‘We’re still a destination market’: Raleigh’s real estate market remains strong
Written by Brian Boucher
Reviewed by Mynd Editorial Staff
If Raleigh had a report card showing the strength of its housing market, job prospects, quality of life, educational opportunities and amenities, it would be scoring straight As.
The metaphor is fitting, because as the home of three top-flight universities with world-class research departments, the tri-city Raleigh-Durham-Chapel Hill area attracts major research & development funding and leaders in industries such as technology and life sciences. It all adds up to healthy salaries for a highly educated population.
Along with low inventory, that translates into a competitive Raleigh real estate market, even accounting for a slight cooling owing to rising mortgage interest rates.
Per Realtor.com as of November 2022:
Median listing price: $434,900, up 8.5 percent year-over-year.
Median sales price: $420,000, up 9.1 percent year-over-year.
Homes are on the market a median of 55 days, up from 46 a year prior.
“We’re still a destination market,” said realtor Tim McBrayer, the Raleigh Regional Association of Realtors’s secretary/treasurer. “It seems like every day I read about a company expanding or moving here, or a new retail development, meaning people having to buy houses. The market is still strong.”
While he acknowledges that the Raleigh real estate market is seeing some adjustment due to rising interest rates, he points out that the National Association of Realtors placed the city as #2 on its list of markets that will lead the nation in 2023, with prices rising by at least 5 percent.
On the other hand, John Burns Real Estate Consulting does point out that in terms of new homes, the Raleigh housing market is in a "slowing" phase.
LendingTree lists Raleigh as the third-most-competitive housing market in the U.S. due to the high percentage of home buyers who notch a credit score better than 700, place 20 percent down, and secure a mortgage before shopping for a home.
A favorable outlook for investors in the Raleigh real estate market
North Carolina's second-largest city, Raleigh grew 23 percent since the last U.S. Census a decade ago, and over two-thirds of that growth was in-migration.
The rental market for single family homes is strong, with a home currently renting for a median $1,820 according to John Burns Real Estate Consulting, up 10.2 percent year-over-year.
Another bonus for real estate investors in the Raleigh market, points out Amanda Rogers, Mynd’s Raleigh-based portfolio manager, is the state’s legal landscape.
“In many states, we see policies lean toward protecting property owners or residents,” she says. “California, New York and Massachusetts are heavily tenant-focused, for example. While laws protecting tenants start well-intentioned, it can take up to eight months to evict a tenant in those states because of these policies. In North Carolina you have a very fair balance, with much more reasonable recourse.”
Government and tech jobs ensure the future
Home to North Carolina State University, whose leafy campus is just west of downtown,Raleigh is one of the three cities, along withDurham (home to Duke University) andChapel 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.
Global real estate services company Savills recently ranked the Triangle the #8 site for science globally, based on factors like talent, universities, and funding environment, but also lifestyle.
Research Triangle Park, founded in 1959 and the largest research center in North America, is host to major employers like Cisco Systems, IBM, and Fidelity Investments. It sprawls over 7,000 wooded acres across Durham and Wake Counties and is home to more than 250 businesses, including startups as well as Fortune 500 companies.
With some 50,000 people working there, Research Triangle Park aims to offer a community center as much as a workplace, with free yoga and meditation events, and happy hours. People eat, shop, and take in musical performances in the open air at Boxyard, where restaurants and shops are nested in repurposed shipping containers.
Duke’s R&D budget recently topped $1.2 billion, and NCSU is the third-largest recipient of industry sponsored research among public universities that don’t have a medical school. UNC Chapel Hill, not to be outdone, also recently topped the $1.2 billion mark in research funding, and its schools of medicine, business, and law are among the country’s best.
Add it all up, and Raleigh residents are exceptionally well-schooled. In fact, Raleigh ranks as the second-best-educated city in the nation.
“In Raleigh and the surrounding area, extending to Durham and Chapel Hill, top-tier universities funnel a constant prospect pool of student-residents into the rental market,” says Rogers. “In higher-priced areas of the Raleigh market, this extends to university faculty as well.”
