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How Is The Durham Housing Market For Real Estate Investment?

Durham Real Estate Market Outlook

The North Carolina real estate market is a great choice for real estate investors. Durham, NC is home to roughly a quarter million people. However, Durham is the heart of the Durham-Chapel Hill area, home to about half a million. It is also square in the middle of the Raleigh-Durham-Chapel Hill metro area; that’s home to just over two million people and includes the state capitol. It also presents an excellent opportunity for real estate investors. Job opportunities and moderate house pricing have contributed to the excellent growth of the Durham real estate market.

The Durham housing market has made considerable improvements since the housing bubble burst. Only two years after the market crash in 2008, Durham was considered as one of the few favorable locations to invest in the real estate. With a strong population growth and a solid economy, the rental demand in Durham, North Carolina is continuously increasing. Durham real estate typically performed stronger than the U.S. average due to the popularity of the Triangle area among new and out-of-state residents, as well as investors. Real estate investors have a particular interest in the Durham and Raleigh areas which both have an increasingly educated and growing population, as well as a diverse economy employing its base.

Durham Real Estate Market

Original Photo via Pixabay

Durham Real Estate Market Forecast 2019

The forecast for Durham real estate market remains favorable and is slated for a conservative growth trajectory. The median home value in Durham is $225,600. Durham home values have gone up 10.9% over the past year and Durham real estate market prediction is that they will rise 5.7% in 2019. The median list price per square foot in Durham is $151, which is lower than the Durham-Chapel Hill Metro average of $160. The median price of homes currently listed in Durham is $299,900 while the median price of homes that sold is $218,900. The median rent price in Durham is $1,450, which is lower than the Durham-Chapel Hill Metro median of $1,495.

Durham Real Estate Market Forecast 2019

Graph Credits: Zillow.com

Durham Real Estate Market Trends

Durham real estate market trends indicate a decrease of $18,000 (-8%) in median home sales and a 0% rise in median rent per month over the past year. The average price per square foot for this same period rose to $137, up from $132. Trulia has 815 resale and new homes in Durham, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.

The median sales price for homes in Durham for Nov 7 to Feb 6 was $220,000 based on 695 home sales. Average price per square foot for Durham was $137, an increase of 4% compared to the same period last year. The median rent per month for apartments in Durham for Jan 12 to Feb 12 was $1,400.

durham real estate market trends

Graph Credits: Trulia.com

As per the real estate company named Redfin, the Durham housing market is very competitive. Homes in Durham, NC receive 2 offers on average and sell in around 49 days. The average sale price of a home in Durham was $205K last month, down 10.9% since last year. The average sale price per square foot in Durham is $119, down 4.8% since last year. Homes for sale in Durham typically receive 2 offers. Homes sell for about 1% below list price and go pending in around 49 days. Hot Homes in Durham, NC can sell for about 1% above list price and go pending in around 29 days.

Durham Housing Market Summary

  • Median Sales Price: $220,000 (On Trulia)
  • Price Per Sqft: $137
  • Median Rent Per Month: $1,400
  • Median Household Income: $47.337
  • Home Owners: 58%
  • Single Residents: 38%
  • Median Age: 34
  • College Educated: 47%
  • Transportation: Car dependent

There are 1,076 homes for sale, ranging from $11K to $4.9M on Realtor.com. 126 of which were newly listed within the last week. Additionally, there are 304 rentals, with a range of $595 to $2.9K per month. Durham has affordable 1 bedroom listings. In December 2018 the housing market in Durham, NC was a buyer’s market, which means there were roughly more active homes for sale than there are buyers. Buyer’s markets are generally more advantageous for buyers rather than sellers.

Durham housing market trends

Graph Credits: Realtor.com®

In December 2018, the median list price of homes in Durham, NC was $245K, trending up 7% year-over-year. The median listing price per square foot was $138. The median sale price was $246K. Homes in Durham, NC sold for 1.01% below asking price on average in December 2018. On average, homes in Durham, NC sell after 50 days on the market. The trend for median days on market in Durham, NC is flat since last month, and flat since last year.

Durham NC housing market trends

Graph Credits: Realtor.com®

There are 70 neighborhoods in Durham. Duke Forest has a median listing price of $615K, making it the most expensive neighborhood. Omah Street is the most affordable neighborhood in Durham, with a median listing price of $175K. There are 122 schools in Durham, NC. There are 46 elementary schools, 25 middle schools, 21 high schools and 30 private & charter schools.

The median list price in Durham is $332,000 on Movoto. The median list price in Durham was less than 1% change from January to February. Durham’s home resale inventories is 513, which decreased 6 percent since January 2019. The median list price per square foot in Durham is $157. January 2019 was $158. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in February.

