RALEIGH – There’s a major housing supply issue in communities across the Triangle, driving up prices in the region’s housing market to record highs as demand continues to be strong.
But housing shortages and price increases aren’t just affecting those seeking to purchase a home in the Triangle region, as recent data from Apartment List shows that rental prices in the region are rising, and rising rapidly.
And, unlike prior years, where the rental market “tends to cool down a bit,” said Erin Giddons, a spokesperson for Apartment List, during 2021, “price growth remains high.”
In the Raleigh metropolitan statistical area (MSA), Apartment List found the median rent price to be $1,508, the highest in the company’s data set. In the prior month, rents rose by 2.6% in the Raleigh MSA, Giddons told WRAL TechWire. That’s up about 18% year-over-year, Gibbons said.
“The pandemic-era slowdown has given way to an extremely hot rental market,” said Gibbons.
In the Durham MSA, rents rose by 2.3% in the prior month, and the median price of renting is also at an all-time high in the data set, at $1,365. Since the same time period last year, rents have increased by about 22% in the Durham MSA, Gibbons noted.
A household would need to make $60,000 per year to afford most two-bedroom, two-bath apartments in Raleigh.
Based on guidance that housing should make up no more than 30% of monthly expenses, someone working at minimum wage would be priced out of both Triangle cities. An individual would need to make $5,027 per month for the Raleigh average of $1,508 to be 30%. That’s 693 hours per month or 173 hours per week at $7.25/hour. The problem? There are only 168 hours in a week.
In Durham, for the average $1,365 rent to make up 30% of the budget, an individual would need to work 627.6 hours per month or 157 hours per week at minimum wage.
The numbers are even higher when tracking city-level data, and Durham ranks second among all U.S. cities for the percentage of price appreciation in the rental market since the pandemic began.
According to a rent report for the City of Raleigh compiled by Apartment List, “Raleigh rents have increased 2.8% over the past month, and have increased sharply by 22.1% in comparison to the same time last year.”
In Raleigh, the median monthly rental price for a one-bedroom apartment is $1,355 and is $1,528 for a two-bedroom apartment.
According to the rent report for the City of Durham compiled by Apartment List, rents increased by 2.6% in the prior month, and 20.1% year-over-year, with the median monthly rent of a one-bedroom apartment at $1,180 and at $1,415 for a two-bedroom apartment, and the ninth straight month of rental price increases in the data set.
Statewide, rental rates have increased by 19.6% year-over-year, outpacing the national average, which Apartment List data showed to be 15.1% in that period.
Another way to look at it: Nearly every ZIP code in the Triangle requires that a resident make at least $20 per hour to afford the standard apartments there.
The 2021 Out of Reach report by the National Low Income Housing Coalition does the math by ZIP code.
- In North Raleigh, rent would require an income of between $24 and $26 per an hour.
- Downtown Raleigh rent requires from $20 to $25 per hour.
- The most expensive part of the area is in western Wake County. Rentals in the 27519 ZIP code require an income of more than $28 per hour.
A recent Filterbuy report found that the homeownership rate in the Raleigh MSA was 68.2% in 2020, with 31.8% of the population renting.
As prices of rentals rise faster than wages, it’s likely that more renters will become burdened, leaving less money available for other expenses, and a new analysis from Zillow explores the differences in the data based on race, finding that while the typical rent burden rate nationwide was 30.3%, for renters who are Black, 34% of income was spent on rent.
In the Raleigh MSA, Zillow found that rent burdens are highest among households that identify as Black, at 28.5% compared to 27.3% for Latinx households and 27.1% for White households.
Ismelda Ortega works to process rental assistance requests for Wake County. She hears heartbreaking stories.
“People are really stressed,” she said.
Stephanie Cutchins said she was “barely scraping by” in the Raleigh rental market.
“It was too high on the rent, and we couldn’t afford the rent, so we went to a homeless shelter,” she said.
Renters are facing more than rising prices
If rising prices of rental units wasn’t enough of a challenge, there’s another challenge that renters may face: eviction.
The COVID-19 moratorium on evictions ended on August 26, 2021. There are 88 counties in North Carolina where renters have access to the Housing Opportunities and Prevention of Evictions Program (HOPE), which according to its website “provides rent and utility assistance to low-income renters that are experiencing financial hardship due to the economic impacts of COVID-19.” Each of North Carolina’s 12 other counties also have programs in place that provide rental assistance.
Still, renters are facing the specter of eviction, and it’s not just due to COVID-19, said Samuel Gunter, executive director of the North Carolina Housing Coalition.
“The story of housing in the Triangle isn’t just COVID,” Gunter told WRAL TechWire in an interview earlier this month. “We’ve been on the journey to get to the prices where we’re at for a few years now.”
