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Rental Demand Runs High for Raleigh-Durham Real Estate

A strong economy fuels demand for Raleigh-Durham real estate. This demand has created excellent opportunities for real estate investors, both locally and out-of-state. Suburban Raleigh-Durham real estate provides immediate yields, particularly for buyers with all cash or low leverage. Meanwhile, investors with a longer time horizon can acquire urban Raleigh-Durham real estate that generally appreciates faster, though yields are typically lower due to higher entry fees.

In 2017, Forbes dubbed Raleigh the second-best place in the U.S. for Business and Careers. The Raleigh area unemployment rate ended last year at 3.8 percent, according to the U.S Census Bureau, indicating healthy employment in the region. According to HomeUnion’s Research Services team, “tech is a major driver of growth,” led by companies like Citrix Systems which plans to add 400 new positions to the economy over the next four to five years.

Professional and business services continue to expand in Raleigh as well. The sector expanded 6.8 percent year-over-year in December 2017. In particular, the economy received a strong assist from the financial services sector: Companies involved in financial activities grew 5 percent YOY during that same time period.

Raleigh is the capital of North Carolina, and part of its famous Research Triangle, one of the nation’s largest and most successful research parks. It’s also a U.S. hub for high-tech and biotech research. Gifted students study at the myriad colleges and universities in the region, including Duke University, North Carolina State, University of North Carolina at Chapel Hill and Wake Forest University. These schools have a notable economic impact on the area, and spur year-round rental demand for Raleigh-Durham real estate.

Here are 10 of the leading employers in the Raleigh-Durham area:

  • BASF Crop Protection
  • BASF Plant Science LP
  • Bayer CropScience LP
  • Biogen IDEC
  • Cisco Systems
  • Credit Suisse
  • Fidelity Investments
  • GlaxoWSmithKline
  • IBM
  • National Institute of Environmental Health Sciences

Raleigh serves as a major train hub, and one of the busiest Amtrak train stations in the country. It’s location in the middle of the East Coast makes it a great midway point for those traveling from southern U.S. cities like Miami and Orlando to northern metros such as New York and Washington, D.C. Nearby Durham is also connected by Amtrak, though the station is newer.

More than 10 million domestic and international passengers pass through Raleigh-Durham International Airport each year. The airport features facilities for both cargo and general aviation. Employees in this trade, transportation and utilities sector also fuel rental demand for Raleigh-Durham real estate.

Besides Employment Opportunities, What Attracts Renters?

The excellent quality of life and temperate southeastern climate draw people to the region. Many outdoor amenities and parks attract people to Raleigh. In 2016, the metro ranked No. 3 on Livability.com’s 2016 Best Cities for Parks list. The metro is also home to Umstead State Park, offering 5,599 acres of land for camping, hiking, fishing, canoeing, among numerous other outdoor activities. Durham also offers residents plenty of outdoor activity options such as hiking and running trails within the Eno River State Park and Little River Regional Park Natural Area. In addition to these, Durham is home to the world’s largest lemur sanctuary, the Duke Lemur Center, part of the world-famous Duke University.

Several museums are located in the metro, including the North Carolina Museum of Natural Sciences and the North Carolina Museum of Art. The Durham Performing Arts Center, which provides residents with a wide repertoire of Broadway musicals and other well-known acts, also calls the region home.

Vital Statistics for Raleigh-Durham Real Estate Investors

Low vacancy rates in Raleigh-Durham over the past two years means that landlords have the ability to raise rents. In 2017, single-family residence (SFR) vacancy was 5.2 percent. By the end of 2018, HomeUnion’s Data Science team expects that rate to rise 30 basis points to a still-low level: 5.5 percent. Rents will rise 3 percent by the end of 2018 to $1,570 per month.

Median investment prices for Raleigh-Durham real estate remain below the national average (of $193,500) at $190,000. That means many out-of-state investors can still find good bargains for real estate in the metro area.

To find out which neighborhoods meet your investment requirements for Raleigh-Durham real estate investment opportunities, contact us today.

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