Durham real estate market trend

Graph Courtesy: Movoto.com

Durham, NC Single Family Homes

As per the data from the real estate company called Neigborhoodscout.com, single-family detached homes are the single most common housing type in Durham, accounting for 53.41% of the city’s housing units. Other types of housing that are prevalent in Durham include large apartment complexes or high rise apartments ( 29.92%), row houses and other attached homes ( 8.42%), and a few duplexes, homes converted to apartments or other small apartment buildings ( 7.46%).

Durham remains a favorite relocation spot for families and retirees, and the Triangle cities (Raleigh, Durham, Chapel Hill and their suburbs) continue to see new residents flocking in from the North and the West. Just like Durham, the Raleigh NC real estate market is landlord friendly, contains several large populations of renters, and an economic future that ensures long-term growth in housing demand and rents.

The most prevalent building size and type in Durham are three and four bedroom dwellings, chiefly found in single-family detached homes. The city has a mixture of owners and renters, with 46.75% owning and 53.25% renting. Currently, Zillow has 623 single family homes for sale in Durham NC. Additionally, there are 195 single family homes for rent in Durham.

Durham NC Foreclosures And Bank Owned Homes

Foreclosures will be a factor impacting home values in the next several years. The percent of delinquent mortgages in Durham is 1.0%, which is lower than the national value of 1.1%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Durham homeowners underwater on their mortgage is 5.2%, which is lower than Durham-Chapel Hill Metro at 5.4%.

On RealtyTrac, there are currently 170 properties in Durham, NC that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 485. In January, the number of properties that received a foreclosure filing in Durham, NC was 7% lower than the previous month and 52% lower than the same time last year. Home sales for December 2018 were up 0% compared with the previous month, and down 100% compared with a year ago. The median sales price of a non-distressed home was $0. The median sales price of a foreclosure home was $0, or 0% higher than non-distressed home sales.

  • Foreclosures in Durham = 170 (RealtyTrac)
  • Homes for Sale = 485
  • Recently Sold = 1,140
  • Median List Price = $231,000 (3% drop vs Dec 2017)

Durham Home Prices And Appreciation Rates

Durham real estate appreciated 36.39% over the last ten years, which is an average annual home appreciation rate of 3.15%, putting Durham in the top 20% nationally for real estate appreciation. Relative to North Carolina, Neighborhoodscout’s data shows that Durham’s latest annual appreciation rate is higher than 90% of the other cities and towns in North Carolina.

If you are a home buyer or real estate investor, Durham definitely has a track record of being one of the best long term real estate investments in America through the last ten years. Most estimates anticipate that Durham prices will increase two and a half to three percent each year. This is important for two reasons. First, it allows your initial investment to appreciate. Second, it allows rental rates to increase.

Appreciation rates are so strong in Durham that despite a nationwide downturn in the housing market, Durham real estate has continued to appreciate in value faster than most communities. Looking at just the latest twelve months, Durham appreciation rates continue to be some of the highest in America, at 9.58%, which is higher than appreciation rates in 91.36% of the cities and towns in the nation. Based on the last twelve months, short-term real estate investors have found good fortune in Durham. Durham appreciation rates in the latest quarter were at 4.77%, which equates to an annual appreciation rate of 20.50%.

10 Highest Appreciating Durham Neighborhoods Since 2000: By Neigborhoodscout.com

best neighborhoods in Durham NC

Courtesy: Neighborhoodscout.com

Should You Buy Durham Rental Properties For Sale?

With wonderful cities like Charlotte, Durham, and Raleigh, North Carolina is attracting thousands of renters and home buyers every year. Durham historically has a balanced real estate market which has provided safety and stability for investors.  Since Durham and the surrounding areas are host cities to many fine universities, it creates a great pool of tenants to choose from. Therefore, buying Durham Rental Properties for a long term investment is quite safe and lucrative. Airbnb occupancy rate in Durham is  54.74% and a rental income from an Airbnb home can fetch you around $2,036 per month.

Durham area also attracts retirees who also contribute to rental demand. Rents in Durham typically go up two to three percent every year. Today we’re going over the top 10 reasons to invest in the Durham real estate market. These things make Durham stand out when it comes to choosing a place to invest in 2019 and beyond.

1. Jobs, Jobs, and Yet More Jobs

You’ve probably heard the maxim that the three most important things in real estate are all “location”. In reality, the most important factor in determining the attractiveness of a real estate market is jobs, jobs, jobs. Durham sits in the middle of Research Triangle, a constant wellspring of high paying high tech and research jobs. The area contains a high number of healthcare and IT jobs, many of which originated in the famous Research Triangle Park.

