RALEIGH / DURHAM Real Estate: Housing BOOM or BUST in 2021?
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- เผยแพร่เมื่อ 5 ส.ค. 2024
- The Raleigh / Durham Housing Market is getting a lot interest from home buyers and real estate investors over the last year. Especially considering that Apple is now building a $500 million, 3,000 employee campus near Cary in the Research Triangle Park. But does that mean Raleigh is a good place to buy real estate right now? Or is it in a Housing Bubble that will eventually crash?
Raleigh, along with Durham it the north, have a stable real estate history. The market withstood the last Housing Crash well, only experiencing a 13% decline in home prices. But the downside to that steadiness is a lack of appreciation. From 1997 to 2021, over nearly 25 years, home prices in Raleigh went up by an average of 2.7% per year - barely above inflation.
Why is real estate in Raleigh so low growth? Look to housing supply. Raleigh builds more new homes and apartments than virtually any other market in America. So much new building keeps supply high and prices affordable, leading to low levels of appreciation. This is a great thing for society in Raleigh, but not so great for home owners and real estate investors.
The upshot of all this is that Raleigh likely has more downside protection from the 2021 Housing Bubble than a place like Austin - a market with similar economic growth. Home price growth in Austin has surged past local wages, making the local housing market very unstable. Raleigh, on the other hand, has a much closer relationship of home prices and wages, providing the market with more security.
Some of the most expensive areas in Raleigh include the Five Points neighborhood, as well as Cary and Chapel Hill. The cheapest areas in the metro are located in Durham, which are also the neighborhoods that have experienced the most appreciation as of the last 5 years. However, chasing appreciation this late in a Housing Bubble might not be the best idea!
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0:00 Apple moving to Raleigh!
1:41 Raleigh...BAD Appreciation?
4:03 Too Many New Homes / Apartments
7:17 Structural Supply...not Active Inventory
9:13 Raleigh: Good Downside Protection
10:56 How to Avoid the Next Crash
12:10 Home Prices across Raleigh / Durham
15:25 Appreciation across Raleigh / Durham
17:19 In Summary: Slow & Steady
#RaleighRealEstate #RaleighDurham #AppleRaleigh
This video came at the perfect time as someone who now lives in NC. You do amazing work
Thanks Rodrigo!
Any chance to do an update for the RDU market? 😀
The market here is dumb. We used to pay for what a home is worth. Now we're paying for homes for what immigrants from the North think is a good deal. And now I don't stand a chance.
Recently relocated to Raleigh and renting, this video is awesome. Thank you.
Now that you’ve got raligh and Charlotte, let’s see Asheville.
I live in the Raleigh suburbs...appreciation has skyrocketed in the past year. I wanted to trade up last year to a nicer neighborhood, and wasn't able to make it happen and this year with the shortage of homes on the market and bidding wars...I haven't been able to get it done.
You probably should consider the effect of NC’s move from an earnest money (usually refundable if the sale falls through) system to a due diligence fee (not refundable if the sale falls through) system. People are having to put down huge DD fees, like $20k, $30k, up to $100k to get a contract. Then they lose that if they don’t close even if the reason is bad problems found at inspection or financing falls through or something else out of buyers control. This puts more pressure on buyers to both put down large DD and then to close and is another way bids compete that you don’t see in the data because it isn’t public record.
Very interesting point. Thanks Mike!
Thank you Nick for such great content!
Would love to hear the Data for Asheville, Hendersonville, Rutherfordton area!
How bout Baltimore, Md next?
Yes, many many new apartment complexes and new neighborhoods with SFH’s on postage stamp plots. The issue right now is in luxury housing b/c for people relocating from California, NY/NJ/Mass/DC have money to spend on the upper end where there is tiny supply, particularly those well located neighborhoods.
I’m renting from a Chinese investor in the RTP area. He closed in March of this year and paid $370,000 to the builder. Fast forward 4 months the same property is being sold at $460 and higher. It’s called irrational exuberance and many people will regret it. There is no way a property increases in value by $100,000 in less than 6 months. Wages are not keeping up up with these prices. I believe this is unsustainable. Waiting it out or retiring overseas.
I wouldn't mind seeing you do a video on Baltimore, MD.
seconded.
Who the hell wants to live in Baltimore 🤮
On the list! Some others before it, though.
thank you
Thanks for the info. We were looking at Raleigh before Apple announced but I am not sure how much that really affected the prices. People have been offering way over asking and some properties are not even hitting market before being bought up. I am being careful because I get the feeling that people are acting on emotion and not logic.
