Is Chapel Hill, North Carolina a good place to invest in real estate? Before we answer that question, let’s learn more about the Chapel Hill metro area. Chapel Hill is home to around sixty thousand people. The Chapel Hill real estate market is much larger than this. The Durham-Chapel Hill metro area is home to over half a million people. Chapel Hill is part of the Research Triangle area.
The “triangle” consists of three major research universities: UNC Chapel Hill, Duke University and North Carolina State University. The broader “Research Triangle” area is home to more than two million people, making it the second largest metro area in the region. The largest is the Charlotte metropolitan area, which is home to roughly two and a half million people .
Let’s look at a few reasons you may want to consider investing in the Chapel Hill real estate. In the latest quarter, real estate appreciation rate in Chapel Hill has been around 0.2%. If it remains steady, the annualized appreciation rate would be around 0.8%, which could trigger good amount of interest in the Chapel Hill real estate investment opportunities. In this article, we shall discuss some more important reasons why you may want to consider buying Chapel Hill investment properties in 2020. Please note that there are many variables that can potentially impact the value of a home in Chapel Hill (or any other market) and some of these variables are impossible to predict in advance.
Chapel Hill Real Estate Market Forecast 2020
What are the Chapel Hill real estate market predictions for 2020? Chapel Hill housing market 2020 is shaping up to continue the trend of the last few years as one of the hottest markets in North Carolina. The latest real estate data from Zillow shows that the current median home value in Chapel Hill is $397,552. Chapel Hill is currently a seller’s market – which means there are a lot of qualified buyers in the market place and not enough homes for sale in the market.
The home prices have risen by 3.8% over the last year. Looking forward in this year, the Chapel Hill real estate market forecast is that home prices will continue to increase by 1.5%. Since 2015, the median home price in Chapel Hill has increased from $336,000 to $403,000.
Here is the Chapel Hill, NC real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of 1.5% till Dec 2020.
The median list price per square foot in Chapel Hill is $188, which is higher than the Durham-Chapel Hill Metro average of $162. Zillow reports that 11.6% of the listings in Chapel Hill had a price cut in Dec 2019, which is a good thing for buyers. The median price of current listings in Chapel Hill is $480,465. Homes are selling below their asking prices as the median price of homes that have been sold out is $410,800. It shows sellers were willing to negotiate on prices as they were finding it more and more difficult to sell homes at asking prices.
Here is a snapshot that shows the median home values in the cities which are nearby Chapel Hill.
Chapel Hill Real Estate Market Trends
We shall now discuss some of the most recent housing trends in the Chapel Hill area and compare it with past couple of years. We shall mainly discuss about median home prices, inventory, economy, growth and neighborhoods, which will help you understand the way the local real estate market moves in this region. Trulia has currently 485 resale and new homes for sale in Chapel Hill, NC, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The median price of sold homes in Chapel Hill is $419,000 and homes are selling for about $190/sqft.
As per the real estate company called Neigborhoodscout.com, the median house price in Chapel Hill is $486,649, which indicates that home prices in Chapel Hill are well above the national average for all cities and towns in the United States. One and two bedroom single-family detached homes are the most common housing units in Chapel Hill. Other types of housing that are prevalent in Chapel Hill include duplexes, row houses and homes converted to apartments. Chapel Hill has a mixture of renter-occupied and owner-occupied housing units.
Following the housing market decline in 2007, single family rental properties became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate. Single family rental homes have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental units.
Currently, there are 232 single family homes for sale in Chapel Hill, NC on Zillow. Additionally, there are 58 single family homes for rent in Chapel Hill, NC. Under potential listings, there are about 2 Foreclosed and 5 Pre-Foreclosure homes. These are the delinquent properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
In the past month, 70 homes have been sold in Chapel Hill, NC on Redfin.com. In addition to houses in Chapel Hill, there were also 38 condos, 25 townhouses, and 2 multi-family units for sale in Chapel Hill last month. The median listing price is around $517,000. According their statistics, the Chapel Hill housing market is somewhat competitive. Homes in Chapel Hill receive 1 offers on average and sell in around 73.5 days.
The average sale price of a home in Chapel Hill was $395,000 last month, up 8.2% since last year. The average sale price per square foot in Chapel Hill is $173, up 4.2% since last year. A hot listing in Chapel Hill can sell for around list price and go pending in around 38 days.
Here is the latest Chapel Hill housing market data for the month of Jan 2020 from Redfin.com. The sale to list price ratio shows us that it was a trending more like a seller’s market in the past month.
Chapel Hill Housing Market Trends
|Median List Price||$519,000|
|Avg. Sale / List||96.9%|
|Median List $/Sq Ft||$174|
|Median Sale Price||$395,000|
|Median Sale $/Sq Ft||$171|
Analyzing real estate data from multiple sources gives us a much broader perspective of the direction in which a market is moving. There are currently 605 homes for sale in Chapel Hill on Realtor.com. The asking price of single family homes can start from $118,000 and can go up to $2.9M for a luxury property located in the neighborhood with zip code 27516. In this neighborhood 27516 home values have risen 3.8 % over the past 12 months. Zillow predicts the home values in 27516 will increase 4% in the next year.
