The Raleigh Housing Market: Still a Smart Investment in 2020?

It’s difficult to find a better real estate market than Raleigh, North Carolina. This capital city is part of the North Carolina Research Triangle – a major center for high-tech and biotech research -- and was recently ranked as the #2 hottest real estate market in the U.S.

This southern metropolis is also the second-largest city in North Carolina. Raleigh is home to world-class technology and life science institutions, artists who thrive on the area’s rich cultural history, and one of the tastiest food scenes in this part of the U.S.

Raleigh is one of those forward-thinking cities that’s able to balance business and development-friendly policies while creating a high quality of life for the people who live, work, and play here. In fact, Raleigh was recently named one of the top convention centers in all of North America.

Learn more about why Raleigh is one of the hottest real estate markets in the country today.

 

Population Growth

With close to 500,000 people in the City of Raleigh and more than 2.2 million people in the Raleigh-Durham combined statistical area, Raleigh has a population density that’s similar to Atlanta and Austin. Diversity in the city is increasing, while Raleigh’s high percentage of baby boomers and millennials help keep the job and housing market strong.

Key Population Stats:

 

iStock-161821581

Job Market

Raleigh is one of the cities where STEM (science, technology, education, mathematics) jobs are on the rise, according to a recent story in USA Today. In fact, Raleigh beats out traditional high-tech powerhouse cities such as San Francisco and Boston for STEM job creation, biotech, and high-tech employment. 

That’s important to real estate investors, because tech jobs pay a median annual income that’s significantly higher than non-tech jobs, based on a recent report from Pew Research Center.

Key Employment Stats:

  • GDP of Raleigh is more than $83 billion, more than doubling since 2002.
  • Raleigh has one of the 10 hottest job markets in the U.S.
  • Job growth in Raleigh increased at 2.6% while unemployment dropped to 3.1%.
  • Major employers in Raleigh include the State of North Carolina, WakeMed Health and Hospitals, North Carolina State University, UNC Rex Healthcare, and Duke Energy Progress.
  • Other major companies based in the Raleigh metro area include Capitol Broadcasting Company, First Citizens BancShares, and multinational software company Red Hat.
  • Raleigh is part of North Carolina’s Research Triangle, one of the largest high-tech and biotech research parks in the world.
  • Forbes ranks Raleigh #3 as the best place for business and careers in the U.S.
  • Major universities in Raleigh and North Carolina include North Carolina State University, Duke University, and University of North Carolina at Chapel Hill.
  • 48% of Raleigh residents hold a bachelor’s degree or higher, compared to just 30% nationwide.
  • Interstate 40 is one of the major highways passing through Raleigh, and the Amtrak train station in Raleigh is one of the busiest in the southern U.S.
  • Passenger growth at Raleigh-Durham International Airport (RDU) recently set an all-time high, and FedEx and UPS provide cargo service at the airport. 
  • With more than 9,000 acres of parkland, Raleigh is the perfect place for outdoor activities like biking, hiking, or kayaking year-round.
  • The North Carolina Museum of Art is one of the five must-see art museums in Raleigh, and sports fans can watch the NHL Carolina Hurricanes in action at the PNC Arena.

 

iStock-1095612102

Real Estate Market

The Triangle Business Journal recently said Raleigh has one of the best real estate markets in the country, and the latest report on Emerging Trends in Real Estate 2020 from PwC and the Urban Land Institute lists Raleigh-Durham as having one of the top three best real estate prospects for 2020.

Looking at the real estate market stats of Raleigh, it’s easy to understand why.

Key Market Stats:

  • The median home value in Raleigh is $280,300 according to Zillow (as of Sept. 2019).
  • Over the past 12 months, values have increased by 5.4% with values forecasted to grow by another 3.5% over the next year.
  • Homes in Raleigh have a median listing price of $339,900 and a median sale price of $258,800, indicating there’s plenty of room for negotiation.
  • Median list price in the City of Raleigh is $154 per square foot, higher than the per square foot median list price of $144 in the Raleigh metropolitan area.
  • Average days on market is 52.
  • 18.7% of the home listings in Raleigh have a price cut during the listing period.
  • 4.9% of the homes in Raleigh have a negative equity vs. 8.2% U.S. average.
  • 0.7% of the homes in Raleigh have a delinquent mortgage vs. 1.1% nationally.
  • Rental property investors can potentially benefit from motivated sellers in Raleigh by buying into a strong market where both the negative equity and delinquency rates are well below the national averages.

