There aren’t enough flame emojis on the Internet to describe the Raleigh housing market. In 2022, the median home in Wake County sold for $470,000, a 20.5% jump year-over-year. And in the City of Oaks, real estate sales topped $3.84 billion.
Despite the surge in demand for houses last year, price increases are showing signs of stabilizing — but they’re still higher than normal. For those hoping to dip their toes in the home buying waters soon, it helps to know what trends to expect. So, let’s hear what the local experts predict for 2023.
Look out for walkability
Gilliam Kittrell, vice president and broker-in-charge at Hodge & Kittrell Sotheby’s International Realty, said many buyers will be looking for walkable neighborhoods. That means areas in Midtown, like North Hills, Lakemont, Quail Hollow, and North Ridge, could see heavy house buying activity, thanks to its easy access to restaurants, shopping, and entertainment.
“We are getting a lot of out-of-town buyers,” Daniel Harmon of The Jim Allen Group said. “Only 35% of the buyers in the Triangle area are local.” Most are coming from New York, Colorado, Texas, Arizona, New Jersey, and Florida, he said.
Harmon has noticed an influx of people moving to the Triangle due to growing job opportunities and the area’s climate, further escalating the demand for housing. This will continue to raise the value of homes in the area.
Worth it to wait?
Both Kittrell and Harmon agree that although interest rates are rising, it’s still a good time to buy.
Kittrell said that every transaction he made in 2022 had multiple offers. With so many people involved in the sales, home prices were driven up. However, now that interest rates are increasing due to the Federal Reserve’s efforts to slow inflation, fewer people are placing offers and home prices have started to stabilize.
If you wait for interest rates to go down, you’ll end up buying your house at a higher price due to appreciation, Harmon said. And although interest rates are higher than they were last year, Kittrell estimates that they are still lower than they’ve historically been. So no, don’t wait.
What about renting?
Kittrell anticipates a strong rental market next year, especially due to the many new apartments being built (think: The Signal at Seaboard Station and Forge at Raleigh Iron Works). Although more space will be available, rent values are still rising. According to Zumper, Raleigh has seen a roughly 7% increase in the average rent for a one-bedroom apartment since this time last year.
“As housing becomes less affordable because of higher interest rates, we’ll probably see more people that are switching or staying in apartments because they can’t afford to buy a house,” Kittrell said.
Harmon and Kittrell agree that people seem more open to moving further away from downtown Raleigh to locations where they can buy larger houses for less.
“The two places in the Wake County area that are the best value right now are Wendell and Zebulon,” Harmon said.
Kittrell has noticed that many buyers are looking for home offices and lots of outdoor living space. Homes like these can be found — or built — on larger plots of land located north of Raleigh, in places like Falls Lake.
Supply + demand
The average home prices for single-family homes in Raleigh are well above $600,000 and they will continue to rise in 2023 — but not as quickly as they did last year. Harmon expects appreciation rates to decrease from 17.6% in 2022 to 12% in 2023 but remain high overall. In a typical market, he said, a home’s value will increase ~5.5% per year.
Why are rates so high? There’s less supply than there is demand. According to Harmon, there is only about a 1.5 month supply of homes on the market in the Triangle area. A normal market has ~4 months. “We’re going to continue to be a sellers market in the foreseeable future,” Harmon said.