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Guide to Investing in Fredericksburg, VA

Guide to Investing in Fredericksburg, VA

Investors diversifying their income with real estate don’t only have to target large urban areas. Smaller suburban cities like Fredericksburg, VA offer excellent opportunities as well. So, is investing in Fredericksburg right for you?

Located an hour south of Washington, DC, this small city is rich in US history. It’s grown immensely in the past decade. However, it still offers a less urban feel and lower cost of living than the DC area.

If you’re evaluating the Fredericksburg market to start or grow your real estate portfolio, here are some things to consider:

Population

Fredericksburg proper is a small city with just 29,059 residents. However, it’s grown rapidly in the past decade. It had 24,400 residents in 2010, meaning it has grown 20% in just 10 years. That rate has slowed slightly in the past two years.

Fredericksburg residents lean young. The median resident age is 30.7 years old, much lower than Virginia’s median of 38.4.

The Greater Fredericksburg area has around 338,000 people spanning four counties:

  • Caroline
  • King George
  • Spotsylvania
  • Stafford

Job Market

Fredericksburg may be small but has a solid job market and economy. According to the St. Louis Federal Reserve, the city had a 3% unemployment rate, not seasonally adjusted.

Government is a popular sector in Fredericksburg since it’s close to Washington, DC and Richmond, VA. However, many workers also work in professional services, trade, and healthcare.

Major employers in Fredericksburg and the surrounding Northern Virginia area include:

  • Aspetto
  • Capital One
  • City of Fredericksburg & Public School System
  • Freddie Mac
  • Mary Washington Hospital, Healthcare & Affiliates
  • Navy Federal Credit Union
  • Transmitter Location Systems
  • University of Mary Washington & Foundation

Fredericksburg’s median per capita and household incomes are lower than the Washington-Arlington-Alexandria metro area. However, its cost of living is lower as well. Some residents commute to higher-paying jobs in DC. That means higher incomes in a cheaper area.

Neighborhoods

Different neighborhoods offer different tenant experiences. You should evaluate neighborhoods closely to pick the best for your goals.

Consider the following neighborhoods when planning your Fredericksburg real estate investments:

  • Falmouth: Just across the Rappahannock River from downtown Fredericksburg sits Falmouth. It offers plenty of trees and a more private and spacious feel without being far from the amenities of the city. Falmouth has Belmont, the home of artist Gari Melcher, preserved as a museum. Falmouth is home to numerous other historic locations, and Chatham Manor is just outside the neighborhood.
  • Leeland: Just northwest of Falmouth is Leeland, which has more new construction and mostly consists of single-family homes. It’s known for its amenities like playgrounds, nature parks, and a basketball court. Leeland’s a bit further from the city, but only by a few minutes.
  • Idlewild: Idlewild is another newer construction neighborhood. Just four miles southwest of the city, Idlewild has some relatively large properties and well-maintained landscapes. The city is not too far, but even that isn’t an issue. Idlewild has several amenities next to the neighborhood and just across I-95.
  • Downtown: Downtown Fredericksburg offers a mix of history and modern amenities. Many of the buildings and sidewalks are made of brick and there are some homes that have stood for decades. Fredericksburg is a college town (University of Mary Washington) and has several modern apartments. Plenty of bars, restaurants, and other businesses are closer to the Rappahannock River.

Home Values

An uptrend in home values — especially alongside a growing population — is a great sign for any market. Steady property appreciation allows investors to earn more rental income and, potentially, earn a larger profit if they sell.

Zillow data shows that Fredericksburg area home prices have increased slowly but steadily since 2013, accelerating in 2021. Home values grew 10.8% from May 2021 to June 2022. They now stand at a median of at least $416,000. Some sources report higher median home values and sale prices. That said, the number of home sales in June 2022 is down from June 2021. The median number of days on the market has increased as well.

Still, the market’s hot enough to score 78/100 on RedFin’s Compete Score. That places it in the Very Competitive Category.

Census Reporter reports that 60% of residents are renters, and 55% of properties are single-unit so, if you’re considering investing in Fredericksburg, you’ll have plenty of tenants to choose from. It appears that this market could strongly favor rental real estate investors.

Quality of Life

Investing in Fredericksburg

An area with plenty to do and a solid quality of life draws residents and visitors. Fredericksburg has that in spades, making it a highly attractive market.

Like many Virginia cities, Fredericksburg has a wealth of US history. George Washington lived here in his childhood, and several museums have displays tied to the nation’s first president. The James Monroe Museum offers more early American history as well.

Fredericksburg also had a prominent role in the American Civil War. Sites like the Chatham Manor and the Fredericksburg Battlefield offer a glimpse at Civil War battles. People can also visit the Fredericksburg National Cemetery.

Beyond history, Fredericksburg has many breweries, wineries, and distilleries for residents to enjoy. Outdoor lovers will appreciate areas like Alum Spring Park, the Virginia Outdoor Center, and Crow’s Nest Nature Preserve.

Of course, residents can always drive an hour north to visit the nation’s capital and all its attractions.

Fredericksburg also gets all four seasons. Summers are muggy, and winters are cold. However, residents won’t experience as extreme of temperature as some places further north or south.

Crime and Safety

Investing in Fredericksburg may also be a safe bet – literally. Fredericksburg has seen a gradual downtrend in violent crime over the past decade. Property crime rates have fallen a bit faster, so Fredericksburg is becoming safer overall. If trends continue, early investors may see great returns since the city will become more attractive to tenants.

However, crime and safety can vary by neighborhood. Safer neighborhoods may have more affluent tenants, meaning higher rental incomes, but properties may be more expensive. Neighborhoods with higher crime rates may be less desirable for tenants, but properties are often less expensive.

Neighborhoods closer to and within the city proper tend to see higher crime rates, according to Neighborhood Scout. These include communities like:

  • Braehead Woods
  • College Terrace/Downtown
  • Mayfield
  • Normandy Village

Crime rates drop further away from the city itself. Some of the lowest-crime neighborhoods around Fredericksburg include:

  • Bel Plains Estates
  • Highland Homes
  • Regency at Chancellorsville
  • Stafford Lakes Village

Top Schools

Strong public schools can benefit a real estate investor’s returns. Investing in Fredericksburg may be a prudent choice in this regard, as quality schools draw in families who want their children to get a great education.

Fredericksburg City Public Schools has five schools — one preschool, two elementary schools, one middle school, and one high school. According to US News, the student to teacher ratio is 15:1, just barely above Virginia’s 14:1. That’s on par with the US national average. These smaller class sizes mean each student can get more attention from their teachers.

Many Fredericksburg private schools are rated even higher than the public school system. These can draw wealthier families. Some of the best private schools include Fredericksburg Academy, St. Michael the Archangel High School, and Grace Preparatory School.

Fredericksburg is home to the University of Mary Washington. Several apartments dot the area surrounding the campus, too. Therefore, college students could be a good rental market for investors to consider.

Census Reporter states that 92.2% of residents are high school graduates or higher. That’s a slightly larger figure than Northern Virginia and the state.

Final Thoughts

Fredericksburg is a small but growing city offering proximity to DC with a lower cost of living. It draws families and professionals by combining a good local economy and modern amenities with the charm of a historic town.

As a result, investing in Fredericksburg could be a great move for many real estate investors. Whatever your real estate goals and experience, consider the city of Fredericksburg, VA.

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