Since the start of the Covid-19 pandemic, the Triangle’s real estate market isn’t the only residential space that’s experienced massive growth. The rental market across the Triangle has similarly boomed, creating a competitive housing landscape for any of the area’s residents who are looking to make a move.
Rising home costs and a shortage of inventory have caused many potential homebuyers to put off the purchase of a home. However, as families grow and needs change within the market, the shift from renter to homebuyer is top of mind for many in the region.
In a market where both home prices and rent are rising, you may be asking: is it smarter to buy or rent? Here are a few things you should consider as you think about your future in the Raleigh-Durham metro.
Renting in the Triangle
If you’re the type of person who needs flexibility and enjoys low-maintenance living, renting can be a great option. Yet, rental prices have risen significantly across the Triangle through the pandemic, creating a high cost of living for many. Already in 2022, rent has increased across the Raleigh-Durham metro by nearly 21 percent compared to last year.
In fact, according to Apartment List, the current average rent for a 1-bedroom apartment in Raleigh is $1,450, $1,735 for a 2-bedroom, and $1,935 for a 3-bedroom apartment. While median rents in Durham seems slightly less expensive—$1,159 for a 1-bedroom and $1,390 for a 2-bedroom—the city’s growth year-over-year is currently exceeding the national average by 2 percent. Similarly, Apartment List reported Cary’s rental prices have grown year-over-year by over 23 percent, making it one of the most expensive rental markets in North Carolina.
As the Triangle continues to grow, rent prices are likely to continue moving upward. Pre-pandemic, Zillow reports rents typically increased by 2 percent each year.
Buying in the Triangle
Like rental prices, the pandemic also stimulated massive real estate growth in the Triangle. As home prices have continued to climb—with median prices in January already up by 28.8 percent over 2021—it’s expected 2022 will follow a similar trajectory. However, there will be a more modest increase in home prices as the market begins to stabilize through the rest of the year.
While the market should start to see more existing homes on the market to help it stabilize, there is still a lack of inventory and more housing is needed to keep up with the pace of market demand.
Keep in mind that as the Triangle continues on its current growth path, the housing market will begin to catch up with the help of new construction.
Crunching the Numbers
Consider the question of which is more affordable: owning or renting. The answer is, “That depends.” Each has their strengths and weaknesses.
For those unsure of where they want to be, renting may help you find where you’d like to land before you sign on to a long-term mortgage. If your credit isn’t great or you don’t have savings set aside for a down payment, renting may be an obvious choice. Keep in mind that rising rents may not be sustainable in the long-term, however. A 2-bedroom apartment renting for $1,735 today may cost more than $2,000 by this time next year if the Raleigh market continues upward on its current trend.
For those considering purchasing a home, there’s a convenient trade-off between rent and a mortgage: your mortgage is locked in, providing you with cost stability. You’ll also quickly start building equity, which means a house purchased in January of 2021 is already worth 28 percent more than it was last year. If you’re in the market to buy, make sure your credit is in great shape and check in with a lender to determine what you need to do to begin your home search with confidence. If you don’t have savings in place or a credit score that needs improvement, you may need to stick with renting until your financial situation is better.
The Jim Allen Group provides access to information on this blog/website as a public service for educational purposes only. Although reasonable efforts have been made to ensure that all of the information made available is current, accurate, and complete…[read more]