If you are looking to invest in Raleigh real estate, you must read till the end. Raleigh, North Carolina is a southeastern city often overshadowed by the larger Charlotte market. Raleigh is the capital of North Carolina. It is the second-largest city in the state. It is home to roughly half a million people. However, the Raleigh housing market is much larger than this. The Raleigh metropolitan area – the city and its surrounding suburbs – account for about one and a half million people.
The Raleigh 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. Owning a piece of Raleigh real estate is a great achievement for many people. Homeowners in Raleigh continue to see their homes appreciate because they are in such high demand. From Millennials moving to the area to retirees living here, Raleigh continues to be a great place for people from all walks of life.
Raleigh's real estate market is already scorching, with prices at record highs, but they are set to soar even further in 2022, with the Raleigh market expected to be the third hottest in the United States this year, according to a new study. Home values in the capital city's real estate market are expected to increase nearly 24%, bringing the average home value to well over $450,000 from the current average of $391,444, according to an analysis by Zillow. Only Tampa and Jacksonville, Florida, are expected to experience greater home value appreciation through November 2022, according to Zillow's analysis.
Raleigh Housing Market Trends & Forecasts
Analyzing real estate data from multiple sources gives us a much broader perspective of the direction in which a market is moving. We shall now discuss some of the most recent housing trends in the Raleigh area from multiple sources and compare them with the past couple of years. We shall mainly discuss median home prices, inventory, and growth, which will help you understand the way the local real estate market moves in this region.
If you are a home buyer who’s looking for a new place to call home or a savvy real estate investor who is looking for a strong ROI, then you should consider all that Raleigh NC real estate market has to offer. Raleigh is a minimally walkable city in Wake County with a population of approximately over 467K people (2020). The Raleigh housing market has been on the incline in 2021.
The United States Census Bureau released new data on how much each county's housing stock expanded over the decade from 2010 to 2020, and a new analysis by Apartment List finds that Raleigh ranks third among the top 100 most populous metropolitan areas, behind Provo, Utah, and Austin, Texas, but just ahead of Boise, Idaho, with housing growth of 23.5 percent.
According to Charlotte mortgage site LendingTree, Raleigh is the third most competitive market in the United States, owing to a high proportion of homebuyers with credit scores above 700, a 20% or greater down payment, and mortgage shopping prior to looking for a home. Raleigh is also experiencing an increase in rental rates, as Apartment List discovered in a recent analysis of the rental market. Raleigh rents have increased by 3.43% compared to last month, and are up by 11.2% compared to last year. 79% of apartments in Raleigh cost between $1,000-$1,999 per month. 44% of apartments in Raleigh are 1-bedroom apartments.
Raleigh (Wake County) Housing Market Trends
Prices in the Triangle, particularly in Wake County, are already skyrocketing. The median sale price of a home in the region was $369,000 in November 2021, up from $365,000 in October, with 4,073 transactions closed in November compared to 4,007 in October, according to the most recent Triangle Multiple Listing Service reports.
According to Redfin, in December 2021, Wake County home prices were up 22.9% compared to last year, selling for a median price of $427K. On average, homes in Wake County sell after 33 days on the market compared to 45 days last year. There were 1,719 homes sold in December this year, down from 2,050 last year.
Apple announced that it will open its first East Coast campus in Wake County, creating 3,000 new jobs and investing more than $1 billion in the Research Triangle area. With Apple bringing 3,000 high-paying jobs on the way to Wake County, prices in the local housing market would go up considerably. The company said it will also create a new $100 million fund for schools and community initiatives in the Triangle and around North Carolina.
According to the latest analysis of real estate data conducted by the Triangle Multiple Listing Service:
- New Listings in Wake County were up 1.3% from last year.
- Closed Sales dropped from 1,905 to 1,886, down – 1.0%.
- Median Sales Price increased from $350,000 to $424,715, up +21.3%.
- Average Sales Price increased from $397,213 to $477,789, up +20.3%.
- Days on Market Until Sale dropped from 16 to 10, down – 37.5%.
- Inventory of Homes for Sale dropped from 2,069 to 1,005, down, – 51.4%.
- Months Supply of Inventory also dropped from 1.1 to 0.5, down – 54.5%.
Raleigh Housing Demand
Home sales decreased when compared to November of last year. November sales were down by 1% compared to the same month last year, according to the data from Triangle Multiple Listing Service (source). Low inventory levels continue to contribute to this decline. The average sale price increased this month in comparison to November last year. In November, the average price of homes sold was $477,789. This is a 20.3 percent increase over November last year. The average number of days on market before a sale decreased significantly again this month when compared to November last year. November's average days on market were ten days. This is a decrease of 37.5 percent from November last year.
