As Richmond, Virginia, gears up for significant economic growth, especially following Eli Lilly’s recent $5 billion investment in Goochland County, a vital concern looms: the region’s housing supply crisis. The influx of new jobs, projected at around 650 from the Eli Lilly facility alone, highlights the pressing need to align housing development with job creation. This is not merely about economic expansion; it’s about ensuring that the new workforce can find suitable and affordable homes.
The Current Landscape
Despite the excitement surrounding job growth, the region faces a stark reality. This year, only 837 residential lots have been rezoned across Richmond and its surrounding areas, a number alarmingly low considering the need. Meanwhile, about 2,500 new homes have sold, underscoring a significant disparity between supply and demand. The construction of new homes is lagging behind job creation, threatening long-term economic stability.
In contrast, regions like North Carolina enjoy a more balanced relationship between job growth and housing availability. In fact, 11 out of 12 regions in the Carolinas have managed a healthy alignment, often achieving a ratio of one building permit for each new job created. Such planning is crucial in fostering a supportive environment for both workers and businesses. CNBC’s recent ranking of North Carolina as the state with the best business climate underscores the positive impact of this synergy.
Virginia, however, finds itself in a different position. The capital region typically issues between 4,000 to 5,000 building permits for new homes annually, but current figures suggest a troubling one permit for every three jobs—far from the ideal ratio of 1:1.5 or even 1:1 that would support sustainable growth.
Impact of the Housing Shortage
The repercussions of this unbalanced housing market extend beyond mere inconvenience; they threaten the vitality of Richmond’s economy. As companies like Eli Lilly seek to establish themselves in the area, they create jobs that need to be filled by qualified employees. However, with insufficient housing, the region may struggle to attract and retain the necessary talent.
Zillow data indicates an alarming trend where millennials, the largest demographic cohort, increasingly share homes with non-relatives, highlighting the pressing issues of housing affordability and availability. In the second quarter of 2025, 468 condos and townhomes were sold in Richmond, comprising 43% of all new homes. The average selling price for these attached products was $427,071, compared to $618,310 for single-family homes. This price gap emphasizes the need for more affordable housing options, enhancing the region’s appeal to prospective residents.
Additionally, the current pace of homebuilding is not keeping up with market demand. Builders are revising their strategies in response to this slowdown, realizing that fewer homes are being constructed and that the demand remains stagnant. It’s clear that without policy adjustments to facilitate quicker rezonings, the situation could worsen, underscoring the urgent need for a proactive approach to housing development.
Strategic Recommendations
To chart a course toward resolution, Richmond must develop a cohesive strategy that intertwines housing policy with economic development initiatives. Local governments should prioritize measurable housing-to-jobs targets to ensure that housing developments keep pace with job growth. A collaborative approach, pairing major employer announcements with housing approvals, can demonstrate a commitment to supporting workforce needs.
Moreover, expediting the review and approval processes for rezonings, particularly those related to new job opportunities, can send a strong message about the region’s commitment to economic growth. By implementing fast-track processes, localities can offer clarity and predictability, ultimately fostering a robust housing market.
Incentive structures could also play a crucial role in addressing the affordability gap. Policies aimed at enhancing access to attainable housing—such as density bonuses and shared infrastructure costs—can create opportunities for developing affordable options like condos and townhomes. These developments are essential to accommodating the growing workforce.
Additionally, establishing a regional housing scorecard that tracks rezonings and permits against job creation would promote transparency and emphasize the need for synchronized growth. By treating housing supply as an integral component of economic competitiveness, Richmond can create a more attractive environment for both businesses and residents alike.
Conclusion
Richmond has the potential to thrive economically, but its success hinges on acknowledging and addressing the housing supply crisis. By prioritizing housing as a central pillar of economic development rather than an afterthought, the region can ensure that its workforce is equipped with the availability and affordability needed to live where they work.
The task may seem daunting, but with the right strategy and a commitment to collaboration among stakeholders, Richmond can overcome its housing challenges and remain competitive in the ever-evolving economic landscape. Every zoning decision made shapes the future of this vibrant community, signaling whether it’s truly prepared to house the workforce driving its economy forward. It is time for the Richmond region to take decisive, informed action to secure its future as a thriving economic hub.
