Raleigh has an embarrassment of riches, including a hopping job market, a strong culinary scene, excellent educational opportunities, and a super-hot housing market. If real estate investors looking for guidance asked the Magic 8-Ball whether the future for the capital of North Carolina was bright, the answer would come up, “It is decidedly so.”
But they wouldn’t have to rely on divination. Raleigh and its sister city, Durham, ranked #1 in terms of overall real estate prospects and homebuilding prospects in consulting firm PwC and Urban Land Institute’s 2021 report “Emerging Trends in Real Estate.”
Furthermore, Brett Bushnell, a broker/owner/realtor at Tri Local Realty and 2021 president of the Raleigh Regional Association of Realtors (RRAR), who brings 16 years of experience, predicts that the forecast “is good for continued growth for investors to build on.”
Some 67,000 people are expected to move to the area over the next five years, or 1.5 per hour, ensuring dramatic growth, and a rich opportunity for investors.
Known as the “Research Triangle,” the Raleigh-Durham area is home to IBM, Cisco, SAS, and Wells Fargo. The area offers career opportunities, affordable housing and walkable neighborhoods. Raleigh-Durham continues to be the fastest-growing metropolitan area while remaining among the 30 most affordable housing markets in the U.S. (Credit: The City of Raleigh)
The housing market is competitive, but not prohibitively expensive.
- As of August, the median home price was $351,000, up 15 percent year over year.
- Time on market has dropped in hot housing markets all over the U.S., but according to Zillow, houses in Raleigh are selling in an astonishing four days, second-fastest in the country.
- Prices remain relatively affordable, with the median price right in line with the national average.
(READ MORE FROM MYND: Raleigh's market is off the charts)
A Mecca for Higher Education, and Tech Jobs
Home to North Carolina State University, Raleigh is one of the three cities, along with Durham (home to Duke University) and Chapel Hill (site of the University of North Carolina’s flagship campus) that make up the renowned Research Triangle, owing to these elite universities’ robust research programs.
The city is rich in tech and STEM jobs; Raleigh ranks second (behind Austin) in tech growth over the last decade, and the state capital is #1 in STEM job growth.
And those numbers will only grow, since Apple plans to invest $1 billion in the state, including a new campus and engineering hub in Research Triangle Park (the largest research center in the nation and home to companies like Cisco Systems, IBM, and Fidelity Investments). This will create jobs in A.I., machine learning, software engineering and related fields. The company will contribute $110 million in infrastructure spending on broadband, roads and bridges and schools, to the state’s neediest communities.
Areas near Raleigh that investors should target
The most promising areas lie to the west, south, and east of the city center, says Erica Sizemore, a real estate agent who has lived in Raleigh for 20 years and who has a background in finance with Morgan Stanley. (She also writes about Raleigh for The New Homes & Ideas Magazine.)
The areas Sizemore recommends mostly lie along the current or future path of the 540 highway, which, when completed, will ring the metro area (and will be concentric with the earlier, inner 440 loop around the city proper). The area that was developed first, and currently where the most has been invested, is to the north; the areas filling in to the south and the east are most interesting for investment, she advises.
“Raleigh has a little bit of sprawl, though not out as far as Atlanta,” she says. “But we’re catching up pretty fast.”
All the same, one bonus of Raleigh’s configuration, she says, is that wherever you are, you can get to many parts of the metro area within about a half-hour, as long as you’re not driving from one end of the city to the other. So, even with the degree of sprawl the city has experienced, people don’t have to travel too far to go downtown to see the ballet or a show.
“You’re not committing to an hour’s drive to go for dinner at a top-rated restaurant,” she says. “So you can live in outlying towns but not miss out on the city’s amenities.”
(All statistics are from September 2021 and come from the Triangle Multiple Listing Service.)
This aerial photo of Raleigh, N.C. from 1955 shows Cameron Village. Oberlin Road runs along the left side of frame, and Clarke Avenue runs along the bottom. Today, the area is booming with shops and promenades. (Credit: Conservation and Development Photograph File, State Archives of North Carolina)
1. Downtown South
The southern end of downtown Raleigh is about to see major changes. A 140-acre, $2.2 billion mixed-use development is in the works, featuring an entertainment district centered on a 20,000-capacity soccer stadium that will also include housing, hotels, retail, and office space, all just off the southern part of the 440.
“Drive just 10 minutes from downtown Raleigh, and things can start to feel quite rural," says Sizemore, "such that you might actually say, ‘Wait, where am I?' You’ll see cows and crops, as well as land owned by North Carolina State University, which has well-respected veterinary and agricultural programs," she points out.