Raleigh Housing Supply Trends
This remains a significant issue as active listings decrease again. In November, listings fell by a staggering 51.4 percent compared to last year. The months' supply of inventory is just 0.6 months. It refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months' supply tends to push prices up more rapidly.
Raleigh Home Listing Prices
The median list price of homes in Raleigh, NC was $379K, trending up 16.6% year-over-year. The median listing price per square foot was $196. The median sale price was $399,800, according to Realtor.com's November 2021 report.
- The sale-to-List Price Ratio was 100%.
- It means that homes in Raleigh, NC sold for approximately the asking price on average in November 2021.
- The trend for median days on market in Raleigh, NC has gone down since last month, and slightly down since last year.
- There are 75 neighborhoods in Raleigh.
- Popular neighborhoods include North Hills, North Raleigh, Glenwood, Northwest Raleigh, Downtown Raleigh, Southwest Raleigh, West Raleigh, and Oakwood.
- Glenwood has a median listing price of $895K, making it the most expensive neighborhood in Raleigh.
- Triangle Town Center is the most affordable neighborhood, with a median listing price of $282,500.
In December 2021, Raleigh home prices were up 21.4% compared to last year, selling for a median price of $387K, according to Redfin, a real estate company. On average, homes in Raleigh sell after 34 days on the market compared to 42 days last year. There were 712 homes sold in December this year, down from 841 last year.
- Many homes get multiple offers, some with waived contingencies.
- Homes Sold Above List Price = 62.8%, +33.0% year-over-year.
- Homes with Price Drops = 5.4%, +1.3% year-over-year.
- The average homes sell for about 4% above the list price and go pending in around 33 days.
- Hot home listings can sell for about 9% above the list price and go pending in around 10 days.
- At present, homes for sale in Raleigh have a median listing price of $390K.
Raleigh Rent Price Trends: Is Renting in Raleigh Affordable?
Raleigh has a mixture of owner-occupied (51%) and renter-occupied (49%) housing units. The average rent for a 1-bedroom apartment in Raleigh, NC is currently $1,211. This is a 15% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Raleigh increased by 1% to $1,472. The average rent for a 1-bedroom apartment increased by 2% to $1,211, and the average rent for a 2-bedroom apartment increased by 1% to $1,453.
- The average rent for a 2-bedroom apartment in Raleigh, NC is currently $1,453, a 17% increase compared to the previous year.
- The average rent for a 3-bedroom apartment in Raleigh, NC is currently $1,761, an 11% increase compared to the previous year.
- The average rent for a 4-bedroom apartment in Raleigh, NC is currently $1,955, a 9% increase compared to the previous year.
According to Apartment List, 2% of apartments in Raleigh cost less than $1,000 per month while 80% of apartments in Raleigh cost between $1,000-$1,999 per month. 16% of apartments in Raleigh are priced between $2,000 and $2,999 per month and 1% of apartments in Raleigh cost over $3,000 per month. Using the 30% rule, you can get a rough estimate of the salary needed to rent an apartment in Raleigh.
- If you are renting an average-priced studio apartment in Raleigh, your annual salary should be around $54,144 or higher.
- If you are renting an average-priced 1-bedroom apartment in Raleigh, your annual salary should be around $54,072 or higher.
- If you are renting an average-priced 2-bedroom apartment in Raleigh, your annual salary should be around $64,728 or higher.
- If you are renting an average-priced 3-bedroom apartment in Raleigh, your annual salary should be around $67,860 or higher.
Raleigh Real Estate Market Forecast 2022
Recent forecasts and predictions for the Raleigh, North Carolina housing market suggest that home prices will continue rising in 2022. Prices are expected to rise at a more or less average pace between now and the summer of 2022. The Raleigh real estate market is currently experiencing a supply shortage, which is partly why home prices are climbing in the region. The Months Supply of Inventory is just 0.6.
The cumulative appreciation rate over the ten years has been 72.95%, which ranks in the top 30% nationwide. This equates to an annual average Raleigh house appreciation rate of 5.63%, according to NeighborhoodScout.com. During the latest twelve months, Raleigh's appreciation rate, at 14.29%, has been at or slightly above the national average. In the latest quarter, Raleigh's appreciation rate has been 7.08%, which annualizes to a rate of 31.46%.