“Some of this is due to population growth,” said Gunter. “It goes back to transit planning that Wake County went through a few years ago, what’s happening with RTP, and everyone preparing for the announcements of companies like Apple, Google, Fidelity, and on and on,” he added.
The result is that we’re in a “supply crunch,” said Gunter, which is increasing prices.
And that, coupled with the end of the eviction moratorium and the coming winter months, could mean that renters are facing challenges on multiple fronts.
A Duke University project known as Data+ tracked eviction trends in Durham County beginning in July 2019, before the onset of the global coronavirus pandemic in early 2020.
One key finding: when rents rise in Durham, evictions tend to rise as well. The data the team studied prior to making this finding was between 2012 and 2014, according to a blog post about the project, and found that when rents increased, evictions increased two months later.
Another finding, which was described as “stark:” Evictions increased in the winter months, according to the research team.
“January is the worst month by far,” Rodrigo Araujo is quoted as saying on Duke’s research blog. “In the winter months utility bills are higher; they’re struggling to pay for that.”
In North Carolina, an eviction must occur through the court system, and is called a “summary ejectment.” Landlords must file legal documents in order to legally remove a tenant from the property. Most often when a tenant has failed to pay rent, or violated the lease agreement.
“It’s obvious that there was a big decline during the time the CDC moratorium was in place.” said Sarah D’Amato, a supervising attorney with the Durham Eviction Diversion Program and with Legal Aid of North Carolina.
“Now, filings have ticked up,” said D’Amato. “And in Durham, the other part that we’re struggling with is that in Durham, the rental assistance program is slow.”
“In September, Durham County landlords filed 328 summary ejectments and 80 writs of possession,” the monthly newsletter for DataWorks NC reads. That’s compared to 174 filings for summary ejectments and 29 writs of possession made in August 2021, according to the organization. The federal eviction moratorium expired on August 26.
Renters also unlikely to be able to afford to buy
Even before COVID-19 spread in the United States, housing affordability was a challenge for those looking to live in the Triangle, particularly in its largest cities, Gunter noted.
“You hit a certain income level, and housing doesn’t exist for you,” said Gunter. “The challenge that a lot of people are facing in the Triangle right now, is that the impossibility of finding housing supported by the income you are making is starting to creep up the income scale.”
Renters are facing a dual challenge with the accelerating trends in the housing markets in the region, Gunter noted. It’s not just that rents are increasing, it’s also that home prices are increasing across each segment of the market, particularly for homes that would be most likely to attract first-time homebuyers.
“That entry-level house is gone, it doesn’t exist,” said Gunter. “You’re not finding houses anywhere for $240,000, $250,000,” he said. “For first-time homebuyers, it is rough out there, or for renters who want to make that transition to homeownership, it is really rough.”
According to a recently released Zillow, in the Raleigh MSA typical home values are now $374,649. That’s up 26.0% year-over-year, and increasing, according to the study, as the data showed that the Raleigh MSA ranked first out of the top 50 most populous MSAs in the United States for monthly home price appreciation, with price appreciation of 3.0% in August, the most recent complete data set in the study.
That 3.0% monthly increase outpaces the increase in monthly rental rate found by Apartment List.
Add to that the challenge that Zillow’s data found that in the Raleigh MSA listings of properties for sale only stay on the market for four days, the fastest in the nation.
Zillow found that while rental prices in the MSA were up 16.1% year-over-year, home prices increased by 26% in the same period.
And what new supply is coming on the rental market in the Triangle is meant to appeal to the top end of renters, noted Gunter. “But that doesn’t mean the other properties are dropping down rents,” he said. “That’s a major challenge for folks.”
The increasing price of real estate in the Triangle is also shifting the market in other ways, noted Gunter, including the activity of real estate investors.
“The other thing that is happening in the market that we’re paying attention to is investor money in the single-family space,” said Gunter. “Buying up single-family homes with the purpose of turning them into single-family rentals,” he noted. “Or the Zillows of the world that have a model where they’re buying sight unseen, and then they reach a critical mass when they’ll sell,” he added.
Zillow announced this week that it has paused buying property through its Zillow Offers program, though it does still have 98 properties listed for sale on its website.
Renters need three things, said Gunter: an available supply of rental properties consistent with household income, available housing subsidies for those whose incomes are not high enough to support the market rate of rental properties, and housing stability, which is a critical component of public health outcomes.
But not all of those factors are present in today’s housing market, even though there are programs like HOPE, and similar programs in the other 12 counties where the HOPE program does not operate, to support renters facing financial instability.
“In a pandemic, out of a pandemic, in a hot rental market, not in a hot rental market,” said Gunter. “For folks at the low end of the income spectrum, it’s never worked.”