As 2020 is just around the corner, it’s time for real estate investors looking for opportunities to plan where to buy their new investment property. Of course, location is an important success factor in real estate and you only want to buy property in top locations. Is the Raleigh housing market one of these locations? Even though the larger Charlotte market often overshadows it, you shouldn’t underestimate the Raleigh real estate market. That’s because according to the PwC’s Emerging Trends in Real Estate report (the most highly regarded forecast report), the Raleigh/Durham housing market ranks as the 2nd best market to watch in 2020! Moreover, this metro market ranks as 1st for homebuilding prospects. What are the Raleigh real estate market trends that helped it become a top location for investors? Which are the best neighborhoods in Raleigh for buying a rental property? Keep reading to find out.
Want to learn which US cities also made it to the top? Here are the 10 Best Places to Invest in Real Estate in 2020.
#1. Relatively Affordable Home Prices
The first trend benefiting Raleigh real estate investors is the market’s affordability. According to a recent study by WalletHub ranking the best state capitals to live in, Raleigh took 3rd place for overall ranking and 2nd place for affordability. According to Mashvisor’s real estate data, the median price for Raleigh houses for sale is $428,041 ($177 price/square foot). Most experts believe that buying an investment property in Raleigh is affordable because the average mortgage payment in the city is less than a third of the median household income. Meaning, you can buy a Raleigh rental property knowing that the monthly payments will be made without fear of affecting your positive cash flow.
Current Raleigh housing market trends, however, point to the fact that house prices have been rising and are also expected to continue rising at a more or less average pace moving into 2020. The primary reason for this, of course, is the level of supply and demand in the city. Currently, Raleigh is experiencing a bit of a shortage in supply, which is why home prices are climbing. Still, Raleigh’s title as number 1 for homebuilding prospects suggests that supply is catching up with the strong demand for housing in this city. Want to start looking for affordable Raleigh houses for sale to buy for real estate investing? Use our Property Finder to find properties that match your criteria in a matter of minutes!
#2. Fast Real Estate Appreciation
This leads us to the second reason why you should consider a long-term real estate investment in Raleigh. Increasing home prices indicate that investors in the Raleigh housing market will reap profits from real estate appreciation. Raleigh home values have actually gone up 5.5% over the past year and Zillow predicts they will rise 4.0% within 2020. This is more than the national average which remains at a steady 3.7%. As a result, buy-and-hold investment properties in Raleigh are expected to make large equity gains. This is good news if you already own property here which you’re looking to sell in 2020.
Related: 5 Best Cities for Real Estate Appreciation in 2020
As a matter of fact, it seems that the housing market in Raleigh NC is very much a seller’s market. Meaning, if you’re a seller, you’ll see real estate appreciation and demand for your investment property. Again, this is mainly driven by supply and months of inventory – which is less in the Raleigh Durham housing market than in other markets. According to the Durham Association of Realtors and the Triangle MLS, the entire Triangle region had 2.5 months’ supply of inventory as of September 2019. Plus, the region’s absorption rate (the number of months it would take for all currently listed homes to be sold) is 1.91. Real estate experts agree that these numbers indicate the entire region, including the Raleigh real estate market, is a seller’s market. As a result, first-time homebuyers are having a hard time competing in the Raleigh housing market. This leads us to the next point.
#3. Growing Demand for Rental Properties
While Raleigh has a sense of small-town charm, its up-and-coming metropolis makes it a highly sought-after place to live. In fact, Raleigh/Durham is one of the US metros that experts predict will have the highest population growth and net migration in 2020 according to PwC’s Emerging Trends in Real Estate report. The other cities are Austin, Nashville, Charlotte, and Orlando. The Raleigh housing market attracts people for many reasons. First, the market’s concentration of educational institutions – Duke University, the University of North Carolina, North Carolina State University, and several smaller colleges – is drawing a large number of students from across the nation.
