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 one of the few favorable locations to invest in real estate.
With strong population growth and a solid economy, the rental demand in Durham, North Carolina is continuously increasing. Durham real estate market is strong 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 North Carolina Housing Price Trends 2022
Demand: There is a growing demand in the Durham housing market. The median home listing price is somewhere in the neighborhood of $390K. In April 2022, the median listing home price in Durham, NC was $385,000, trending up 24.6% year-over-year. The median listing home price per square foot was $220.The median home sold price was $418K, according to Realtor.com. Homes in Durham, NC sold for 3.95% above the asking price on average.
In April 2022, the Durham Regional Association of REALTORS® and Triangle Multiple Listing Service (TMLS) released the following data regarding the Durham housing market. The data shown reflects information on properties located in the 16 counties of the greater Triangle Region.
- The number of New Listings in the Triangle region increased by 0.2% to 4,783.
- Under Contract Sales decreased by 7.4% to 4,077. Inventory levels fell 10.5 percent to 2,740 units.
- The number of closed sales decreased by 7% to 3,757.
- The median sales price rose by 25.8 percent to $415,000 in the past year.
- The Days on the Market decreased by 28.6% to 10 days.
- The fact that the Months' Supply of Inventory remained unchanged at 0.7% to 0.7 months was encouraging for sellers.
- The Year to Date Housing Affordability Index was 71, which was 31% lower than April 2021.
- This index measures the region's housing affordability.
- An index of 120 indicates that the median household income was 120 percent of the amount required to qualify for the median-priced home at the current interest rate.
- The greater the number, the greater the affordability.
Durham County Housing Price Trends 2022
- Median Sales Price: $426,000 (+33.1% year over year)
- Average Sales Price: $455,890 (+26.3% year over year)
- Median Days On Market: 9 (-18.2% year over year)
- Average List Price: $476,967 (+3.3% year over year)
- Percent of Original List Price Received: 107.2% (+2.9% year over year)
Durham County Sales & Housing Supply
- Closed Sales: 447 (-16.3% year over year)
- New Listings: 551 (+0.7% year over year)
- Inventory of Homes for Sale: 375 (+16.5% year over year)
- Months Supply of Inventory: 0.8 (+33.3% year over year)
Durham Housing Market Forecast
Durham, North Carolina is going to see heavy population growth over the next decade. Another seventy thousand people are expected to contribute to the 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 they're 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. The limited inventory and strong demand led to increases in prices for homes in the Durham real estate market.
Durham – Chapel Hill MSA comprises Chatham county, Durham county, Granville county, Orange county, and Person county.
- 564,273 Population [2010] – census
- 649,903 Population [2020] – census
- 1.4% Annual Population Change [2010 → 2020] [Citypopulation.de]
- Source: U.S. Census Bureau (web)
Durham County in North Carolina (USA)
- 326,126 Population [2021] – Estimate
- 0.32% Annual Population Change [2020 → 2021] [Citypopulation.de]
- Source: U.S. Census Bureau (web)
Zillow's forecast for Durham real estate market remains favorable and is slated for a conservative growth trajectory. The typical home value in the Durham-Chapel Hill Metro is $416,579 (Zillow Home Value Index). Durham metro home values have gone up 34.1% over the past year and 119.2% over the past decade.
Similarly, the typical value of homes in the city of Durham is $408,011, up 37.5% over the past year. The pandemic has fueled the demand in this region for the past two years. According to Zillow's forecast (ZHVI), Durham metro home values will rise by 14.1% by the end of April 2023.
Durham has experienced some of the highest home appreciation rates in the country over the past decade. Over the past decade, Durham real estate has appreciated by 94.89 percent, which equates to an average annual home appreciation rate of 6.90 percent, placing Durham in the top 20 percent of the nation for real estate appreciation.
According to NeighborhoodScout's data, Durham's 12-month appreciation rate of 20.44 percent has been at or slightly above the national average. In the latest quarter, Durham's appreciation rate has been 8.78%, which annualizes to a rate of 40.02%. Significantly, this makes Durham one of the fastest-growing communities in the nation for the most recent quarter and may indicate the city's future real estate investment potential.
Here is the Durham real estate price appreciation graph by Zillow since the last decade.
10 Highest Appreciating Durham Neighborhoods Since 2000 (By Neigborhoodscout.com)
- Central Park / Old Five Points
- Old North Durham / Duke Park
- Albright
- Trinity Park
- Lyon Park / Burch Avenue
- Duke University / Duke West Campus
- Golden Belt
- E Pettigrew St / S Alston Ave
- Downtown
- Forest Hills / Morehead Hill
Durham Real Estate Investment Overview
With wonderful cities like Charlotte, Durham, and Raleigh, North Carolina is attracting thousands of renters and home buyers every year. 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 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 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 has an economic future that ensures long-term growth in housing demand and rents.
The most prevalent building size and types 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 49.44% owning and 50.56% renting. 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 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.
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 being half a point below the national average and average income being several thousand higher than the U.S. average.
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.
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 where 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.
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 ren. 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.
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 in the rest of the state.
Summary
There 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 an 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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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
Market Data & Forecasts
https://durhamrealtors.org/market-tools/
https://www.trianglemls.com/tmls/market-trends/
https://www.zillow.com/durham-nc/home-values
https://www.neighborhoodscout.com/nc/durham/real-estate
https://www.redfin.com/city/4909/NC/Durham/housing-market
https://www.realtor.com/realestateandhomes-search/Durham_NC/overview
https://www.neighborhoodscout.com/nc/durham/real-estate
Population & Jobs
https://www.citypopulation.de/en/usa/metrodurham/
https://realestate.usnews.com/places/north-carolina/raleigh-durham/jobs
Research Triangle / Universities
https://en.wikipedia.org/wiki/Research_Triangle
Landlord friendly
https://www.avail.co/education/laws/north-carolina-landlord-tenant-law
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
Broad rental market
https://www.heraldsun.com/news/local/counties/durham-county/article213386894.html
https://www.heraldsun.com/news/business/article162739458.html