Chapel Hill is also a rental property market. There are currently 161 rental properties in Chapel Hill and their rent prices range from $450 to $4.6K per month. The median rent price in Chapel Hill is $1,400. The most affordable rental properties can be found in the Finley Forest and Downtown Chapel Hill neighborhoods in the city of Chapel Hill, NC. Finley Forest is the most affordable neighborhood in Chapel Hill, with a home price of around $150,000.
There are only 74 new construction homes for sale in Chapel Hill within a price range of $335,000 to $1.5M. The most affordable new construction homes can found in the Booth Mountain neighborhood in the city of Chapel Hill, NC. The home prices in Booth Mountain neighborhood is $610,000. According to Realtor.com, in December 2019, the median list price of homes in Chapel Hill, NC was $400K in December 2019, trending down -3% year-over-year. The median listing price per square foot was $171.
The median list price in Chapel Hill, NC is $550,000 on Movoto.com. The median list price in Chapel Hill was less than 1% change from January to February. Chapel Hill’s home resale inventories is 290, which increased 1 percent since January 2020. The median list price per square foot in Chapel Hill is $174.
As you can see in the graph, the median price per sq ft in Chapel Hill rose to its peak value in July 2019, when it was $179. In January 2020 it was $174. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in February.
Chapel Hill is a minimally walkable city in Orange County with a population of approximately 56,978 people. If you are looking to invest in the Chapel Hill real estate, you should that three most important factors when buying a real estate anywhere are location, location, and location. Location creates desirability. Desirability brings demand. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Chapel Hill investment real estate and you should be able flip it for a lump sum profit.
The neighborhoods in Chapel Hill must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools and shopping malls. Governors Club has a median listing price of $714K, making it the most expensive neighborhood in Chapel Hill. Finley Forest is the most affordable neighborhood, with a median listing price of $150K.
Some of the most popular neighborhoods are Glendale, Rocky Ridge, Meadowmont, Falconbridge, Poplar-Davie, Estes Hills, Laurel Hill-Rocky Ridge, Finley Forest, Laurel Hill, Gimghoul, The Oaks, Governors Club, Downtown Chapel Hill and Downing Creek.
Chapel Hill, NC Foreclosures And Bank Owned Homes Statistics
As per the Chapel Hill foreclosure data given by Zillow, the percent of delinquent mortgages in Chapel Hill is 0.2%, 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 Chapel Hill homeowners underwater on their mortgage is 5.1%, which is lower than Durham-Chapel Hill Metro at 5.4%.
|Total No. of Foreclosures in Chapel Hill||29 (RealtyTrac)|
|Homes for Sale in Chapel Hill||287|
|Median List Price||$447,000 (7% drop vs Nov 2018)|
There are currently 29 properties in Chapel Hill, NC that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 287. In December 2019, the number of properties that received a foreclosure filing in Chapel Hill, NC was 82% lower than the previous month and 100% higher than the same time last year.
In Chapel Hill, the zip code with the highest foreclosure rate is 27517, where 1 in every 11873 housing units is foreclosed. 27516 zip code has the lowest foreclosure rate, where 1 in every 16163 housing units becomes delinquent.
Is Chapel Hill a Good Place For Real Estate Investment?
Is Chapel Hill a Good Place to Invest In Real Estate? Investing in real estate is touted as a great way to become wealthy. Is buying an apartment in Chapel Hill a good investment? Many real estate investors have asked themselves if buying a property in Chapel Hill is good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead. We have already discussed the Chapel Hill housing market 2020 forecast for answers on why to put resources into this sizzling market.
If you are looking to make a profit, you don’t want to buy the most expensive property on the Chapel Hill real estate market and expect to make a good profit on rents. Perhaps you are looking for a slightly different hold-over, an investment property in Chapel Hill that you might move into or sell at retirement in the future. Either way, knowing your profit potential and purpose is the first thing to consider. Let’s now discuss state of the Chapel Hill real estate market, which can help investors who are keen to buy an investment property in this city.
The Chapel Hill Real Estate Market
The average home price in the Chapel Hill real estate market is just under 400,000 dollars. Home prices increased nearly 4 percent in 2019, and they are projected to rise another 1.5 percent in 2020. Not only is this much higher than the national average, it is dramatically higher than the average price of homes in North Carolina. The average home in North Carolina costs a little over 200,000 dollars.
That means the average home in the Chapel Hill real estate market is roughly twice the state average. On the flipside, this forces many in the area to rent, resulting in high rental income from any Chapel Hill real estate investment. Median rental rates are over a thousand dollars a month, and that number is deceptively low due to how many of the surveyed parties live in efficiencies and dorm rooms. A more accurate figure is that half of the local population rents instead of own their homes.
You can find a wide range of options if you’re searching for Chapel Hill real estate investment properties to rent out to students; these also yield the highest rental rates. The Chapel Hill real estate market is seeing redevelopment near campus to meet the expectations, while downtown is also seeing redevelopment to accommodate the Millennials who make up a large share of the rental market. This is why there are multiple new urbanist village communities in the area.