Coupled with the Research Triangle Park, this has branded Raleigh as a technology hub. The city has a very strong job market with an unemployment rate of 3.6% which is lower than the national average. Hence, it doesn’t surprise us that Raleigh is generating many high tech startups and bringing people to the area for high paying jobs. According to a recent report, Raleigh now ranks among the 10 emerging tech cities to watch! But what makes Raleigh attractive to young professionals is the fact that it’s the only tech city with a cost of living below the national average. This combination of good schools, a strong economy, and a high quality of life make the Raleigh NC housing market a good place to grow and raise a family.
Accordingly, this makes it one of the best places to invest in rental properties in 2020! The above Raleigh real estate market trends contribute to a strong rental market with low vacancy rates. It also has a price to rent ratio of 23 which proves that it makes more financial sense for people to rent rather than buy a house in Raleigh. Mashvisor’s real estate data predicts that you can generate a $1,565 monthly rental income from a Raleigh rental property. Moreover, 70% of experts surveyed by PwC advise investors to buy a multi-family property in the Raleigh housing market 2020. So, what are you waiting for? Start your property search with Mashvisor now!
Should You Invest in Airbnb Raleigh in 2020?
Buying an Airbnb investment property has become a favorable strategy for investors in the US housing market. But before making such an investment, you should know that some US cities ban buying property specifically to rent it out as a vacation rental (also known as non-owner occupied rentals). If you want to invest in the Raleigh housing market and are interested in Airbnb real estate investing, you’re probably wondering what the deal with Airbnb Raleigh in 2020 is. The truth is – it’s complicated.
In May of 2019, the Raleigh City Council approved one and two-bedroom short-term rentals, but restrict residents from renting out entire houses. Raleigh Airbnb laws also require registering with the city and obtaining a $172 permit which must be renewed annually. Also, Raleigh short-term rental hosts must notify their neighbors and live on the property during the guest’s stay. Airbnb regulations were set to take effect Jan 1, 2020, and those found in violation will accrue fines of $500 per day.
However, in July of 2019, Governor Cooper signed a one-page clarification to the Vacation Rental Act which could put a stop to Raleigh Airbnb laws. According to the new state law, Raleigh (and any other local government) can’t “Adopt or enforce any ordinance that would require any owner or manager of rental property to obtain any permit or permission…to lease or rent residential real property.”
After reviewing the law, Raleigh’s city’s public information officer, Julia Milstead, said that this law doesn’t have any impact on the current regulations related to short-term rentals. However, Brent Woodcox, the General Assembly special counsel, later responded that the city is wrong. He said the city “is going to get sued and lose if they try to require short-term rental hosts to get a permit.” According to him, the law clearly mandates cities and counties to treat short-term rentals in the same way they treat long-term rentals.
Until now, the Raleigh city council has not responded or made any changes to its Airbnb regulations. But even if the city can’t use its current system to regulate or ban short-term rentals, there may still be other legal options at its disposal. So, we advise both homeowners and real estate investors in the Raleigh housing market to keep an eye out for any developments before renting properties on Airbnb.
If you’re interested in Airbnb real estate investing, consider these 20 Cities with No Airbnb Legal Issues in 2020.
Best Neighborhoods in Raleigh for Investing in Real Estate
Now you have a better understanding of why investing in the Raleigh housing market is a smart decision in 2020. But, where can you find the best Raleigh houses for sale? According to Mashvisor’s Rental Property Calculator and predictive analytics, there are the 3 best neighborhoods in Raleigh to consider:
1. East Raleigh
- Median Property Price: $274,220
- Price Per Square Foot: $173
- Price to Rent Ratio: 18
- Monthly Rental Income: $1,281
- Cash on Cash Return: 2%
2. North Central
- Median Property Price: $413,781
- Price Per Square Foot: $277
- Price to Rent Ratio: 18
- Monthly Rental Income: $1,903
- Cash on Cash Return: 2%
3. Glenwood
- Median Property Price: $602,963
- Price Per Square Foot: $206
- Price to Rent Ratio: 28
- Monthly Rental Income: $1,759
- Cash on Cash Return: 2%
Sign up to Mashvisor to start looking for and analyzing investment properties in your neighborhood of choice in the Raleigh housing market in a matter of minutes!
