RALEIGH – The price of renting in the Triangle continues to soar, even faster than home prices in the red-hot residential space, a new rental report found this week.

Since the onset of the global coronavirus pandemic in March 2020, the median price of renting a one-bedroom apartment in Durham increased from $950 per month in March 2020 to $1,321 per month in August 2021*, or an increase of about 39%, according to Jeff Andrews, an analyst with Zumper.

That’s the second-highest increase, by percentage, of any city tracked in the data set, Andrews said.

In Raleigh, the median price of a one-bedroom apartment in Raleigh increased to its current median price of $1,240 per month from $1,020 per month in March 2020.  That’s an increase of 21.57% since the pandemic began, Zumper found.

Two-bedroom prices are up more than 22% in Durham and 15.6% in Raleigh since March 2020, according to Zumper’s data set, which Andrews shared with WRAL TechWire upon request.

By comparison, the latest data from Triangle Multiple Listing Service (TMLS), which tracks properties listed for sale, showed that the median home sale price in the region, which includes Durham, Johnston, Orange, and Wake Counties, changed from $287,000 in March 2020 to $351,000 at the end of August 2021, an increase of 22.9%.  But median home prices are up 15.2% year-over-year, comparing August 2020 to August 2021, TMLS data shows.

The increase in the median rental price and in median home sale price both outpace the rate of inflation, which federal statistics show is running some 5% so far this year.

And rents could be increasing in the future, as the increase is not just seen in a comparison of year-over-year or since the pandemic began.  For one-bedroom apartments, rent is up 4.29% in Raleigh compared to the prior month, according to the Zumper data set, and rent is up 4.76% month-over-month in Durham for one-bedroom apartments.

“The home sales market has been so hot that people are either priced out or exhausted with all the competition,” said Andrews in an interview with WRAL TechWire.  “This means a lot of people who would in ‘normal’ times have already bought a house are stuck renting.”

The result, said Andrews?  “This leaves relatively high-income people in the rental market, thus driving up rent.”

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What’s happening?

The Triangle continues to experience population growth and job creation growth, which puts added pressure on the housing markets in the region.  The Triangle has a housing shortage, and that means that pricing may continue to increase in the future, said Arlyn Solórzano, a licensed real estate agent with Durham-based Movil Realty, in an interview with WRAL TechWire.

“What we see is that most people are misinformed,” Solórzano.  “They are hoping that the market will crash, that it will normalize, that home values will go down.”

“They probably don’t have the right advice,” said Solórzano.  “They are afraid to, or don’t feel like they’re ready to compete in this real estate market.”

So some would-be-buyers, particularly first-time buyers, are seeing increasing home prices, intense competition for existing homes on the market, and deciding their only remaining option is to rent rather than potentially committing all of their financial resources to win an offer on a property, said Solórzano.

“So, they’ll choose to renew their lease, or be forced to stay in an Airbnb, which is just temporary living,” said Solórzano.  “They’re waiting for more options, but we don’t have enough inventory.”

Demand for housing remains high.  Solórzano attributed this due to low inventory in the for-sale market, and Andrews told WRAL TechWire that the rental market is not likely to experience a high vacancy rate, either.

A recent Zillow survey of real estate experts about the state of the national housing market led Zillow economists and analysts to predict that the housing market would remain “relatively stable,” even as the eviction and foreclosure moratoriums end.  Foreclosures in North Carolina surged nearly 20% in August 2021, following the end of the foreclosure moratorium at the end of July, which trailed the national average.

Still, foreclosures coming on the for sale market are only expected to represent 5.4% of the inventory of available homes, Zillow found.

Instead, the experts surveyed by Zillow predicted that 22.5% of inventory would come from new construction homes, and 39.7% from existing homeowners deciding to sell.

As recently as last month, a comparison of available homes in the “starter home” segment of the market found that for those seeking new housing options, renting could make more sense than purchasing.  But while the median home sale price decreased in August compared to July, the median rental rate increased, Zumper’s data showed.

Based on the Triangle’s housing market, and the metrics used to track inventory, competition, and price, Solórzano does not anticipate a market crash.  Nor is she expecting home sale prices to decrease in the Triangle.

That’s because of how tight the market is right now, with so few homes available on the open market, she said.

“We’re not going to see home prices go down, not this year,” said Solórzano.  “Because sellers may not have a place to move.”

“Sellers are concerned they won’t find another house to buy or to rent,” said Solórzano.  That’s leaving would-be buyers on the sidelines, said Solórzano.  “Some are still interested in buying,” she said.  “I am trying to do the best we can do for them, and sometimes we can’t win an offer.”

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It’s not just the Triangle where rents are increasing

All 10 of the most populous cities in North Carolina saw rental price increases, with the state averaging a rental price increase of 19.6% year-over-year, according to the most recent data from Apartment List, which found that Raleigh’s increase outpaced the state average and was 22.1%.

The most expensive North Carolina city to rent?

September 2021 Rental Trends in North Carolina. Image: Apartment List.

That’d be Asheville, according to the Apartment List data, with the median rent of a two-bedroom apartment of $1,730, an increase of 28.3% year-over-year, the fastest increase in the state.

In Durham, the median price of a two-bedroom apartment is $1,415, up 20.1%, and in Raleigh, the median price of a two-bedroom apartment is now $1,530, according to the Apartment List data.

Zumper’s data set listed the median price of a two-bedroom apartment at $1,420 in Durham and $1,410 in Raleigh.

“In Raleigh, rents are up 23% since the start of the pandemic in March 2020, whereas nationally, rents have increased 14% in the same period,” Chris Salviati, senior economist for Apartment List confirmed to WRAL TechWire.

Raleigh may continue to outpace the national average, as well, found Apartment List, which estimated a price increase of 2.8% in Raleigh’s rental market this month, compared to 2.1% nationally.

 

*Editor’s Note: An earlier version of this story incorrectly stated the data point within the Zumper data set as $1,140 per month for a one-bedroom Durham apartment.  The correct total dollar monthly rent amount in the data set — and where the 39% increase was seen — was $1,321 per month for August 2021, compared to $950 per month for March 2020.