That center of innovation is credited with starting nearly two thousand startups, and that is aside from the number started by students on their own. All of this contributes to the unemployment rate half a point below the national average and average income several thousand higher than the U.S. average.

2. The Strong College Market

One of the main drivers of the Durham real estate market is North Carolina State University. The others are Duke University and the University of North Carolina at Chapel Hill. These three universities create massive demand for Durham rental properties. However, other schools like William Peace University, St. Augustine’s College and Southeastern Baptist Theological Seminary and Louisburg College.

This makes the Durham housing market a good, diversified market for those who want to invest in real estate catering to students.

3. The Generally Broad Rental Market

We’ve addressed the large student market, but that is only one factor contributing to the high demand for Durham rental properties. Many people move here for work, both from across the state and the country. They may take their time finding a home, since the Durham real estate market is markedly more expensive than the North Carolina average. For example, the median home price was $170,000 in 2013 and hit $260,000 in 2018.

Despite the sharp increase in home values, the number of homes on the market is nearly half the number it was in 2013, too. People who relocate simply need to rent until they can find a home, if they want to live in one. This contributes to higher rents than are seen across the area. It also explains why homes may only sit on the market for a month, while desirable properties are bid up.

4. The Strong Profit Margin for Rentals

Rents in downtown Durham grew by 10% or more in 2016 and 2017, though an influx of new apartments in the area helped it cool down to the single digits. Rent for the average one bedroom apartment in Durham hit $1100 a month in January, 2019. This is a 7% increase over 2018 figures. Two bedroom apartments increased about 6% to $1350 a month. Single family homes, of course, rent for much more.

5. The Balanced Supply and Demand for Real Estate

A SmartAsset study had ranked the Durham housing market one of the healthiest in the state. In 2018, Durham came in 9th in the state a study that factored in the value of homes, how easy it is to sell properties, total ownership costs and how long people stay in their homes. Several cities in the Triangle area made the list. The limited inventory and strong demand led to slow increases prices for homes in the Durham real estate market.

Demand isn’t so high that the market is overheated, but the hot job market will keep demand and property prices going up. This explains why the same study said the Durham real estate market was the only one in the state among the top ten healthiest real estate markets in the country. On the national list, it came in sixth.

6. Downtown Revitalization

Durham is redeveloping its downtown. They’ve built a new athletic part and performing arts center. This is in addition to the existing museums and active music scene. The historic district has attracted businesses like Red Hat. Many tobacco industry buildings are being converted to lofts, entertainment venues and businesses. Vacancy rates were around 10% in 2018 but expected to fall due to the influx of young people and empty nesters moving into downtown.

7. All the Reasons People Choose to Stay Here

Durham, North Carolina is going to see heavy population growth over the next decade. Another seventy thousand people are expected to contribute to demand for properties in the Durham real estate market overall. Some of these are people relocated for work. And many are the students who attend local colleges, stay for jobs, and then choose to start their growing families here.

That relatively young population helps explain the roughly half of residents who rent and their smaller than average household size. As they grow out of studio apartments and into single family homes, they drive demand for rented houses and property purchases. But the availability of jobs means many growing up here will stay here for school and work themselves, contributing to the sustainable long-term growth of the Durham housing market.

8. Landlord Friendliness

For those interested in Durham rental properties, the fact that North Carolina is landlord friendly is a major selling point. There are reasonable limits on late fees on rent (15% of weekly rent, 5% of monthly rent). The grace period on late rent is a reasonable five days. A recent change in favor of landlords was a bill that went into effect in 2018 that allows landlords to recover court costs and attorney’s fees when taking evictions to court. This protects the cash flow for those who own Durham rental properties.

9. Low Taxes that Are Falling Further

One factor attracting new business to North Carolina is the state’s declining tax rate. Before their 2013 tax reforms, the state of North Carolina had the highest income taxes in the region. It now has the lowest income tax rate in the Southeast, excepting states like Florida that don’t have an income tax. Its effective property tax rate of 0.86% is lower than the national average.

A $164,000 house in the Durham real estate market will come with a property tax bill of roughly $1400 a year. We can’t say the Durham housing market is affordable by national standards, since housing here is on par with the national average and more expensive than the rest of the state.

10. Rules Limiting Future Supply

While redevelopment downtown is converting industrial real estate into rental units to meet demand in the Durham real estate market, it isn’t enough. This helps explain why rents are increasing faster than the rate of inflation. However, you’re not going to see a ton of new apartments and condos because the city’s zoning laws continue to favor single family, detached houses.

