Covington and the rest of the Alleghany Highlands have a housing shortage and a large supply of empty homes at the same time. Alleghany County has roughly 11,000 housing units, and about 2,000 of them sit vacant, according to County Administrator Ken McFadyen in an opinion piece for Cardinal News in October 2025. The region's biggest employer told a 2025 housing study that it loses some salaried recruits after they tour the homes on the market.
Both things are true because the shortage is about quality and age, not about how many houses exist. Once you see that, the low prices make sense. They also tell you what a buyer, a relocating professional or an investor is really paying for here.
The Shortage Is Measured in Bathrooms
McFadyen put it plainly. A lot of the Highlands' housing "is dated and mismatched with today's demand," and his example was a three-bedroom house with one bathroom, from an era when one bath was normal, in a market where families now want two.
The region's housing study shows the same thing in its numbers. The Alleghany Highlands Comprehensive Housing Analysis, prepared by S. Patz & Associates and dated June 2025, took a snapshot of every active listing across the Highlands in May 2025.
| When the home was built | Listings, May 2025 |
|---|---|
| Before 1900 | 3 |
| 1900 to 1929 | 9 |
| All years before 1970 | 27 of 38 |
| 2000 to 2009 | 4 |
| Past 15 years | 0 |
Use those counts as a baseline, not as today's inventory. What they describe is a long-standing pattern, and that part has not changed. The study found new home construction "virtually nonexistent over the past two decades," with no active subdivisions, so the for-sale market depended entirely on resales of older homes.
Most of those listings were priced between $100,000 and $250,000, and the study noted that many needed updates or repairs, which can put off buyers looking for something move-in ready. That is where the paradox comes from. Plenty of houses exist. What the market lacks is houses that someone with a good salary and other options will choose to buy.
Who Walks Away After the Tour
The demand side is steady. Smurfit Westrock describes its Covington paper mill as a 900-employee operation and, in May 2026, reported investing in a drive-system upgrade on a paper machine. The company's 2025 round of capacity cuts closed mills in Minnesota and Texas, not Covington. The housing study counted 902 employees at the mill and described employment as stable, with hiring mostly replacing retirements and voluntary departures.
So the jobs are steady. The study found that at least 30 percent of the mill's workforce commutes from outside the Highlands. The company told the study's authors that some recruits for salaried positions turn down offers after touring local housing, because what they see doesn't match what they could afford on that pay. The company offers housing assistance packages to some salaried hires, and many retired employees move to the Roanoke area, pointing to the shortage of high-quality homes.
Older homeowners face the same problem from the other direction. McFadyen wrote that seniors make up more than 30 percent of the population and over half of homeowners, and that those who want to downsize can't find single-level or low-maintenance homes locally. The study reported that some of them look in Botetourt or Roanoke County instead. When a downsizer leaves the region, their house still comes on the market, but no newer house in the Highlands has been absorbed.
Why Nobody Builds the House Everyone Wants
Builders have stayed away from the two-bath, single-level homes these buyers want for a reason McFadyen gave in one clause. In this rural market, "achievable rents and sale prices trail construction costs."
This is the core of the whole market. A new house has to sell for at least what it cost to build. When nearby sales sit well below that figure, private building doesn't add up, so it doesn't happen, and the old housing stock stays the only choice. That keeps prices low, and low prices keep new building unprofitable. The vacant homes are part of the same cycle. A house that needs more work than its finished value can pay for tends to stay empty.
Rentals show what happens when someone does build. River Retreat Apartments at 94 YMCA Way in Covington, developed by R. Fralin & Associates, has 96 units, and the housing study found them almost fully occupied, mostly by local residents. McFadyen wrote that it filled quickly at a price many people associate with cities. People in the Highlands will pay for a newer place to live. What has been missing is any way to make building one pay for itself.