Same here. We were looking for something with more land outside of the RTP area but everything is inflated and selling within a few days. We are riding this one out.
Might be worth a closer look, there are a lot of neighborhoods that are older and under appreciated, but close in and very wooded. Do your research, you might find a gem in the rough.
I'm also hearing that many BANK APPRAISALS are coming in at less than asking price, forcing buyers to pony up significant cash or they lose their deposit/earnest money/due diligence money.
@@ibezimokehie9526 Less than asking price as in list price or closing price?
@@ibezimokehie9526 That sounds like a good way to end up underwater from day one. Nope, I wouldn't do it unless I had nowhere else to live until things calm down.
Seems pretty well aligned with what I have seen in Raleigh the last few years as a buyer and seller. Bought my condo in 2017 for $148k. Sold in January 2021 for $185k. Went under contract for a new build home for $505k in September 2020 in the 27713 zip code. One of the more stable areas. Same floor plan and finish level now sells for around $600k. This zip code is less than 15 minutes from the new Apple campus. My guess is that with the growth trends and quality of life, we will likely not see a big crash if we see one at all. But we are definitely not going to see the current growth rate long term. My guess is we see things start to level off this winter and return to a more modest growth trend during the 2022 peak sales season.
Excellent analysis! What about Greenville, SC?
While a house building to jobs ratio of 1.03 may not be good for home price appreciation, it is certainly good for the growth of the city. Perhaps in the long run, that is more important than greed.
I like this comment.
I live in the RDU area and work at a location in Research Triangle Park and also drive a lot all over the RDU area (delivery driver side job). Houses and apartments are being built constantly at a rapid rate. Real estate prices have definitely increased quite a bit in the last 7 years or so and especially within the last year.
Thanks for the local perspective John!
Well done. A great vid would be the best markets for investors focused on rental properties going forward.
Thank you! You probably want to target markets with higher upfront cash flows/yields right now.
Can you do a video on Philly
I jus commented on a prior video asking about Raleigh. This is nuts. Looking forward to watching this.
I would love to see your analysis of the current RE market in Tucson, AZ.
I need a market deep dive of Phoenix, AZ.
What's the map website you use? Looks like a nice tool.
Hey Nick, I'm curious as to what program you use to create your charts, and especially, your maps?
Great question! I use Tableau Graphing Software.
As someone who has lived in nc most of my life the very things that make this state great are being changed by the influx of folks. You begin to lose the quality of life sometimes and what made it worth staying here. It's a catch 22 situation...
I hear you! Lots of growing pains in many southern states right now.
Those folks (mostly from the northeast) have made driving unfriendly, but have brought much culture, fine restaurants, and big city activities to the area including an NHL hockey team. You can even find a place to go curling.
@@lymancopps5957 Don't be mistaken, there was culture and restaurants, sports and recreation before the "northerners" got here, and less traffic.... NHL, eh....
@@greatlylovedbygod I moved here in the late 80s from the Southwest. In those times sports was only for those who came from the 3 universities. Very few really ethnic restaurants existed (Raleigh had 2 Mexican restaurants), most others were chains, people who lived here at the time mostly moved from small towns and cities from down east and they were very clickish. We now have an incredible mix of people from all corners of the globe.
@@lymancopps5957 I've lived here a great deal of my life and I'm 58. I've seen a lot of the local mom and pop places perish. There was culture here...perhaps in your move here you weren't familiar with it. At any rate it has changed greatly. Some good...some not so good. You can't base what you may have deemed culture and growth on where you come from...yes the sports were university sports but that was part of the culture.
What is that mapping tool you are using called?
Tableau!
Um, housing prices here aren’t exactly what I would call reasonable. A bunch of hot shot companies decided to set up shop here year after year. This skyrocketed rent in most places from $650-$700 to over $1,000 for a 1BR apt over the past 8 years. I’ve been here since 2008 and things used to be cheap. People are migrating here from places where $1500-$2500 for a 1BR apt is normal. So they think $1,000 for a 1BR is good. It is not. These are also people who make a shit ton of money. LOTS of folks here are still making $9/hr. The really sad part is the vast number of homeless tent camps that are being shut down by the city and sold to greedy investors who will then charge exorbitant rent to desperate renters. It isn’t fair. Where do the homeless people go? On to the street. We have a dire affordable housing crisis here because Fortune 500 companies keep setting up shop. Not everyone is making Apple or Google or Research Triangle Park kind of money.
Nick, your content & Research is brilliant!
How many properties do you have in your portfolio?
0.