Since the city is running out of large vacant areas near utilities to build new tracts of single family homes on, building out is not going to help the area meet demand for new housing. NIMBY movements can fight the rezoning of property to be able to build multi-family housing. All of this guarantees strong future growth of rental rates for anyone holding Durham rental properties.

Durham Real Estate Investment Properties

Maybe you have done a bit of real estate investing in Durham, North Carolina but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. If you invest wisely, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate.

Most investors naturally gravitate to residential property investment. When looking for the best real estate investments, you should focus on markets with relatively high population and employment growth. Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.

You must also learn from savvy real estate investors who have retired early on in their lives by investing in some of the best real estate markets like Durham, NCThere are many reasons to buy investment properties in the Durham real estate market. An unusual combination of features makes Durham attractive to real estate investors, since it creates a large population of renters willing and able to pay more per month to live here because they cannot necessarily find their dream home.

Buying investment property is different than buying an owner-occupied home. The investment properties are designed to make money as rentals, which means you must look at it solely as an income producing entity just like any other business. 

Whether you are a beginner or a seasoned pro you probably realize the most important factor that will determine your success as a Real Estate Investor is your ability to find great real estate investments.

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Apart from the Durham real estate market, you can also invest in Louisville, KY. The Louisville real estate market provides a steady rental market made up of several, independent populations. It combines slow population growth with healthy market turnover to yield a number of opportunities for redevelopment or rent. The Louisville rental market is stellar one.

Louisville has a nearly one billion dollar, twenty year plan to redevelop west Louisville. About a third of that money will be spent in the Russell neighborhood. This means that investors in the Louisville real estate market know where new infrastructure, amenities and housing will be built. They can buy up properties now to renovate and flip later or rent out at a premium.

The Louisville real estate market isn’t as open to short term rentals as some places, but Louisville is making concessions to tolerate AirBnB and other short-term rentals where it can help both local property owners and area tourism. For example, their plan is to allow short-term rentals in industrial and commercial neighborhoods like Butchertown.

Another market that we suggest for savvy investors is the housing market in Boston, MA. Boston is the top market where real estate investments are safe and have high rates of return. Airbnb rentals are the best option for real estate investing in Boston. The Boston housing market sees steady population growth, faces limited supply, and can’t really go vertical. This means that those who invest in the Boston real estate market will see decent cash flow from nearly any property and guaranteed appreciation.

The Boston real estate market and its environs include a whopping hundred universities, colleges and trade schools. There are more than 150,000 college students in Boston and Cambridge alone. You could buy properties across the Boston real estate market and cater to students, and your market is so diverse that you’ll always see demand.

Let us know which real estate markets you consider best for real estate investing! If you need an expert investment advise, you may fill up the form given here. 

One of our investment specialists will get in touch with you to discuss all facets of searching for, buying, and owning a turnkey investment property.


*Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.

References:

Research Triangle / Universities
https://en.wikipedia.org/wiki/Research_Triangle

Introduction/population statistics
https://en.wikipedia.org/wiki/Durham,_North_Carolina

Downtown revitalization
https://en.wikipedia.org/wiki/Durham,_North_Carolina#Downtown_revitalization

Jobs
https://realestate.usnews.com/places/north-carolina/raleigh-durham/jobs

SmartAsset study
https://www.newsobserver.com/news/business/article205350029.html
https://www.bizjournals.com/charlotte/news/2018/07/18/where-charlotte-lands-in-study-of-healthiest.html

Landlord friendly                                                                                            https://www.avail.co/education/laws/north-carolina-landlord-tenant-law

Alternate eviction fee law reference
https://www.newsobserver.com/latest-news/article213096479.html

Low taxes
https://www.forbes.com/sites/patrickgleason/2018/12/30/nye-tax-changes/#4b7ed9741ecd
https://wallethub.com/edu/states-with-the-highest-and-lowest-property-taxes/11585

Rental rates
https://www.rentjungle.com/average-rent-in-durham-rent-trends

Limited future supply
https://www.heraldsun.com/news/local/counties/durham-county/article213386894.html

Broad rental market
https://www.heraldsun.com/news/local/counties/durham-county/article213386894.html

Profit margin on rentals
https://www.heraldsun.com/news/business/article162739458.html

Market Data, Trends and Forecast                                                                                  https://www.zillow.com/durham-nc/home-values https://www.realtytrac.com/statsandtrends/foreclosuretrends/nc/durham-county/durham https://www.neighborhoodscout.com/nc/durham/real-estate                                    https://www.movoto.com/durham-nc/market-trends              https://www.redfin.com/city/4909/NC/Durham/housing-market                https://www.trulia.com/real_estate/Durham-North_Carolina/market-trends https://www.realtor.com/realestateandhomes-search/Durham_NC/overview


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