Triangle Taking a New Shape as Transplants Grow the Market
While some housing markets in the United States struggle with affordability or even availability, others are flourishing and should continue to do so through at least 2024, if not longer.
Take the Durham-Chapel Hill area in North Carolina for example. Always known as the Research Triangle because of the abundance of top-end medical colleges in the area, this portion of the state is also flush with new job opportunities and housing that is affordable to younger folks looking to buy their first home.
It, along with several other markets that are doing well, should all outperform initial projections for that market over the next three to five years, according to a study released in December by the National Association of REALTORS® (NAR).
“Some markets are clearly positioned for exceptional longer-term performance due to their relative housing affordability combined with solid local economic expansion,” said NAR’s Chief Economist Lawrence Yun. “Drawing new residents from other states will also further stimulate housing demand in these markets, but this will create upward price pressures as well, especially if demand is not met by increasing supply.”
The 10 most notable markets expected to outperform projections also included Charleston, S.C., Charlotte, Colorado Springs, Colo., Columbus, Ohio, Dallas-Fort Worth in Texas, Fort Collins, Colo., Las Vegas, Ogden, Utah and Tampa-St. Petersburg in Florida.
There were a number of factors that made these markets project to be the hottest as far as real estate over the next half-decade, including job growth compared to the national average, housing affordability, the structure of the age population, their attractiveness to retirees, how likely they are to attract new residents from out of the area, and the appreciation of home prices over time.
Raleigh specifically has seen job growth of nearly three percent, almost double the national average (1.6 percent). With Durham and Chapel Hill basically suburbs to Raleigh, it would make sense that the growth in jobs in the city makes living in the suburbs more attractive.
“Potential buyers in these markets will find conditions especially favorable to purchase a home going into the next decade,” said NAR President Vince Malta, a broker at Malta & Co., Inc., in San Francisco. “The dream of owning a home appears even more attainable for those who move to or are currently living in these markets.”
About 15 percent of the total population in the Durham-Chapel Hill market (approximately 84,400 people) moved into the area recently, and 72 percent of those are renters.
That rent number shouldn’t surprise since the median age of all recent movers to the area is 28 years old. In total, 54 percent of all recent movers to the area were between the ages of 18 and 34.
Still, despite the youthful nature of this population boom, 36 percent of those recently moved renters can afford to buy a home at the median price of $274,300, assuming a 20 percent down payment. The median income of individuals who have recently moved to Durham-Chapel Hill is $48,800, which would also indicate those looking for workforce housing (middle-income earners) are finding what they need in this market.
As the young average age would indicate, 58 percent of these recent movers are single individuals, likely looking to begin their careers in a place they can both find work and simultaneously afford to live. The remaining 42 percent are either married couples or families, meaning they are looking for a place to set down roots for their families while finding a place that is affordable to live and work. The average length of time for people to own a home in Durham-Chapel Hill is 11 years, meaning this community has staying power when it attracts residents – once they come, they are unlikely to leave.
While most of the recent movers have come from other parts of North Carolina, specifically neighboring Raleigh, a good chunk of new residents have migrated south from the Boston, New York, Philadelphia, and Washington, D.C. markets.
A little less scientific, but likely still telling data about the influx of new residents to this area comes from the self-service moving company U-Haul. According to a report in the Raleigh News & Observer U-Haul identified this market as the No. 1 in the country in 2019 based on one-way truck rentals in 2019.
U-Haul indicated that one-way rentals coming into the Raleigh-Durham-Chapel Hill area increased by three percent from 2018 and the number of one-way rentals leaving the market decreased by two percent in the same time span.