@@ReventureConsulting
Your predicting a housing bubble for Austin, TX and you own ZERO SFR’s?
You just lost ALL credibility.
I wish you the best truly, but you are going to be very disappointed by 2024.
Blame The FED.
When do you think the bubble might burst? It's look like we are in the early stages and may have years of price appreciation before any price relief.
We live in the Apex/Holly Springs area but have been looking to buy something with more land (1-2 acres) out towards Pittsboro. There isn't much available and the prices seem way too high right now. Our own house per zillow has gone up $50-$60k in the last 6 months or so. I think we will ride out the next few years since I-540 will be done in our area then and hopefully will raise our value more, then we may decide to leave the area for somewhere less populated and peaceful. Yes, good jobs and growth are good for the economy, but I crave a slower pace of life (I grew up in a very small town). You are right about new builds. Anywhere there is old farmland or woods, they get clear cut for zero lot line neighborhoods. It's depressing in my opinion, but all of the new jobs require new housing.
Thanks for the local insight Tilly! And congrats on your appreciation!
you need to spend some time talking to real estate agents actually working day to day in these markets. This is an extremely competitive market right now and the are will continue to grow. there is not going to be a housing crash.
Agents are the absolute worst people to give you an objective analysis of the housing market.
It’s not so much Raleigh unless you’re inside the inner belt line or closer to the Emoloyers like SAS ,IBM , amazon along with other juggernauts. But the supportive area for the local economy make their drive into Raleigh. Aka knightdale and other surrounding areas. I purchased in knightdale in 2019@ $335k my latest appraisal came in at $425k. And guess who left Selma,nc because of the market 😉. Talk about timing it just right. Another interesting fact there are basically no starter homes in the say sub $200k market and it’s been that way since 2018. Example 1000sqft 2/1 and 3/1 homes going for $160k prepandemic or the properties having being rehabbed.
Thanks for the comment and local insight Joel!
I would love for a St. Louis MO video
Great digestible data. Thanks. I’m generally curious about one of your calculations. Does your jobs:permits ratio account for tear downs? Inner Raleigh is seeing *a lot* of 80 year old homes worth $400k getting bulldozed and replaced with $800k custom builds. This would increase your denominator but not add to the overall inventory. I do think you’re correct about appreciation and rapid building in the suburban areas.
Please do Tampa, FL
Soon! Stay tuned.
Live outside of the Charlotte market. Totally exploding. I have been flipping homes since 2018. Stopped buying last fall, way too expensive. Building cost are too expensive as well. I won't risk my hard earned money on these inflated prices. I am holding until the crash of both materials and real estate markets. Bas9retired so I can wait.
Thank you for the comment and local insight!
I know the top is in because the adds are popping up on the radio about how to learn to be a real estate investor in Charlotte NC. Same as 2006/2007. Don't try to catch a falling knife. Food for thought.
Yup - telltale sign.
Hi Nick, where are you getting the data for the Raleigh zip code real estate prices? Can you send me the link so I can see the raw data? Same for the median income for 2019 you've pulled?
Thanks for the comment Peter! I am working on a web app / subscription service that will make this data accessible to a wide audience! Stay tuned and make sure you are signed up for the Reventure mailing list for updates.
@@ReventureConsulting Awesome, looking forward to it!
Living in Greensboro, I see no slowing in the market. I will say homes in 230,000 to 300,000 are staying on the market longer....instead of one week or less, to two weeks....not much difference. many new "coming soon" signs is really a way to sell a home without official listing, it seems...Semantics vs reality(?). I enjoy watching the market. Any data on the Greensboro NC area in comparison to NC as a whole.
Nick, I am seeing a lot of houses are being listed the same day and and being sold the very same day for $70 to $100K over the listed price. Do you think that Zillow or other realtors are trying to boost and stimulate the receding hot housing market?
Yes Open Doors and Zillow among other institutional investors are artificially inflating the market in order to transition Americans into a renters nation. Plan accordingly, invest wisely and have a game plan!
People want to be in chapel hill , but the avg cost house is 500k+, Durham is more affordable
Good insights! Thanks!
Can you please do a video on Tampa?
Soon!
I bought my home in Fayetteville, NC 2019 due to gentrification I saw in 2018 while living in Durham.. Fayetteville is a Military town (Ft. Bragg) when inflation rises so does militarily pay and their bah ... we're only 12yrs off the 2009 lows. If you study the 18yr real estate cycle . That means 6yrs left im out in probably 4yrs.. paid 159k in 2019, im up nearly 50k in 2.5yrs...
Perfect
Thanks Jatinder!
Can you do Orlando, FL???