According to Zillow, the Raleigh housing market is expected to be the third hottest in the United States this year. Let us look at the price trends recorded by Zillow over the past few years. Since Jan 2012, the median home prices in Raleigh have appreciated by roughly 98%, according to Zillow’s Home Value Index. Raleigh home values have gone up 28.8% over the past year. The typical value of homes in Raleigh is now $396,232 (which only includes the middle price tier of homes).
- The typical value of homes in Raleigh Metro is $391,444, up 29.5% over the past year.
- Zillow predicts that home values in Raleigh Metro will rise 23.7% in the next twelve months.
- The typical value of homes in Wake County is $426,478, up 29.5% over the past year.
- The Raleigh real estate market forecast is that the home prices will continue to increase in the next twelve months.
Is Raleigh a Good Place For Real Estate Investment?
Should you invest in Raleigh real estate? If you want to find out whether Raleigh real estate is a good investment or not, you need to drill deeper into local trends. The Raleigh real estate trends will tell what the market holds for the year 2022. We have already discussed the Raleigh housing market forecast for answers on why to put invest in this market. Purchasing an investment property in Raleigh real estate is a little different from shopping for your car or primary residence.
While you still want to get the most for your money, if you are looking to make a profit, you don’t want to buy the most expensive property on the Raleigh real estate market and expect to make a good profit on rents. Perhaps you are looking for a slightly different hold-over, a turnkey investment property in Raleigh 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.
According to Neighborhoodscout.com, a real estate data provider, three and four-bedroom single-family detached homes are the most common housing units in Raleigh. Other types of housing that are prevalent in Raleigh include large apartment complexes, duplexes, rowhouses, and homes converted to apartments.
About a third of Americans rent their homes. In the Raleigh NC real estate market, the rate is 43%. This is partially due to the large student market, but it is also fueled by young people moving here for work. That explains why downtown Raleigh rents grew 9% in 2018. It also explains why you can rent out a studio for $900 a month and one-bedroom apartments for a thousand dollars a month.
Kiplinger, a leading publisher of business forecasts and personal finance advice, uses ATTOM Data Services to compile data on home price changes and housing affordability in the country's top 100 markets. The affordability index indicates a city's relative affordability (1 is the most affordable, 10 is the least affordable). It is calculated as the percentage of annual income required to purchase a median-priced home in late 2020 in each metro area. Raleigh has an affordability index of six out of ten, making it one of the most expensive cities in the United States to own a home. New York City is the most expensive city, while Augusta, Georgia is the least expensive.
To consider the prospects of investing in the Raleigh NC real estate market, we’ll focus on factors that matter to investors instead of citing the many high quality of life metrics and awards the city receives that draw new residents to the area.
The Student Market
College towns can be a great place to buy investment real estate, but the rise and fall of the flagship campus affect demand for real estate. Any state capital will be home to at least one flagship university. North Carolina State University is located here. However, the Raleigh NC real estate market for those catering to students is diversified, so to speak. Meredith College, St. Augustine’s University, and Shaw University are also located here, as are several other private religious schools.
If you invest in the Raleigh suburbs, you could attract students from Duke University in Durham and the University of North Carolina in Chapel Hill. Young people from across the globe want to experience Raleigh. From attending school at one of the local, prestigious colleges to working in the infamous Research Triangle Park, Raleigh is the new destination for young people who are interested in a fresh start and a great home to live in.
The Growing Technological Employment Base
The Research Triangle Park area consists of Raleigh, Durham, and Chapel Hill. These research centers are generating many high-tech startups and jobs, bringing people to the area for high-paying jobs. Red Hat is one of the biggest employers in the area, despite the school system, state and local governments being major employers. The high-tech sector helps explain why Raleigh’s income per capita is roughly $33,682 while the national average is $29,829 and far above the $26,779 state average. Raleigh was ranked number one in Glassdoor’s 25 Best Cities for Jobs report.
In April, Apple announced a new campus and engineering hub that will bring many high-paying jobs to the area. The site will be located off the Triangle Expressway between Louis Stephens Drive and Davis Drive. In addition, Apple will invest $100 million to support schools and community initiatives in the Triangle and will put more than $110 million toward infrastructure in 80 North Carolina counties. In total, Apple said it will invest more than $1 billion in the state.
Raleigh's Diverse Economic Base
Unemployment tends to be lower in areas with diverse economies. Raleigh is home to several major hospitals. It hosts an international airport. The high-tech sector is so large we’ve already mentioned it as a point in favor of the Raleigh NC real estate market. This diverse economic base protects a community from the rise and fall of employment tied to a single market sector. This explains why Raleigh’s unemployment rate was one point lower than the state average in 2018 and was three points lower than the unemployment rate for the state during the Great Recession.
