Richmond vs. Lexington: Which City Fits Your Budget?

By Bob Sophiea

Founder and CEO of New Home Collective, established the company in 2014 with a mission to revolutionize the real estate industry.

Are you better off saving money in Richmond, or does paying a little more to live in Lexington actually make more sense for your day-to-day life? It’s a question I hear constantly, and the honest answer comes down to real numbers: what you’d pay to buy, to rent, and to live in each city, plus how taxes shape your take-home pay. Let’s compare the two.

Start with the big picture, because it shapes everything else. Lexington is the larger of the two and the job hub for this part of Kentucky, with more employers, health care, offices, and infrastructure.

Richmond sits about 25 to 30 minutes south down I-75, a smaller city with a strong college-town feel thanks to Eastern Kentucky University. So the real choice is between a regional city and a smaller, more affordable town just down the road.

Housing prices are where the biggest difference shows up. In Lexington, recent home values have been sitting in the low-to-mid $300s, with some data pointing to a median sale price around $333,000 in 2025. In Richmond, you’re more often in the mid-to-high $200s, with many recent sales landing in the $285,000 to $295,000 range. Break it down further, and the gap gets concrete: one three-bedroom comparison showed about $310,000 in Lexington versus about $225,000 in Richmond. You can often buy a comparable three-bedroom in Richmond for tens of thousands less, and the same holds for the kind of move that changes your monthly math.

Rent follows the same pattern. A typical two-bedroom runs around $1,100 a month in Lexington and closer to $850 in Richmond. So whether you’re buying or renting, Richmond consistently comes in lower, and that’s the single biggest reason people start considering it.

Beyond housing, Richmond is still cheaper, just by a slimmer margin. One comparison puts it about 6% cheaper than Lexington across the board, covering groceries, utilities, and going out. Groceries run about 5% less, and utilities can average around $20 a month lower. None of that is dramatic line by line, but it adds up.

The simplest way to think about it: copy and paste your Lexington lifestyle down to Richmond, same groceries, same square footage, same habits, and you’d likely save a couple of hundred dollars a month without ever leaving the state.

Taxes surprise a lot of people, because they barely move the needle between the two. At the state level, there’s no difference at all: Kentucky’s flat income tax applies the same whether you live in Richmond or Lexington, and it was recently reduced to 3.5%. Sales tax is identical at 6% statewide. Local taxes get a little more specific. Lexington levies an occupational tax of about 2.25% on wages, and Richmond sits in a similar range, so your paycheck takes a comparable hit either way. Property taxes are close as well: Kentucky’s effective rate averages around 0.7%, and both cities land in that range.

The key difference is dollars, not rates, because homes cost less in Richmond, and the property tax bill is usually lower there. You’re not saving because of the rate; you’re saving because the house costs less.

So how do you decide? If your priority is a lower monthly cost, Richmond wins most of the time, with lower home prices, lower rent, and slightly lower daily expenses. If your priority is access to jobs, amenities, and a bigger-city environment, Lexington is still the center of everything. Most people choose lifestyle first, then check whether the numbers make sense.

And don’t underestimate that 25-to-30-minute drive: some are happy commuting from Richmond into Lexington, while others find it adds up fast. When you compare costs, factor in your time and daily routine too, because where you choose to plant yourself is as much about the day-to-day as the dollars.

If you’re weighing a move to Lexington or Richmond and trying to decide which makes more sense for you, I’d love to continue the conversation. Call or text me at 859-721-2200, email me at bob@nhcnow.com, or visit blog.nhcnow.com.

You can also join our Facebook group, Living in Lexington, Kentucky, to ask questions, share experiences, and get a feel for what it’s really like to live and work here.