County in category of wealthier New York City suburbs
Analyst: ‘Rappahannock County is experiencing market distortions’
Rappahannock County home values grew 561 percent above national values from 1980 to 2015, while the county’s average household income rose 72 percent above the nation’s rate.
The data, compiled from the U.S. Census Bureau and analyzed by New York-based vHomeInsurance, suggests the high real estate values correlate with the county’s changing demographics over the previous three-plus decades, where large tracts of land are being purchased by people who earn their livings elsewhere.
“The numbers for Rappahannock County are alarming when compared to most other counties across the nation,” reacts Kevin Pryor, a data analyst for vHome, a New York City-based company that evaluates housing prices and real estate trends for insurance purposes.
“Such data can imply that Rappahannock County is experiencing market distortions where houses that have recently been priced are at a much higher rate compared to the [average] incomes levels,” he explains. “This implies that the average person is spending more of their income on housing.”
The cost of living in Rappahannock is 143.8 percent, anywhere from 42 to 50 percent higher than a sampling of similar Virginia counties in size and population. Yet the average household income of Rappahannock is $59,753 — below the state median of $65,015.
Rappahannock also has one of the highest rates of income inequality in the United States — ranking 64th among 3,804 counties and county equivalents. Housing is listed as the biggest reason for the county’s high cost of living.
Pryor tells this newspaper that Rappahannock County’s “close location to the city” is likely a driving factor in the findings, with the relatively short drive to major metropolitan areas attracting wealthier, often part-time residents.
“Rappahannock County seems to be following trends across the U.S where home values are soaring in locations around large metropolitan areas,” the analyst says.
“Such a trend is driven by those with high annual incomes who are looking to purchase homes close to the city where they can enjoy the [country] lifestyle. As seen with the ‘Gold Coast’ in Connecticut — property close to New York City. And other properties across the country like Rappahannock County are reporting large increases in home value fueled by the few with high paying jobs from the city.”
Key findings of the analysis:
* Rappahannock’s household income grew 72.3 percent more and median house values increased 561 more than the national average from 1980 to 2015.
* Rappahannock’s house values grew 2.9 times the rate of median household income from 1980 to 2015 compared to 1.3 times for the nation.
* Rappahannock’s home values had a compounded annual growth rate (CAGR) of 6.6 percent (vs. 3.9 percent nationally) while household incomes had a CAGR of 4 percent (vs. 3.4 percent nationally).
Pryor says Rappahannock “may be an example where those with higher paying salaries from D.C. come in and can afford to buy land with 25-plus acres while locals do not have the same . . . job opportunities as compared to those earning high wages in D.C.”
The analyst also calls attention to Rappahannock County’s high poverty rate of 10 percent, the highest in Virginia’s northern Piedmont region, with an even higher poverty rate for children at 16 percent.
“Such a rate of low income earning in the county and a lack of high paying job opportunities has to compete with those who work and earn high wages in D.C.,” he says. “The few who purchase such expensive houses with a lot of acres compared to the large number of average citizens in Rapp county seem to be what has driven home values so high while income has not increased as much.”
vHome is a division of Gridlex, a technology-driven financial research and data firm. The company employs a cross functional team of software engineers, data scientists and analysts. For this nationwide study, one of the first of its kind, vHome analyzed housing prices and income in every county across the United States.