The Raleigh housing market, which flourished both before and throughout the pandemic, still seems to be on an unending uphill trend. Just two months ago, the real estate price in the Triangle was $352,250—a 14% rise from April last year!
And even at that price, you have to be prepared to move quickly if you hope to secure your dream home.
This steady rise has prompted questions about whether we’re riding a bubble—and if it’s going to pop sooner rather than later. And with demand so high, you might have doubts, too.
We’re here to be your real estate myth busters, with facts about housing bubbles and the truth about why Raleigh ISN’T in one.
WHAT IS A HOUSING BUBBLE?
Housing bubbles begin with a spike in demand, even if the available inventory is limited. As speculators enter the market, buying up properties, demand grows and the bubble swells. Prices skyrocket as limited supply comes up against increasing demand.
Major factors that contribute to housing bubbles include:
- Increased economic activity—increased prosperity makes consumers look to spend their disposable income in the housing market.
- Increased speculation—rapid growth in an area can lead investors to pour extra money into a market, further decreasing supply.
- Low interest rates—make homes more affordable and encourage more buying.
- Easy-to-access credit—usually with lower underwriting standards, allows more people to buy houses rapidly.
- Lack of financial literacy—causes mortgage borrowers to take excessive risks.
ALL BUBBLES ARE TEMPORARY
When housing bubbles burst, prices drop rapidly and instantaneously, causing mortgage investors, homeowners, property investors, and mortgage lenders to suffer great losses.
The following are some of the factors that make housing bubbles go…POP!
- Increased interest rates—can make some people unable to afford new (or even their current), homes, leading to an increased supply, especially after foreclosures.
- Lowered economic activity—such as a recession, leads to less disposable income or fewer employment opportunities, making home purchases a luxury fewer people can afford.
- Exhaustion of demand—brings about an equilibrium of supply and demand, causing home prices to stagnate and even start dropping.
RALEIGH IS A BOOM. NOT A BUBBLE.
Our vibrant Cary, Raleigh, and greater Triangle area continues to see steady growth in job opportunities, housing development, and cultural expansion. This keeps Raleigh high on the list of great places to relocate, and to invest in 2021.
Here are some of the major factors that predict that the Triangle’s housing market will keep on booming:
- Continued population growth. Raleigh’s population has grown steadily for years, and is up 76% since 2020, with projections showing little change in pace. In Wake County, the expectation is that we’ll see growth of 2% (that’s higher than the national average). The city is also diverse and its high baby boomer and millennial population will keep its job and housing market strong.
- Immense job market. Raleigh currently outranks traditional high-tech powerhouse cities like Boston and San Francisco in the creation of STEM (science, technology, education, mathematics) jobs. Its GDP has nearly doubled and 48% of its population hold a bachelor’s degree or higher, which has caused low unemployment rates. Forbes even ranks the city as the third-best place for careers and business in the US.
- Desirable quality of life. Raleigh consistently ranks as one of the best cities to live and work in the US, as ABC 11, a local news channel reported recently.
- Attractive market for renters. Ranked as one of the fastest-growing cities in the US, Raleigh has designated 70% of its land for residential use. This has helped us outrank destinations such as Charlotte, Atlanta, and Austin, in terms of housing affordability. The rents in the Triangle have grown by 2%, on average, every year, making it very ideal for rental property investment.
Still have questions? We’re happy to allay any fears you may have had about whether Raleigh is a housing bubble that’s about to pop. And if you’re looking for a place to move or acquire real estate, rest assured that the Triangle should be among your top locations. Just contact us for help selecting areas that will serve you best.