Inventory is low causing competition. Market is hot due to multiple offers but is not crazy relative to other markets and there is still value as you point out in the video. Investors probably seeing the same.
Awesome!
Thanks!
Good video Nick. I am in Cary and price appreciation here is nuts. We bought last year right when Covid hit and now probably worth 30% higher. Like you said some areas are more desirable especially ones close to RTP. Most nice areas are built out except for Holly Springs area where you can find some.
Thank you for the comment!
Long Beach, CA
Watching this video now. Raleighs market is more built to rent not own and rents are huge. Most that I know that work in Raleigh live outside true “Raleigh”. Isn’t the info be presented a little skewed? Within the “belt line” is crazy money and has been the last few years. I don’t think inflation is the true appreciation.
The value data is metro-area Raleigh, which includes outlying suburbs.
Philadelphia suburbs have much better appreciation than Raleigh over that same period (Philadelphia Suburbs, not the City)
Yup! Most places have done better than Raleigh.
Please analyze Jacksonville and Naples FL next.
Will be doing Tampa before those two! But Jacksonville is on the list.
Those homes being built in NC are cheaply made vinyl homes. What happens when the hurricane and tornados come thru? How will the house withstand? The home will fall apart. I guess buyers are so desperate for a home for whatever reason their not able to use logic, over paying for a vinyl home? Ummm...No Thank you well as live in a trailer basically the same thing.
I purchased a house in Raleigh in the early 90’s for just under 100K, similar houses in my area are selling for well over 300K now. There is a broad difference between properties close in and further out. What you say may be true for houses further out, but the closer to downtown you go, housing prices rise a high order of magnitude greater. Strong tech and biotech keep this area very vibrant. Raleigh is a very beautiful city, properties close in have risen significantly as the city is very well run and the city never feels overdeveloped. Durham is an interesting city where you have a lot of good and bad neighborhoods intermixed as you would normally find in academic cities, many of those neighborhoods exude character with classic frame houses. There are a lot of remodeling opportunities in Durham. Durham hosts world class education with Duke University, UNC is very close by in Chapel Hill and the School of Science and Math, it has an old Tobacco Road character with red brick buildings, the American Tobacco factory has been transformed into a wonderful campus for start-ups and businesses. The city is very liberal, so crime is higher than Raleigh and Cary.
* "There is a broad difference between properties close in and further out. What you say may be true for houses further out, but the closer to downtown you go, housing prices rise a high order of magnitude greater."*
That's what I was trying to tell @Reventure Consulting. I think the most important factor in recent price trends is proximity to a Downtown area whether in Durham, Cary, Raleigh or even smaller outlying towns like Graham, Hillsborough and Smithfield.
I love the Raleigh/Durham area, it's wonderful.
Classic contemporary pattern - Californians go to lower-priced areas and without any sense of value, over-bid and drive prices up.
100%.
As a Raleigh native I can say it's New Yorkers who doing what you describe. We tend to get those people and not so much Californians who move down here.
Great video! Could you do an analysis of the Detroit Metro area? It's always been thought you could get a house for a song but I'm wondering if that is still the case.
Thanks for the comment! Added Detroit to the list.
I am building a home in Holly Springs and went under contract last August (2020), the same house is now $126k more to build. Very thankful my home will close in July. Such high demand with so many people coming from NY and other northern blue states, plus growth for employment is increasing helping out growth.
I'm coming from NY. See you in a few =)
@@AG-sj6ll It smells pretty bad on a hot day. I was at the Target shopping center a couple days ago and could smell it.
@@tillyp9953 I have not noticed it where I'm building, can't report on the matter.
I am in a similar situation in Durham. I went under contract on a new build for a floor plan starting at $430k. That same plan now starts at $560k.
Phoenix metro area (AZ)
Under-building is the biggest contributor to the homeless problem in most major cities.
Certainly could be in places like NYC, SF, and LA.
Crisp content! Solid research!! Please think about making videos about Saint Petersburg, Naples, Ckear Water FL 🙏🙏
"Tons of new building going on" Yup, not a good thing. Check out the morning traffic and construction (bldg another highway lane) off the I40, Fuquay Varina exit! Reminds me of the Long Island Expy...noooooo! Sorry, but new cookie cutter houses next to a highway is a no go for me. 4 years ago, these homes didnt exist!
More building is pretty good when people want to live there.
The alternative is what you have in places like NYC and SF with residents using the government to make existing housing as expensive as possible to keep their net worth up and the riffraff out.
Introduce me a good broker, thanks.
Durham NC 27713 please