The BLS reported that the unemployment rate for Raleigh fell 0.1 percentage points in July 2021 to 3.7%. For the same month, the metro unemployment rate was 0.7 percentage points lower than the North Carolina rate. The unemployment rate in Raleigh peaked in May 2020 at 12.1% and is now 8.4 percentage points lower. The relative abundance of jobs brings many to the Raleigh area, while it will keep many students graduating from their schools in the area.
Low Overall Taxes
North Carolina’s overall tax burden is roughly 30th out of the 50 states according to WalletHub. Property taxes clock in at an average of 2.3%. That’s 11th in the country but far better than a number of eastern states. Georgia’s property tax rate, for example, is 2.75%, and neighboring South Carolina’s comes in at 2.91%.
It Is Landlord Friendly
North Carolina on the whole is landlord-friendly. There are payment grace period laws, but you can charge late fees. There are no pet laws or rekeying laws in North Carolina. And unlike other states, North Carolina has been becoming more landlord-friendly. For example, a law passed in 2018 allows landlords to recover legal fees and the cost to issue a court summons when they had to go to court to evict a tenant. This isn’t a blank check, though. Recovered legal fees can’t exceed 15% of the amount owed.
Raleigh Real Estate is Relatively Affordable
North Carolina homes cost an average of $180,000. You can buy several investment properties here for the cost of one middle-class home in California or a loft in New York City. The area is so affordable that housing costs score 92 on the cost of the living index while the national average is 100. The median home value of roughly $254,000 (Zillow). NerdWallet had ranked Raleigh one of the best places to own a home. Over 70% of Raleigh's land is zoned for residential use, which contributes to the city's affordability of housing relative to Austin, Atlanta, and Charlotte.
The Modest Military Market
Raleigh is almost ideal in this case. The community isn’t the home of Fort Bragg, but that means the community’s real estate market won’t rise and fall based on the fate of a large base. Instead, there are several moderately sized military employers in the area. Raleigh is home to one of 65 MEPS to induct people into the military. Raleigh is home to the North Carolina National Guard, Civil Air Patrol, a US Army Corp of Engineers, and an Army Research Office. An office of the Defense Criminal Investigative Service is located here, as well.
Maybe you have done a bit of real estate investing in Raleigh 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. The strong US real estate market shows no signs of slowing and is slated to remain among the world’s top performers. Whether you are a Baby Boomer or a Millennial, you will find living in Raleigh is a unique experience. From being a leader in the job market to being a hub for entertainment, it’s pretty clear why many people love to call Raleigh home.
A good cash flow from Raleigh rental property 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 Raleigh real estate investment opportunity would be a key to your success. If you invest wisely in Raleigh real estate, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it is very important to read good books on real estate.
The less expensive the Raleigh investment property is, the lower your ongoing expenses will be. Some of the most popular neighborhoods in Raleigh are Downtown Raleigh, Southwest Raleigh, Wake Forest, West Cary, Oakwood, Forestville, Stonehenge, North Hills, Northeast Raleigh, Lochmere, Fayetteville Street District, North Raleigh, Five Points East, Northwest Raleigh, and Brier Creek.
Apart from the Raleigh market, you can go for Tucson, AZ. The Tucson housing market has recovered and is poised for slow, steady, and certain long-term growth. The shifting demographics and known groups eager to sell at the right price provide an excellent opportunity to find bargains almost anywhere in the Tucson real estate market. Tucson consists of 583 neighborhoods. Many people move to Tucson and then commute to work in surrounding cities.
Tucson’s relatively slow and steady growth rate means that new construction is at a crawl. That is causing rents to rise faster than average, especially at the low end of the market. Another factor propping up home prices is the relatively small inventory on the market; snowbirds typically sell when they need to instead of based on market conditions.
Another market that we suggest is Dayton, Ohio. The Dayton Ohio real estate market is one of the best deals in the Midwest. It balances affordable properties with strong future growth, a large rental market and stable property values, low carrying costs, and decent ROI. The average home size is roughly 1,350 square feet. Downtown Dayton and its suburbs are doing a nice job of incentivizing new businesses to come into the area. Existing businesses are also benefiting from positive housing market trends in Dayton. While the overall Dayton housing market is booming, downtown Dayton has struggled with crime from time to time. The good news is that the city has steadily reduced crime.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. 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 areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
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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, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
Market Trends And Forecast
Universities and demographics
Higher average income