Growth in STEM jobs buoys Raleigh housing market
Apple plans to invest $1 billion in North Carolina, including a new campus and engineering hub, its first on the East Coast, in Research Triangle Park. This will create jobs in AI, machine learning, software engineering and related fields.
To cultivate future talent, the company is creating a $100 million fund to support the state’s schools (already second in the nation for most equitable). It will also contribute $110 million in infrastructure spending on broadband, roads and bridges and schools in the state’s neediest communities.
Google has come to the area too, opening a Durham hub that will create over 1,000 jobs, with engineers working on Google Cloud projects.
Commercial real estate services firm CBRE ranks Raleigh-Durham #6 in the nation for life sciences. In fact, research undertaken here has been key in responding to the COVID-19 pandemic.
UNC, whose government research funding is behind only the Centers for Disease Control and Prevention and the National Institutes of Health, partnered with Gilead Sciences to develop Remdesivir, the only effective drug in treating the disease.
Other biotech companies are also attracted to the existing infrastructure; Amgen, whose drugs treat conditions like low white blood cell counts, osteoporosis, and colorectal cancer, broke ground on a $550 million manufacturing facility in nearby Holly Springs, bringing more than 350 jobs with an average salary of $100,000.
And in the city of Cary, which is part of the Raleigh metro area, a defunct mall is giving way to the new global headquarters of Epic Games, the company behind mega-hits like Fortnite. The city is rezoning 87 acres for the new space, which is set to include 2.7 million square feet of office space and a 200-room hotel.
Nearby is the $850 million, 92-acre mixed-use Fenton development, which is already open but where construction vehicles and hardhats are still everywhere you look. It has the feel of a highly walkable village, with residential developments, office space, retail, restaurants and other entertainment, and hotels.
The businesses set up here include Raleigh locals like Dram & Draught bar, Scott Crawford Steakhouse, and Durham’s M Sushi in addition to chains like Williams Sonoma and Lululemon.
A hopping culinary and coffee scene
All of these major draws are bound to continue to lure new people, underpinning the market for Raleigh investment property. Many of them will arrive via Raleigh-Durham International Airport, which was ranked #3 (up from #9 a year before) in J.D. Power’s 2021 North American airport customer service satisfaction survey. A record 14.2 million passengers traveled through Raleigh-Durham in 2019.
Once they join a metro area population just shy of two million, they’ll have plenty of reason to feel comfortable exploring, since Raleigh ranked eighth-safest in the country in a WalletHub study. That feeling is abundantly in evidence in the City of Oaks (so called because of its many tree-lined streets), where residents describe the feeling that they live in a forest.
Raleigh’s culinary offerings are top notch.
They include Brewery Bhavana, which Condé Nast Traveler ranks among the world’s most beautiful breweries; Indian and Asian hot spot Garland, whose chef, Cheetie Kumar, was shortlisted for the coveted James Beard Award for best of the Southeast; and 2019 James Beard outstanding chef Ashley Christensen’s stable of restaurants (Poole’s Diner, Beasley’s Chicken + Honey, Death & Taxes), which “live up to the hype.”
Nature, in and out of the city, and museums galore
Other amenities include proximity to sandy beaches along the coast for when it gets too hot in the summer (daytime highs regularly hit 90 degrees), as well as to the Blue Ridge Mountains, which offer opportunities for winter skiing, hiking, rafting, and camping.
More indoorsy types enjoy cultural facilities like the Durham Performing Arts Center, the North Carolina Museum of Art, and the North Carolina Symphony.
In fact, the city proudly calls itself the “Smithsonian of the South” for its many museums. School groups crowd into the North Carolina Museum of History and the North Carolina Museum of Natural Sciences (where visitors can look in on scientists in a glassed-in lab), which face each other across a small plaza downtown.
Not far from there, for those looking for more avant-garde fare, is the Contemporary Art Museum Raleigh, which serves up thoughtful exhibitions in a converted brick warehouse. For those who want to meet working artists, Artspace has exhibition galleries as well as dozens of studios where artists greet visitors while they work.
