Could Richmond Home Values Fall to Zero?

As someone who has sold REO property in the worst parts of Richmond and used police escorts to visit foreclosures with squatters, I can tell you the answers is absolutely yes.

Richmond is well-known as one of the most dangerous cities in the United States. Given that a high percentage of that crime happens in the 94801 zip code, those blocks make up one of the most violent stretches you’ll find outside of an official war zone.

Property values once boomed here as outside investors swarmed in. But in this pocket, values have fallen a whopping 90%. Last year, I sold a house for $28,000 that had previously sold for over $400,000. There are newer homes, built in 2005-2006 that once sold in for $500,000+ now selling for $40,000.

It’s no surprise that values are collapsing. The only possible buyers are investors – but how do you plan to actually collect the rent? (It’s not like you can just knock on the door and demand you money.)

Foreclosure Forecast

Given the hundreds of homes in this zip code that have already been foreclosed on in the last few years, I was surprised to hear that half of the homes are still somewhere in the foreclosure process.

Half – on top of the probably other half that have already gone through it. And, this time around, investors’ won’t be as quick to buy up the “deals”.

Homes in 94801 are generally old and with a lot of deferred maintenance. The neighborhood is violent and drug-ridden. The police don’t patrol there much anymore and are slow to respond. If you are an investor, buyer, or agent looking at great “deals” in the Iron Triangle or anywhere in 94801, program the Richmond Police Department’s number into your phone and have it on speed dial.

(510) 233-1214

Richmond Home Prices

The first wave of foreclosures knocked values down 80-90%. I would expect the coming second wave to drive many of the prices to zero (or even below). It’s happened in Detroit, Cleveland, and other rust-belt cities. There is no fundamental economic reason why it won’t happen here.

For many reasons, be very careful about investing in Richmond’s 94801.