Looking for the best places to invest in real estate in 2021?
If you’ve heard of the booming real estate markets in North Carolina, then you might be wondering, “Is Raleigh a good rental market?”
Good news: buying an investment property in Raleigh is an excellent move in 2021.
The Raleigh housing market ranked #1 (the Raleigh/Durham housing market, specifically) in the PwC and Urban Land Institute’s “2021 Emerging Trends in Real Estate” report. Despite the impact of the coronavirus pandemic, the Raleigh real estate market is hot and heating up heading into 2021.
In this article, we are sharing our research and knowledge of the Raleigh real estate market trends and factors contributing to this top rental market.
Raleigh Housing Market Statistics 2020
Let’s take a quick look at how the Raleigh real estate market is performing right now. This will provide some insight into why it’s been rated a top market for 2021. The following data comes from Mashvisor:
- Median Property Price: $477,440
- Price per Square Foot: $197
- For Sale Listings: 1,015
- Price to Rent Ratio: 27
- Monthly Traditional Rental Income: $1,485
- Traditional Cash on Cash Return: 2.2%
- Average Airbnb Daily Rate: $132
- Monthly Airbnb Rental Income: $2,617
- Airbnb Cash on Cash Return: 3.6%
- Airbnb Occupancy Rate: 65%
6 Reasons Why the Raleigh Housing Market 2021 Will Be a Top Market
In-Migration Will Cause the Renter Population to Increase
Currently, the renter population in Raleigh is high – around 51%. The renter population in the Raleigh housing market will continue increasing due to the city’s steady in-migration rates.
As stated in the “2021 Emerging Trends in Real Estate” report, the Raleigh housing market is one of the Magnet markets. Raleigh falls under the subcategory of 18-hour cities, indicating that it is a major attraction for young people seeking the up-and-coming lifestyle, culture, and work opportunities the city offers. This age group is typically known for being renters and thus, 2021 will likely see the Raleigh renter population go up. But there’s another factor at play here, too, besides demographics: affordability.
Occupancy Rates Will Be High Due to Lack of Affordability
In addition to the population of young people growing, affordability plays a factor in the profitability of this rental market.
According to Mashvisor’s data, the price to rent ratio in Raleigh is extremely high: 27. This means that the vast majority of Raleigh residents will find it far more affordable to rent than buy homes. A high price to rent ratio is a good sign for real estate investors because they will experience high occupancy rates. And with the Raleigh real estate market forecast 2021 showing an increase in home values, more and more people will be priced out of the market and into rental properties.
Best Neighborhoods in Raleigh for Traditional Investment
#1. Northeast Raleigh
- Median Property Price: $272,544
- Price per Square Foot: $138
- Price to Rent Ratio: 17
- Monthly Traditional Rental Income: $1,365
- Traditional Cash on Cash Return: 3.4%
#2. Falls of Neuse
- Median Property Price: $445,142
- Price per Square Foot: $191
- Price to Rent Ratio: 20
- Monthly Traditional Rental Income: $1,865
- Traditional Cash on Cash Return: 3.0%
#3. North Central
- Median Property Price: $561,561
- Price per Square Foot: $295
- Price to Rent Ratio: 21
- Monthly Traditional Rental Income: $2,218
- Traditional Cash on Cash Return: 2.7%
#4. South Central
- Median Property Price: $407,637
- Price per Square Foot: $237
- Price to Rent Ratio: 20
- Monthly Traditional Rental Income: $1,719
- Traditional Cash on Cash Return: 2.7%
#5. East Raleigh
- Median Property Price: $272,724
- Price per Square Foot: $159
- Price to Rent Ratio: 19
- Monthly Traditional Rental Income: $1,228
- Traditional Cash on Cash Return: 2.5%
Related: How to Achieve a High ROI on Rental Property Every Time
Multifamily Properties in Raleigh Will Be Profitable
Real estate investors who are interested in taking on multifamily properties should consider the Raleigh housing market. While most types of Raleigh rental properties are set to perform exceptionally well in 2021, 72% of real estate analysts recommend buying multifamily property in Raleigh, according to the “2021 Emerging Trends in Real Estate” report. Find a top-performing multifamily home for sale in Raleigh now by visiting Mashvisor.
Related: 12 Best Multifamily Markets for 2021 with High Cap Rates
Construction Prospects Look Optimistic
Raleigh real estate investment opportunities include not only buying traditional rental properties but strong prospects for developing land.