The Job Growth in Chapel Hill
The Chapel Hill real estate market is high priced due in part to the high local wage rate. The average resident earns 65,000 dollars a year. Per capita income is a third higher than the national average and well above the state average. And unemployment is around 3 percent, a full point lower than the national average. It isn’t San Francisco, but it is the local hotbed of high tech and high paying employment.
The local university is one of the biggest employers. The affiliated healthcare network is another major employer. The area is also home to a number of government offices and high tech companies here because over a third of the population holds master’s degrees. Property values in the Chapel Hill housing market are propped up by these high paying jobs.
The fact that these jobs are spread across the area means the entire metro area is relatively expensive, though properties catering to students have a value proportional to how close it is to campus. This is partially due to the fact the city runs a bus service to connect residents to jobs in the rest of the Research Triangle.
One point in favor of Chapel Hill real estate investment is the relatively young population. The large student population here has resulted in nearly a third of the population being between 18 and 24. A large number of university graduates choose to stay in the area to work after graduation. This is why the Chapel Hill area is expected to see better than average population growth for the foreseeable future. And it is why the job market is expected to see job growth about one percent higher than the national average over the next ten years.
Quality of Life
The massive college-aged cohort gives Chapel Hill a vibrant culture scene for such a small town. You have a wide selection of restaurants, movie theaters, and plays on campus and off. Book stores, music festivals and art shows dot the area. Chapel Hill is within driving distance of Durham, North Carolina. A point in favor of Chapel Hill real estate investment is the lower crime rate in Chapel Hill. It has far less violent crime, and that attracts many families to the area. That drives up demand for single family homes in the Chapel Hill housing market.
The school system itself is better than average. The excellent amenities explain why the Chapel Hill real estate market was given a livability score of 76 out of 100. That is actually in the top sixth of all cities in the United States .The only reasons it didn’t rank high were the high cost of properties in the Chapel Hill housing market and the cost of living, a factor affected by the expensive of real estate.
The Tax Climate
North Carolina has an average tax burden, literally. The state ranked 24 out of the 50 states in the tax rankings by Wallethub. The sales tax rate is higher than average, but the income tax is lower than average. North Carolina’s property tax rate is lower than average, 0.86 percent. However, the high property values in the Chapel Hill real estate market are so high that the average property tax bill is higher than the state average.
The Legal Climate
North Carolina is landlord friendly. You don’t have to pay interest on deposits. You can commingle deposits from several Chapel Hill real estate investment properties. There are limits on late fees on rentals in the Chapel Hill housing market. There are modest grace period laws, but there is no law regarding notice before you enter the residence. The state doesn’t require a rental license to be a landlord.
A point in favor of the Chapel Hill housing market over South Carolina is the eviction process. North Carolina makes it much easier to evict non-paying tenants and those who break their lease terms. North Carolina even says the tenants cannot withhold rent for failure to provide essential services like electricity, hot water or heat. AKA, the tenants can’t refuse to pay the rent if you don’t fix the hot water heater immediately.
Investing in Chapel Hill Real Estate or Not: The Conclusion
Maybe, you have done a bit of real estate investing in Chapel Hill, NC 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. In any property investment, cash flow is gold. Should you consider Chapel Hill real estate investment? The Chapel Hill area is an excellent place for real estate investment if you can afford the entry costs. It offers high rental rates, a property-owner friendly legal climate, low taxes and good long term prospects.
A good cash flow from Chapel Hill investment properties means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding a good Chapel Hill real estate investment opportunity would be a key to your success. If you invest wisely in the Chapel Hill real estate, you could secure your future. As with any real estate purchase, act wisely. Evaluate the specifics of the Chapel Hill housing market at the time you intend to purchase.
Hiring a local property management company can help in finding tenants for your investment property in Chapel Hill. If it is your first time to invest in Chapel Hill real estate, then you would have to be aware of common beginner’s mistakes. Beginners would usually follow the media, buy a property and wait for its value to increase. This could be risky. Real estate investing requires research. We recommend doing your own research or hiring a real estate investment specialist for guidance.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market area, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing and interest rates.
NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.
The aim of this article was to educate investors who are keen to invest in Chapel Hill real estate in 2020. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend to do your own research and take help of a real estate investment counselor.
Other Good Markets To Invest in Real Estate in 2020
Another good market to invest in real estate in 2020 is Edmond in Oklahoma. If you are considering investing in the south central part of the United States, we would recommend Edmond housing market over trying to buy more expensive and more heavily taxed properties in Texas. The Edmond housing market isn’t as cheap as other parts of Oklahoma, but it benefits from strong population growth, a solid job market and excellent long-term trends that will keep both rents and property values growing for years to come.
The other good place for real estate investment is Kissimmee in Florida. The Kissimmee real estate market is reasonably priced with a massive rental market. The legal and tax climate is so amenable that the area is attracting investors from California and New York. As long as you understand the rules and restrictions, it is a good opportunity for investors.
Remember, caveat emptor still applies when buying a property anywhere. Some of 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.
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