If you are looking to invest in the 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 real estate 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 housing market is landlord friendly, contains several large populations of renters, and 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 in value 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 from all walks of life.
Recent forecasts and predictions for the Raleigh housing market suggest that home prices will continue rising in 2020. In the past ten years, the annual real estate appreciation rate has amounted to 3.25%% in Raleigh, according to NeighborhoodScout.com.
Let’s learn more about the factors that make Raleigh a good place to invest if you’re considering real estate investment. Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control.
Please note that there are many variables that can potentially impact the value of a home in Raleigh in 2020 (or any other market) and some of these variables are impossible to predict in advance.
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.
Table of Contents
Raleigh Real Estate Market Forecast 2020 – 2021
Recent forecasts and predictions for the Raleigh, North Carolina housing market suggest that home prices will continue rising in 2020. Prices are expected to rise at a more or less average pace between now and summer of 2020. The Raleigh real estate market is currently experiencing a bit of a supply shortage, which is partly why home prices are climbing in the region.
Let us look at the price trends recorded by Zillow over the past few years. Since 2015, the median home prices in Raleigh have appreciated by roughly 27.9% from $225,000 to $287,647, according to Zillow’s index.
The latest real estate data from Zillow shows that the current median home value in Raleigh is $191,161. In the last twelve months, the Raleigh real estate has appreciated by 2.9%. The latest Raleigh real estate market forecast is that the home prices will continue to increase by 3.5% – in the next twelve months.
Raleigh is currently a buyer’s real estate market. This means you can probably buy a home for less than list price, and the seller might be willing to pay some or all of your closing costs. Zillow reports that 11.8% of the listings in Raleigh had a price cut in Jan 2020. When there are less number of homes available for sale than buyers to purchase them, those sellers are enjoying a hot real estate market.
Here is the Raleigh real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of 3.5% till Feb 2021.
Raleigh Housing Market Forecast 2021
Here is a short and crisp Raleigh housing market forecast for the 3 years ending with the 3rd Quarter of 2021. The accuracy of this forecast for Raleigh is 86% and it is predicting a positive trend. The LittleBigHomes.com estimates that the probability for rising home prices in Raleigh is 86% during this period. If this price forecast is correct, the Raleigh home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
Check this page each quarter for updates to the Raleigh Housing Market Forecast.
Raleigh NC Real Estate Market Trends
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 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.
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 393,039 people.
The Raleigh real estate market was on the incline all year long in 2019. With an increase in sales price, new home buyers who buy low will likely continue to see their home build value over the years.
On average, homes in Raleigh, NC sell after 51 days on the market. In a healthy, balanced market, it would take about six months for the supply to dwindle to zero.
In terms of months of supply, the Raleigh market can tip to favor buyers if the supply increases to more than six months of inventory. However, looking at the current trends, we don’t see things stopping moving in that direction.
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. With 2020 being, theoretically, in the middle of a boom, there’s still 4 years for residential construction to surge. Most likely, a housing shortage will remain in 2020, keeping home prices high.
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, row houses and homes converted to apartments. The median house price in Raleigh is $279,759, which indicates that home prices in Raleigh are well above the national average for all cities and towns in the United States.
Here is a snapshot that shows the median home values in the some of the popular neighborhoods in or around Raleigh.
Raleigh Housing Market Inventory And Sales Trends
Raleigh has a mixture of owner-occupied and renter-occupied housing units. In the past month, 613 homes have been sold in Raleigh, NC on Redfin.com, a national real estate brokerage. Additionally, there were also 268 condos, 461 townhouses, and 12 multi-family units for sale in Raleigh last month.
The median sold price was $234,000 in the last month. Raleigh real estate market trends indicate an increase of 10.7% in the average sale price since last year. The average sale price per square foot in Raleigh is $145, which is an increase of 4.3% year-to-year.
According their statistics, the Raleigh housing market is very competitive. Homes sell for about 1% below list price and go pending in around 51 days. A hot listing in the market can sell for around list price and go pending in around 27 days.
Trulia has 1,350 resale and new homes in Raleigh lined up for you, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.
