Raleigh has been one of the fastest-growing and most affluent cities in the Southeast. Although the pandemic caused significant economic disruption last year, the market's economy has improved at an impressive pace. Despite posting the largest apartment inventory expansion last year since 2013, Raleigh's key indicators are showing signs of strength.
Rents have increased 7.5% year-over-year while vacancies remain stable due to the strong rental demand.
Demand has proved resilient, keeping vacancies within the market's typical range, even amid massive job losses and the influx of new supply. Leasing activity picked up once again at the start of the new year and vacancies are trending downward. Also, consistent with renters' desire for more space, rent trends are also reflecting an increase in demand for two- and three-bedroom units. Although homeownership will continue to inevitably present a tug on apartment demand, especially while interest rates are near historic lows, home prices have increased substantially around the Triangle over the past year and are pricing out some households.
Raleigh's multifamily market will also benefit from strong job growth and a large pool of college-educated workers. The region has attracted corporate investment from a number of expanding companies throughout the pandemic, including Google, Bandwidth, Amazon, Eli Lilly, and the latest announcement, Apple with 3,000 expected new jobs. These new jobs entering the market will continue to support apartment demand throughout the Raleigh market.
Asking rents have improved since the beginning of the new year, translating to 7.5% growth on a year-over-year basis. With the busy spring leasing season underway and the economic and social situation improving, rents can likely be pushed more aggressively throughout the coming months.
The average market sales price per unit has increased by 12% in less than one year.
Both buyers and sellers remain bullish on Raleigh, and some high-end, well located assets have sold for a premium, even amid the pandemic. After a slow second quarter in 2020, sales activity rebounded in the second half of 2020 with a near-record quarter for sales volume in the last quarter of the year. One of the largest deals post-outbreak closed in mid-November, when an institutional investor acquired The Dillon in downtown Raleigh. It sold roughly at $349,000/unit, well above Raleigh's average market sales price per unit of $190,000. The average market sales price per unit has increased by 12% in less than one year.
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