Plenty of people are coming to the region to visit, even if not to live. When international travel was hobbled by the pandemic, Vogue pointed out that Durham was among the top five destinations where Americans were traveling domestically, and singled out Raleigh’s “quaint yet buzzy” boutique hotel Guest House.
Some stay longer than just a vacation. Rocket Homes and Sperling’s Best Places called Raleigh the country’s sixth-best place to work remotely, based on factors like median home value, amenities, and broadband access.
No sign of growth slowing soon
Raleigh’s real estate market is forecast to only go from strength to strength.
Raleigh-Durham ranked #1 in terms of homebuilding prospects and #2 in overall real estate prospects in consulting firm PwC and Urban Land Institute’s 2022 report “Emerging Trends in Real Estate,” based on surveys and interviews with more than 1,600 property owners, real estate firms, banks, and other stakeholders. The report called it one of America’s magnet cities. (The paired cities held the same rank in 2021.)
Besides all the universities and corporations, Raleigh has one more ace up its sleeve: it’s the state capital, which tends to provide stability to an ecosystem.
All these high-paying tech and STEM jobs, in Raleigh as elsewhere, tend to create an environment short on affordable housing markets. But if anything, housing affordability may soon improve for more types of people, not just the well-paid researchers at the Triangle.
The city’s strategic plan includes a drive to promote the construction of new housing, including affordable stock, and allow for more diverse housing types, includingaccessory dwelling units, creating more opportunities for investors.
Anyone driving around the area can see that there’s construction in many parts of the city. Among the new developments are the 19-acre "live-work-play" Raleigh Iron Works complex northeast of downtown; the mixed-use 400H tower in downtown; the nearly six-acre mixed-use Seaboard Station development, also in downtown; the 12-story mixed-use North Hills redevelopment on the site of a former mall; and the expansion of the SearStone retirement community, in Cary.
Especially near new transit infrastructure, the city hopes to promote walkable neighborhoods, and, on the environmental side, to invest in electric vehicle charging stations.
“The city is certainly focused on a dense and diverse center, making it a hip and energetic place to live,” says Rogers. “Large-scale commercial development and revitalization are creating a downtown environment that is the place to be.”
The state government is eyeing eliminating the single family zoning that makes it impossible to build denser housing.
In terms of Raleigh real estate trends, all this will lead to more and more neighborhoods with promising returns.
“Anything that is close to Research Triangle Park, flowing through several suburbs, the core of the metro area, or any of the downtown locations, is dependable,” says Rogers. “That said, development is rising in all corners of the surrounding counties. Many of those communities are seeing high demand as well.”
McBrayer, having lived in Raleigh for three decades, can easily tick off a list of things to love about the area.
The weather is pleasant; Raleigh is located between the mountains and the ocean; there’s great transportation infrastructure, with major highways nearby (but not running through downtown); and the city offers excellent health care.
On top of all of that, property taxes are low, he added. Clients of his moving in from expensive cities in the Northeast and out West pay half the property taxes on homes two or three times the size, he said.
“I’ve yet to have a client move here,” he said, “and not love it.”
The 6 best places to invest in Raleigh
The most promising areas for investors 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; as far as Raleigh real estate trends, 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 November 2022 and come from Realtor.com.)
1. Southern Downtown
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.
Median home price: $414,000
Change year over year: -13.8 percent
Median days on market: 41, same as 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."
Median home price: $590,000
Increase year over year: 12.6 percent
Median days on market 61, up from 44 a year prior
Median home price: $407,500
Change year over year: -0.9 percent
Median days on market 68, up from 60 a year prior
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.
And the city's skyline will soon see major change, with the arrival of the 27-story skyscraper The Novus, including luxury condominiums, rental units, and retail.
Median home price: $364,533
Increase year over year: 3.1 percent
Median days on market 54, up from 47 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," suggesting a bright future for rental property in the area.
“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.
Median home price: $357,750
Change year over year: -2 percent
Median days on market: 74, up from 48 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."
It's a highly affordable neighborhood, Sizemore says.
"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.”
Median home price: $303,025
Change year over year: -1.5 percent
Median days on market: 64, up from 47 a year prior