 

Strong Renters’ Market

More than 70% of the land in Raleigh is zoned for residential use, which is one reason why Raleigh has been more affordable for housing than Austin, Atlanta, and Charlotte, according to the City of Raleigh.

Key Market Stats:

  • Median rent in Raleigh is $1,569, about the same as rents in the overall Raleigh metropolitan area.
  • Rents in Raleigh have grown by about 7.4% since 2016.
  • Nearly 70% of the housing units in Raleigh rent for more than $1,000 per month, according to RENTCafé.
  • 44% of the households in Raleigh are occupied by renters.
  • Most affordable neighborhoods for renters in Raleigh include Abbington Ridge, Anderson Pointe, and Antelope Point where rents run $973 per month.
  • Most expensive rental areas in Raleigh are Worthington, Wynford Place, and Wynstone where monthly rents are currently $1,511.

 

iStock-698202918

Historic Price Changes & Housing Affordability

Real estate investors employ a variety of analytical tools to determine whether or not Raleigh is good for investing in rental property. Historical price changes of homes provide both a long- and short-term pricing trend, while affordability is one way to determine the potential demand for rental property in Raleigh.

Every quarter, the Federal Housing Administration publishes a house price index that tracks the price changes of housing over the recent quarter and year, as well as historical pricing trends. According to the latest FHA 2019 Q2 House Price Index:

  • Home prices in the Raleigh metro area have increased by more than 178% since Q1 1991. Over the past 5 years home prices have increased by more than 38% and grown by 0.38% from the last quarter.

Kiplinger, one of the leading publishers of business forecasts and personal finance advice, uses ATTOM Data Services to compile home price changes and housing affordability of the top 100 U.S. markets. 

Affordability ratings range from 1 to 10, and the lower the number the more potentially affordable a home is to purchase. However, investors should note that even in the most affordable markets many people choose to rent rather than own.

  • Since the last real estate cycle market peak in May 2006, home prices in Raleigh have increased by 30.1%.
  • Since the last real estate cycle market bottom in March 2012, home prices in Raleigh have increased by nearly 39%.
  • Raleigh has an affordability index of 6 out of 10, meaning the metro area is one of the more expensive places to own a home in the U.S.

 

Quality of Life

Raleigh consistently ranks as one of the best places to live, work, and play in the U.S. In fact, local news channel ABC 11 recently reported that for three years in a row Raleigh made the list of top three cities for the best quality of life.

Key Quality of Life Stats:

  • Second of the Top 100 Best Places to Live in 2019 by Livability.com
  • Best Quality of Life in the Americas by Numbeo.
  • Second in the most Family Friendly Cities by Homes.com
  • Raleigh is one of the Top 10 Best Cities for New Grads Starting Out, according to MarketWatch.
  • Fifth Best Metro Area for Dating, according to ApartmentList.
  • Best City to Drive In 2019 by Wallethub.com

 

Get Out the Map

Where to begin your search? Roofstock created a heat map of Raleigh based on our Neighborhood Rating, a dynamic algorithm that enables you to make informed investment decisions by measuring school district quality, home values, employment rates, income levels, and other vital investment criteria.

 


Ready to invest in the Raleigh market? If you haven't already done so, create your free Roofstock account and set up alerts. We'll notify you when we have a Raleigh investment property that matches your search criteria.

 

 

Click me
Jeff Rohde

Author

Jeff Rohde

Jeff has over 25 years of experience in all segments of the real estate industry including investing, brokerage, residential, commercial, and property management. While his real estate business runs on autopilot, he writes articles for firms such as RealtyMogul, Yardi Matrix, CrediFi, and Roofstock.

Join 100,000+ Fellow Investors.

Subscribe to get our top real estate investing content.

Subscribe Here!