“The area around Lake Wheeler and South Raleigh should continue to expand with the investment in Downtown South by Kane Realty, connecting those neighborhoods to our urban center, with more development everywhere in between,” says Sizemore.
- Average home price: $439,576
- Year-over-year-increase: 15.1 percent
- Average days on market: 13, down from 23 a year prior
2. Holly Springs & 3. Fuquay-Varina
The neighboring districts of Holly Springs and Fuquay-Varina, to the southwest of Raleigh proper, lie just outside the future route of the 540 (which currently ends just north of Holly Springs).
“This whole quadrant is going to get more dense,” says Sizemore. “It’s going to change immensely. In terms of return on real estate investment, this will be a great spot, partly simply because it’s one of the areas where there is still land to be had. Other areas just don’t have land for developers and builders outside of infill opportunities.”
Amgen, whose drugs treat conditions like low white blood cell counts, osteoporosis, and colorectal cancer, recently announced plans to erect a $550 million manufacturing facility in Holly Springs, bringing more than 350 jobs.
And Fujifilm Diosynth Biotechnologies is building a massive biopharmaceutical manufacturing plant there, which, says Sizemore, "represents a $2 billion project with 725 area jobs, and will become the largest bio-pharma manufacturing facility in North America."
- Average home price: $457,740
- Increase year over year 12.4 percent
- Average days on market 11, down from 27 a year prior
- Average home price: $361,499
- Increase year over year: 14.4 percent
- Average days on market 9, down from 26 a year prior
Duke University is one of North Carolina's Crown Jewels, and a key member of the renowned Research Triangle mentioned above. This photo of a student sitting outside of the Duke University chapel was taken from the Bryan Center walkway. The walkway was closed between 2013-2016 for renovations, and is an example of investment and maintenance taking place. (Credit: Flickr/cb2vi3)
Durham is its own city, about 30 miles northwest of downtown Raleigh, and home to about 325,000. But as Sizemore sees it, it’s up there with any of the other outlying areas of Raleigh that are highly promising for investors.
“It’s a cool place,” says Sizemore. “Neighborhoods are gentrifying near downtown Durham.”
With many people moving here from bigger cities elsewhere, she adds, it has a great urban vibe.
“It has a diverse community and culture. The town gets forgotten because we are the capital, and the center of the state. Durham has as much if not more in the way of arts, and the scene is more grassroots.”
Durham has other advantages as well.
"It’s also home to where companies like Google are putting down roots and has access to the Research Triangle Park, sometimes referred to as the Silicon Valley of the East,” Sizemore says. “Many can still get more house for the price in Durham.”
Google announced in March that it will create a Durham hub that will create over 1,000 jobs, with engineers working on Google Cloud projects.
- Average home price: $364,533
- Increase year over year: 14.8 percent
- Average days on market 13, down from 24 a year prior
Clayton, about 15 miles southeast of downtown Raleigh, was home to about 5,000 in 1990, and has risen to nearly 29,000 today. Like some of the other outlying areas, Clayton, which rests just over the line from Wake County into bordering Johnston County, remained “sleepy” until recently, says Sizemore, recalling the state’s agricultural history.
“Interstate 95 runs just to the east of Clayton,” Sizemore says. Transportation centers often determine population centers, she says, pointing out that Clayton lies between Raleigh and I95, promising huge future growth.
“Folks can get homes with more land,” says Sizemore, “so we should see a lot of expansion there."
“And rental rates are good as compared to earnings,” she noted. “Investors can currently get $300,000 houses with an average rent of about $1,800 a month for a single family home. It’s hard to find that elsewhere. The cap rate is pretty effective.”
There is currently a great deal of new construction in the area, she says, which is on the fringe of where the 540, not yet under construction there, will continue.
- Average home price: $310,769
- Increase year over year: 15.6 percent
- Average days on market: 11, down from 27 a year prior
Just 10 miles east of downtown, Knightdale sits astride the 540 and is just moments north of Interstate 87, a connector to eastern North Carolina.
“For people who work somewhere else but want to be connected to Raleigh,” says Sizemore, “I can see that as pretty attractive.”
“Knightdale has a good plan for growth,” she adds. “They’re attracting young buyers with some nice breweries and restaurants going in, and like many areas the small downtown is quite charming. A young first-time buyer who wants to get to downtown Raleigh in just 10 minutes can afford a house here, and it has a cute little culture.”
- Average home price: $303,025
- Increase year over year: 12.1 percent
- Average days on market: 6, down from 20 a year prior