What the Pipeline Actually Adds
The local answer is to use buildings the public already owns, so a project doesn't carry the full cost of buying land and building from scratch. McFadyen described former schools and an armory as good candidates for reuse with historic and low-income tax credits, and said public assets "can bridge feasibility gaps." These are the named projects with public action on record in 2025 and 2026:
- Jefferson School, Clifton Forge. The town received a $1 million award from the Virginia Workforce Housing Investment Program to turn the historic school into up to 28 workforce housing units, the Virginian Review reported in December 2025. Virginia Housing's award announcement lists the town as a recipient. On June 2, 2026, Alleghany County supervisors approved waiving up to $4,700 in building-permit fees and up to $5,600 in transfer-station fees for the renovation.
- Former Rivermont School, Covington. A City of Covington public hearing notice for June 9, 2026 describes plans for 1011 N. Rockbridge Avenue that include 17 units inside the old school and 32 newly built units on the playground area, 49 in total, on about 3.757 acres. The hearing itself was about consolidating the lots, so treat the units as proposed.
- Other candidate sites. McFadyen named parcels near the YMCA, the First Dominion property and Innovation Park as possible future housing locations.
Look at what these projects produce. Most of the defined units are apartments, which serve renters and workers. The regional goal does include up to 120 for-sale homes, such as townhomes, patio homes and modest single-family houses, as part of 200-plus new units within five years. That is a goal, not a set of approved projects. For someone shopping for a house in Covington, the realistic near-term choice is still an older resale.
Reading a Market With Two Sales in a Month
Expect the numbers to be thin. Virginia REALTORS data updated in September 2026 shows 2 home sales in Covington city in August 2026, at a median of $136,000. Alleghany County had 7 sales that month, at a median of $172,000. With two sales, the "median" is really just two houses. The study raised the same caution about these small markets, where monthly prices swing a lot. Activity has also cooled from its peak. Closings across the Highlands fell from 344 in 2022 to 195 in 2023, then edged up to 225 in 2024.
This changes how you should price a home here. A county median tells you very little about one particular house. What matters is its condition. Two homes with the same square footage on the same street can be far apart in value if one still has its original single bath and the other has been updated. Comparable sales need to match on condition and layout, not just location, and in a month with only a few closings, finding good matches can mean looking back further or across town lines.
For a relocating buyer, the low price tag mostly measures the work a house needs. A home that looks cheap compared with Roanoke or Botetourt may need updates before it suits the buyer's routines, and that cost belongs in the comparison from the start.
For an investor, the same gap is the opportunity. The local employer is stable, and a group of salaried workers is commuting in or turning down offers because they can't find updated homes. A well-renovated resale has almost no new construction to compete with, because the study found new residential construction virtually nonexistent for two decades. The constraint is the same one that stops builders. A renovation budget only works if the finished house can sell for more than the purchase price plus the work, in a market where recent sales set a low ceiling.
Quick Answers
Is the Covington paper mill closing?
No. Smurfit Westrock's May 2026 profile of the Covington mill reports about 900 employees, an equipment upgrade, and an apprenticeship program relaunched with Mountain Gateway Community College.
Are there new homes for sale in Covington?
The 2025 housing study found no active subdivisions and no listings built in the previous 15 years. The new projects named so far, at Jefferson School and Rivermont School, are housing units in reused school buildings and on a former playground, not a for-sale subdivision.
Does the vacancy figure apply to Covington city?
The 2,000-vacant-unit estimate refers to Alleghany County, which is counted separately from the independent city of Covington. The pattern behind it, older homes that don't match what buyers want, shows up across the Highlands in the study.
If you're weighing an older home in Covington or Alleghany County, whether to live in or to renovate, the deciding numbers are the cost of the work and how much that work adds to the home's value. With Alexandra Taylor, we'll go through the condition-matched comps and repair estimates together, so you know what the house is worth before and after the work. Schedule a free consultation, or start with an instant home valuation if you already own in the Highlands.
