjust your budget. You need to balance what you’re spending with what you’re earning. Understanding the market and its shifts will help you earn more on your property and spend less on vacancy, turnover, and emergency repairs. |
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Insights and Analytics on the Market Keep You More Competitive Your property managers should be paying attention to your competition and making recommendations that help you stay one step ahead of them. When all the rental properties in your neighborhood suddenly have hard surface flooring and you’re sticking with the same old carpet, you’re at an extreme disadvantage. You’ll need to keep up with resident demands and priorities if you want to rent out a competitive property. You cannot charge higher rents and attract well-qualified residents if you’re not providing a property that they want to rent. |
Reducing Risk and Liability for a Pleasant and Profitable Rental Experience When your property manager helps you stay up-to-date on market trends, you can more easily reduce the risk associated with your investment property. You can identify potential problems and blind spots early on, and you can develop contingency plans. |
The Roanoke real estate market offers many opportunities for investors looking for stable and growing opportunities. Whether you want to buy your first property or diversify your existing portfolio, this is a fantastic place to do it.
We’d love to tell you more and ensure the most important market trends are on your radar.
Please contact us at Lawson Realty Group whether you’re a new investor or an experienced real estate owner. We manage properties in Southwest Virginia throughout the Roanoke Valley, including Salem, Cave Spring, Hollins, Vinton, Glenvar, and Southwest Roanoke County.
