North Carolina is experiencing rapid growth from people moving here from other states. Over the past several years, we have seen increases in both housing and rental prices as well as a shortage of available units in the Triangle region.
A 2021 analysis of Chapel Hill’s housing market projects that housing production will need to increase 35 percent to meet projected job and household growth over the next 20 years. And an examination of housing across the country by the site DeedClaim named both Durham and Raleigh as two of the top metro areas experiencing a housing shortage. Meanwhile, rental prices in Raleigh have increased by more than 20% over the past four years, according to a WRAL analysis.
This blog post will look at housing prices and housing affordability in Wake County. (We’re focusing on Wake due to high-quality, monthly data on home sales available from Wake County government.) If you have additional questions or would like this analysis performed for a different geographic region, please email us at demography@unc.edu and we’ll do our best to answer them.
First, let’s look at how many residential properties were sold in Wake County between 2010 and 2021. Wake County has the largest population in the state, as of the 2020 Census, and has gained nearly 211,000 new residents since 2010. (We should also note that a temporary tax credit was given to homebuyers who purchased a home before April 30, 2010 as part of an Obama administration stimulus package to jumpstart the economy after the recession. Home sales dropped after April 30th of that year.)
Using data from the Wake County Department of Tax Administration, we looked at the total number of residential properties sold in all fourteen municipalities either completely in Wake County or with jurisdictions extending into Wake County. There was a 181% increase in the total number of residential properties sold between the years of 2010 (10,045 properties) and 2021 (28,273 properties).
The chart below shows the total number of residential properties sold, by year, for the six Wake County municipalities with the largest number of home sales. The largest numeric increase in home sales was in Raleigh, but the most rapid changes, measured by growth rate, took place in Apex, Fuquay-Varina, and Holly Springs between 2012 and 2016. Cary, the second most-populous municipality, saw the slowest growth in home sales over this time period.
We can also look at residential property prices.
Both average and median prices of residential properties in Wake County have grown since 2012 and increased dramatically between 2020 and 2021. The average residential property sale price in Wake County increased from $260,362 in 2012 ($300,469, adjusted for inflation) to $427,755 in 2021. After adjusting for inflation, this is a 42% increase in home prices between 2012 and 2021. The largest single-year increase occurred between 2020 and 2021, when median prices rose by more than $52,000 or 14% from an inflation-adjusted sale price of $375,658 in 2020.
We also looked at the top five towns in Wake County, as ranked by their median housing prices during the past five years (2017-21) and their housing price growth rates between 2020 to 2021.
The top five towns with highest average median housing prices during the most recent 5-year period are Apex ($386,800), Cary ($385,300), Rolesville ($378,100), Holly Spring ($370,150), and Morrisville ($353,700).
Between 2020 and 2021, we saw the fastest growth in median housing prices take place in Wendell (34%), Fuquay Varina (23%), Apex (19%), Knightdale (18%), and Morrisville (18%). (Note: growth rate calculated from observed values and not adjusted for inflation.)
Renting a house in the Wake metro area has also become significantly more expensive over the past six years. According to the Zillow Observed Rent Index, rents rose from $1,143 in 2014 to $1,551 in 2021, an increase of $408 or 36%. $159 of the total increase occurred between 2020 and 2021, when rents rose by 11%.
Housing affordability can be measured in a variety of ways. The Housing Affordability Index (HAI) is a measurement used by the National Association of Relators to determine whether home prices are affordable: the HAI measures “the degree to which a typical family can afford the monthly mortgage payment on a typical home.”
The HAI is available regionally. To get more granular, we can look at the median housing value for a given area and divide it by the median household income. This measurement is used by the Urban Reform Institute (URI), a think tank based in Houston, Texas which publishes an annual report on housing affordability. Their housing affordability ratings categorize markets across the United States as affordable, moderately unaffordable, seriously unaffordable, and severely unaffordable. Areas with median housing prices exceeding three times the median household income are considered unaffordable.
By this metric, Raleigh is currently in the “seriously unaffordable” category. Households with income less than $110,000 in Raleigh and less than $151,667 in Cary1 would find it difficult to find housing available for purchase.
Only four major markets in the United States with populations over 1 million are considered affordable: Pittsburgh, PA; Rochester, NY; Buffalo, NY; and St. Louis, MO.
FOOTNOTES
1. According to Newgeography, areas with median housing values exceeding three times of median household income were considered as the unaffordable housing market. $110,000 and $151,667 were derived using: the median housing sale price in 2021 in the two cities divided by 3.
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