The tenth most populous city in the Southeast is Raleigh, which is a well-known illustration of a planned civilization in the United States. After Charlotte, it is the second-largest city in North Carolina. Raleigh is known as the “City of Oaks” because of the numerous oak trees that line the streets in the city’s center.
Raleigh has a lower cost of living than the rest of the country. For residents of Raleigh, the cost of utilities, healthcare, food, and transportation is all lower than the national average.
Like many other housing markets across the country, Raleigh’s is characterized by a severe lack of supply and a high level of demand. So, is Raleigh a smart place to invest in real estate? Or will real estate prices go up in Raleigh NC? Find out what’s happening in real estate markets around the city and which is the best place to invest in real estate if you are in Raleigh.
Covid-19’s Effects On Raleigh’s Housing Market
The Covid-19 pandemic has undoubtedly had an impact on the lives of billions of people worldwide in just a single year. Untold numbers of people have died as a result of the epidemic, which has also closed borders and caused political unrest and economic collapse. In fact, Covid-19 has triggered disasters in unimaginable ways.
Raleigh’s housing market is facing the same difficulties as the rest of the country. The pandemic’s landscape has resulted in a market with low inventory levels and traditional competition. Buyers have remained steadfast throughout the past ten years of price increases. The signs for today exhibit a rare confluence that strongly favors selling. However, the most recent increase in mortgage rates and the upcoming possibility of a recession may limit pricing and competition.
It’s important to remember, though, that the housing market in Raleigh might be a little more steady than those in bigger cities. At least Raleigh’s unemployment rate was significantly lower than the national average during COVID-19. As long as there are still buyers in the market, Raleigh’s real estate market should continue its current trends.
Elements of a Good Real Estate Market
A growing population, an abundance of employment, and affordability are three major factors of a good housing market. A place is most likely a good place to invest in real estate if it is showcasing all of these economic trends.
By considering the above mentioned trends in Raleigh’s real estate industry, find whether Raleigh is a good place to invest in real estate or not.
In Raleigh City, there are more than 1.5 million residents, and this population is growing annually at an average rate of 3%. Due to affordability and employment opportunities, there has been a noticeable influx of people moving to Raleigh City over the past few years.
Abundance of Employment
Many famous ranking lists ranked Raleigh the 3rd most hottest job market in the country for 10 years. Major industries driving the city’s economy include manufacturing, finance, insurance, real estate, professional services, government, education, transportation, and health care. Raleigh is also one of the tax-friendliest cities for businesses. The job market continues to expand, which is a major reason Raleigh’s population keeps growing.
The cost of living is lower than average in Raleigh. Although property values in the city vary slightly, the median price to purchase a single-family home or condo is just under $215,000. Zillow projects a 5.1 percent increase in home values in the upcoming year, bringing the total increase since 2019 to over 6 percent.
Raleigh Real Estate Industry Trends 2022
Raleigh’s real estate seems to have thrived more than that of many other cities during the COVID-19 storm. Demand can continue despite historical appreciation if there are high employment rates and a growing technology sector. The following Raleigh housing market trends have emerged throughout 2022 as a result:
If sales continue at the current rate, inventory, which currently stands at about 3,358 active listings, will last about 6.3 weeks in Raleigh. Although it might not seem like much, Raleigh actually outperforms national trends. 6.3 weeks of inventory, however, leaves much to be desired and is a major factor in the intense competition. For the foreseeable future, inventory will be low, at least until new construction enters the market.
Home Price Trends
Few metro areas in the nation have seen home price trends keep up with those in Raleigh. The median home value in Raleigh increased 34.8% over the past year as supply and demand determined buying trends, which is much higher than the national average. Therefore, it appears that prices will continue to rise in 2022 and 2023 as long as supply is limited and demand continues.
Interest Rate Trends
The majority of the nation’s markets are being shaped by interest rates, and the real estate market in Raleigh is no different. The average commitment rate for a 30-year fixed-rate mortgage has increased significantly nationwide, from 3.45% in January to 5.23%. Less mortgage applications have been made as a result of the rise, but the demand is still high enough to cause prices to rise as a result of a shortage of supply. However, if rates continue to rise, activity will probably slow down and perhaps even cause a slight decline in home prices.
The way Raleigh real estate investors view local assets is being impacted by mortgage rates. At the very least, impending rate increases will convince many investors to take action right away. Investors who can benefit from the current low rates may be able to partially offset today’s high costs.
Raleigh Real Estate Market Forecast 2022
While the Raleigh real estate market seems to have been somewhat less affected by COVID-19, it has nonetheless taken the same course as many of its national counterparts. Most importantly, the city’s inventory cannot keep up with the excessive number of buyers. Many of the current trends in the Raleigh real estate market have been effectively shaped by supply and demand constraints. But as we begin to gain more insight into this market, it becomes more obvious which trends can be extrapolated into the future.
Here is a look at a real estate market prediction for Raleigh that will probably come true:
Home Values Will Rise
There is nothing to assume that Raleigh’s real estate market’s home values won’t continue to rise; they have increased for ten years running. Demand far outweighs supply, which has only 6.3 weeks of inventory and a strong labour market. Home prices are therefore anticipated to increase by as much as 18% over the following year.
Rents Will Rise
Since many would-be buyers were forced to turn to rent due to the housing market’s excessive demand, rents have increased by 15.6% in the past year. Despite this, the demand for rentals is anticipated to increase for the foreseeable future. Rents will ultimately increase as a result of increased competition, just like home values.
Interest Rates Will Rise
In order to combat inflation, the Fed has already raised the benchmark interest rate, and more increases are on the way. Although the precise amount is unknown, it is safe to assume that higher rates will sooner rather than later raise the cost of homeownership in the Raleigh housing market. Even the mere threat of cost increases will spur demand, driving up home values even more.
Right now, Raleigh is profiting from a storm. The economy of the city is essentially booming; almost all economic indicators are better off now than they were in previous years, and more tech companies are located within the city limits. As a result, prices have risen quickly without raising concerns among locals about a potential bubble. Even without anything else, there are a number of indicators that support Raleigh is a good place to invest in real estate.