The Raleigh housing market ranked #1 for homebuilding prospects in the report. The report also ranked Raleigh #1 for development and redevelopment opportunities.
The development of raw land requires large amounts of capital, and an important factor for investment decisions is the availability of funds. Raleigh is an encouraging city for investors in need of capital for development. The report ranked Raleigh as #11 for the availability of debt and equity capital.
A Strong Economy Suggests Long-Term Stability
The fear many real estate investors have lies in the future of the housing market. Investors might wonder if a market that is hot today will last for many years to come, or burst. Especially in the face of disasters such as COVID-19, it can feel daunting to put your faith, and your money, in anything.
The Raleigh housing market, however, looks to be strong and steady on account of its economic stability.
As mentioned, Raleigh is experiencing high levels of in-migration due to job opportunities, and it’s no wonder: Raleigh’s economy is based on healthcare and scientific, professional, and technical services. These industries alone take up a quarter of the city’s economy, and they have been some of the most stable industries through the pandemic. The “Emerging Trends” report ranks the Raleigh housing market as #3 for having a strong economy.
Airbnb Raleigh Rental Properties Will Be Profitable
Looking at Mashvisor’s Airbnb data for the Raleigh real estate market, local hosts are doing rather well, considering the pandemic is still a major issue. The Airbnb occupancy rate is relatively high, and hosts are earning a good daily rate and monthly rental income. With talk of a vaccine and pent-up travel demand expected to explode in 2021, an Airbnb Raleigh investment property will surely generate good returns next year.
Want to find out the latest estimated Airbnb rental income of a property in Raleigh? Use our Airbnb calculator.
But, Is Airbnb Legal in Raleigh?
When it comes to the Raleigh housing market, information on the Airbnb laws seems to conflict.
The city of Raleigh passed an Airbnb regulation that prohibits whole-house listings. Afterward, the state of NC quickly passed another law stating that cities do not have the right to impose such restrictions on short-term rentals.
What does this mean for investors? Well, it appears as though real estate investors and homeowners alike are still listing entire houses on Airbnb. However, some officials say that state laws do not override local laws while others disagree. Mashvisor recommends digging deeper into the local laws and consulting with local officials before buying an Airbnb property in Raleigh. While there are many hosts currently operating Airbnb investment properties, you don’t want to end up with fines if city regulations are eventually enforced.
Related: Is Airbnb a Good Investment Considering All of the Regulations?
Best Neighborhoods in Raleigh for Airbnb Investment
#1. East Raleigh
- Median Property Price: $272,724
- Price per Square Foot: $159
- Average Airbnb Daily Rate: $153
- Monthly Airbnb Rental Income: $3,020
- Airbnb Cash on Cash Return: 6.9%
- Airbnb Occupancy Rate: 62%
#2. South Central
- Median Property Price: $407,637
- Price per Square Foot: $237
- Average Airbnb Daily Rate: $146
- Monthly Airbnb Rental Income: $4,219
- Airbnb Cash on Cash Return: 6.6%
- Airbnb Occupancy Rate: 64%
#3. Northeast Raleigh
- Median Property Price: $272,544
- Price per Square Foot: $138
- Average Airbnb Daily Rate: $114
- Monthly Airbnb Rental Income: $2,241
- Airbnb Cash on Cash Return: 5.0%
- Airbnb Occupancy Rate: 57%
#4. Falls of Neuse
- Median Property Price: $445,142
- Price per Square Foot: $191
- Average Airbnb Daily Rate: $104
- Monthly Airbnb Rental Income: $2,257
- Airbnb Cash on Cash Return: 5.0%
- Airbnb Occupancy Rate: 66%
#5. North Central
- Median Property Price: $561,561
- Price per Square Foot: $295
- Average Airbnb Daily Rate: $143
- Monthly Airbnb Rental Income: $4,258
- Airbnb Cash on Cash Return: 4.5%
- Airbnb Occupancy Rate: 64%
The Takeaway
The Raleigh housing market is the #1 market for real estate investors in 2021. Whether you wish to invest in multifamily homes or smaller rental properties, you will surely generate a good return on investment in the city.
Want to invest in Raleigh real estate? Not so fast! Even though the Raleigh housing market will be hot in 2021, investors must analyze individual properties to determine their profitability. For the best results, we recommend using real estate investment tools for conducting real estate investment analysis.
Mashvisor has the best real estate investment software, and we can help you start looking for and analyzing investment properties in the Raleigh housing market. To start searching for Raleigh homes for sale, click here.