Currently, there are 907 homes for sale in Raleigh on Zillow, an online real estate database company. Additionally, there are 346 homes for rent. Under potential listings, there are about 3 Foreclosed and 110 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).
- The median list price per square foot in Raleigh is $158, which is higher than the Raleigh Metro average of $144.
- The median price of current listings is $349,850.
- The median price of homes that have been sold in the last month is $286,600.
- The median rent price in Raleigh is $1,495, which is lower than the Raleigh Metro median of $1,547.
There are currently 2079 homes for sale and 901 homes for rent in Raleigh, NC on Realtor.com, a real estate listings website. According to their statistics, in February 2020, the Raleigh housing market was a buyers' real estate market, which means buyers have more homes to choose from, which increases the odds that a buyer will find their perfect home.
The median list price of homes in Raleigh, NC was $305,000 in February 2020, trending up 7% year-over-year. The median listing price per square foot was $153. Single-family detached homes are the single most common housing type in Raleigh.
The asking price of single family homes in Raleigh can start from $114,000 and can go up to $9.9M for a luxury property located in the neighborhood having zip code 12917. There are currently 492 new construction houses available for sale in Raleigh.
Glenwood has a median listing price of $1M, making it the most expensive neighborhood in Raleigh. Atlantic is the most affordable neighborhood, with a median listing price of $175,000.
| Homes For Sale in Raleigh | 2097 |
| Homes For Rent in Raleigh | 901 |
| Median Listing Price | $305,000 |
| Median Sale Price | – |
| Sale to Asking Price Ratio | – |
| Median Rent | $1,550 |
| New Listings | 230 |
| New Construction Houses | 492 |
| Median List Price/Sq Ft | $153 |
| Home Price Range | $750 to $10M |
| Most Expensive Neighborhood | Glenwood |
| Most Affordable Neighborhood | Atlantic |
Raleigh, NC Foreclosures And Bank Owned Homes Statistics 2020
Looking for foreclosure homes in Raleigh? As per the Raleigh foreclosure data by Zillow, in Raleigh 0.2 homes are foreclosed (per 10,000). This is the same as the Raleigh Metro value of 0.2 and also lower than the national value of 1.2.
The percent of delinquent mortgages in Raleigh is 0.7%, which is lower than the national value of 1.1%. The percent of Raleigh homeowners underwater on their mortgage is 4.9%, which is higher than Raleigh Metro at 4.7%.
There are currently 399 properties in Raleigh, NC that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 1,312. In February 2020, the number of properties that received a foreclosure filing in Raleigh, NC was 8% higher than the previous month and 62% higher than the same time last year.
| Potential Foreclosures in Raleigh | 399 (RealtyTrac) |
| Homes for Sale in Raleigh | 1312 |
| Recently Sold | 5196 |
| Median List Price | $295,000 (2% rise vs Jan 2019) |
In Raleigh, the zip code with the highest foreclosure rate is 27605, where 1 in every 128 housing units is foreclosed. 27612 zip code has the lowest foreclosure rate, where 1 in every 3942 housing units becomes delinquent.
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 2020. We have already discussed the Raleigh housing market forecast 2020 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.
Let’s take a look at the number of positive things going on in the Raleigh real estate market which can help investors who are keen to buy an investment property in this city.
1. The Student Market
College towns can be a great place to buy investment real estate, but the rise and fall of the flagship campus affects demand for the 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.
2. 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 $34,000 while the national average is $30,000 and far above the $27,000 state average. Raleigh was ranked number one in Glassdoor’s 25 Best Cities for Jobs report.
3. Raleigh's Diverse Economic Base
Unemployment tends to be lower in areas with a diverse economy. 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.
Currently, the unemployment rate in Raleigh is 8% lower than the national average. The relative abundance of jobs brings many to the Raleigh area, while it will keep many students graduating from their schools in the area.
4. 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%.
5. 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.
6. Raleigh Real Estate is 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 living index while the national average is 100.
The median home value of roughly $180,000 is also well below the national median home price of $220,000. NerdWallet also ranks Raleigh one of the best places to own a home.
Recent data shows that owning a home in Raleigh is affordable because the average mortgage payment is less than a third of homeowner’s income. You can purchase a home knowing that you can make the monthly payments without being strapped for cash.
7. Raleigh Property Values Are Rising
According to Zillow, the value of the average home in North Carolina rose by 8.6% over 2018. That site predicts that prices will go up at least 3.6% by February 2o21. The Raleigh NC real estate market will see even faster growth, since they were ranked the second hottest real estate market in the country by The News and Observer.
Home values are stable and rising, because there are relatively few steals here. Mortgage delinquency rates and the percentage of those with negative equity mirror the national average. This ensures that the Raleigh NC real estate market will not suffer a serious downturn if there is a modest recession.
8. The ROI Is Strong
The median rent for North Carolina residents is $1300 a month. That rate includes small starter homes and mid-sized apartments. You could get far more than that for a rented four bedroom single family home. You could easily charge 1% rent on a single family home and capitalize on the appreciation if you ever decide to sell.
According to Zillow, the going rent list price is $0.83 per square foot. However, you may be able to secure more for a house in a desirable area or with amenities people appreciate. After all, people pay $1400 a month for a three bedroom apartment, and any single family home in the Raleigh housing market provides more privacy and a yard for children and pets.
9. The Raleigh Rental Market Is Larger Than Average
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.
10. 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.
Investing in Raleigh Real Estate: Advice For New Buyers
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 in 2020. 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 very important to read good books on real estate. The less expensive the Raleigh investment property is, the lower your ongoing expenses will be.
When looking for real estate investment opportunities in Raleigh or anywhere in the country, the generally accepted standard is to purchase a property that will give you a modest but minimum 1% profit on your investment. An example would be: at $120,000 mortgage or investment cost, $1200 per month rental.
That would be the ideal equation example. Even with rent increases, buying a $500,000 investment property in Raleigh is not going to get you $5000 per month on rent. When looking for the best real estate investments in Raleigh, you should focus on neighborhoods with relatively high population density 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. 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.
You must also collaborate and 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 Raleigh.
Other Good Markets To Invest In Real Estate In 2020
Apart from the Raleigh market, you can go for the 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 provides an excellent opportunity to find bargains almost anywhere in the Tucson real estate market. Tucson consists of 583 neighborhoods.
Gross rent in Tucson hovered around $900 a month in 2017. This is somewhat lower than the median US rental rate and a little cheaper than the Arizona median rate. Many people move to Tucon 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 the 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 business to come into the area. Existing business 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.
Let Us Help You In Buying Your First Investment Property
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 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. Consult with one of investment counselors who can help build you a custom portfolio of turnkey cash flow rental properties in the various growth markets across the United States.
All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching top real estate growth markets and structuring complete turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
Remember, caveat emptor still applies when buying a property anywhere. The aim of this article was to educate investors who are keen to invest in Raleigh 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. 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:
- Universities and demographics
www.en.wikipedia.org/wiki/Raleigh,_North_Carolina - Higher average income
www.areavibes.com/raleigh-nc/employment - Tax rates
www.wallethub.com/edu/states-with-highest-lowest-tax-burden/20494/ - Landlord friendly
www.portcitydaily.com/local-news/2018/06/30/heres-how-north-carolinas-new-eviction-fee-law-changes-things-for - Landlords-and-tenants
www.avail.co/education/laws/north-carolina-landlord-tenant-law - Larger than average rental market
www.bestplaces.net/housing/city/north_carolina/raleigh
www.rentcafe.com/average-rent-market-trends/us/nc/raleigh - Military market
www.mepcom.army.mil/Units/Eastern-Sector/ 12th-Battalion/Raleigh - Foreclosures
https://www.realtytrac.com/statsandtrends/foreclosuretrends/nc/wake-county/raleigh - Market Trends And Forecast
https://www.zillow.com/raleigh-nc/home-values
https://www.realtor.com/local/Raleigh_NC
http://www.metrodepth.com/raleigh-forecast-another-average-year
https://www.redfin.com/city/35711/NC/Raleigh/housing-market
