Comprehensive Housing Market Analysis for Durham-Chapel Hill
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The COVID-19 pandemic has resulted in unprecedented large and rapid changes in many data series, and similarly unprecedented large policy responses, making analysis of, and longer run predictions for, the economy and housing markets exceptionally difficult and uncertain. HUD will continue to monitor market conditions in the HMA and provide an updated report/ addendum in the future. COMPREHENSIVE HOUSING MARKET ANALYSIS Durham-Chapel Hill, North Carolina U.S. Department of Housing and Urban Development, Office of Policy Development and Research As of December 1, 2020 Share on: Durham-Chapel Hill, North Carolina Comprehensive Housing Market Analysis as of December 1, 2020 Executive Summary 2 Executive Summary Housing Market Area Description The Durham-Chapel Hill Housing Market Area (hereafter, Durham HMA) consists of Chatham, Durham, Orange, and Person Counties in central North Carolina and is coterminous with the Durham- Chapel Hill, NC Metropolitan Statistical Area (MSA). The current HMA population is estimated at 590,100. The HMA is home to Duke University and the University of North Carolina at Chapel Hill (hereafter, UNC-CH), which each have research hospitals, and Research Triangle Park (hereafter, RTP), Tools and Resources the largest and oldest continuously running research park in the Find interim updates for this metropolitan area, and select geographies nationally, nation. Among myriad cooperative endeavors, RTP conducts at PD&R’s Market-at-a-Glance tool. Additional data for the HMA can be found in this report’s supplemental tables. research, development, testing, and manufacturing of vaccines. For information on HUD-supported activity in this area, see the Community Assessment Reporting Tool. Comprehensive Housing Market Analysis Durham-Chapel Hill, North Carolina U.S. Department of Housing and Urban Development, Office of Policy Development and Research Durham-Chapel Hill, North Carolina Comprehensive Housing Market Analysis as of December 1, 2020 Executive Summary 3 Market Qualifiers Economy Sales Market Rental Market Weak. During the 12 months ending Tight. The HMA had a 2.1-month Slightly Tight. During the 12 months November 2020, nonfarm payrolls in supply of for-sale housing during ending November 2020, 1,725 rental the Durham HMA fell by 18,100 jobs, November 2020—less than both the units were permitted in the HMA— or 5.6 percent. 2.5-month supply a year earlier and the down from 2,175 units during the current national supply of 2.4 months. previous 12 months. Measures enacted to slow the spread of COVID-19 In November 2020, 3.1 percent of home loans in the The rental market in the Durham HMA is slightly during the past year resulted in job losses that Durham HMA were seriously delinquent (90 or more tight, with a current vacancy rate for all rental ended 9 years of continuous job growth in the days delinquent or in foreclosure) or had transitioned units (including single-family homes, townhomes, HMA. Almost one-half of total job losses were in into real estate owned (REO) status, which is lower apartments, and mobile homes) estimated at 6.3 the leisure and hospitality sector, which lost 8,700 than the national average of 4.1 percent. During the percent—down from 9.5 percent in April 2010, jobs, or 30.6 percent, during the 12 months ending 12 months ending November 2020, new home sales when the market was soft. Single-family homes, November 2020. The manufacturing sector lost decreased 1 percent in the HMA to 1,750, and the including townhouses, made up 38.0 percent of the second most jobs, decreasing by 4,700, or 16.8 average new home sales price increased 5 percent, the occupied rental units in 2018. During the fourth percent. Nonfarm payrolls are expected to expand to $435,100. During the same period, existing home quarter of 2020, the apartment vacancy rate in the by an average of 2.2 percent annually and are sales declined 1 percent, to 7,500, and the average HMA was 5.4 percent, and the average rent was anticipated to make a full recovery during the 3-year existing home sales price increased 7 percent, to $1,189—2 percent higher than a year earlier. During forecast period. $330,100. During the 3-year forecast period, demand the next 3 years, demand is expected for 5,575 new is expected for 9,475 homes. The 1,025 homes rental units. The 2,750 rental units currently under currently under construction are expected to meet a construction are anticipated to meet approximately portion of that demand in the first year. one-half of that demand. TABLE OF CONTENTS 3-Year Housing Demand Forecast Economic Conditions 4 Sales Units Rental Units Population and Households 9 Total Demand 9,475 5,575 Durham HMA Home Sales Market 12 Under Construction 1,025 2,750 Notes: Total demand represents estimated production necessary to achieve a balanced market at the end of the forecast period. Units under Rental Market 17 construction as of December 1, 2020. Sales demand includes an estimated demand for 200 mobile homes. The forecast period is December 1, 2020, Terminology Definitions and Notes 21 to December 1, 2023. Source: Estimates by the analyst Comprehensive Housing Market Analysis Durham-Chapel Hill, North Carolina U.S. Department of Housing and Urban Development, Office of Policy Development and Research Durham-Chapel Hill, North Carolina Comprehensive Housing Market Analysis as of December 1, 2020 Economic Conditions 4 Table 1. Major Employers in the Durham HMA Economic Conditions Name of Employer Nonfarm Payroll Sector Number of Employees Duke University Health System Education & Health Services 24,000 Education and Health Services Largest sector: University of North Carolina at Chapel Hill Government 11,050 The education and health services sector, International Business Machines Corporation Information 9,050 which includes Duke University and the Duke University Education & Health Services 8,000 UNC Health Government 7,100 Duke University Health System, is the Cisco Systems, Inc. Information 5,000 largest nonfarm payroll sector in the HMA, Blue Cross and Blue Shield of North Carolina Education & Health Services 4,700 followed by the government sector, which IQVIA Holdings Inc. Professional & Business Services 4,570 includes UNC-CH and UNC Health. Fidelity & Trust Financial Corporation Financial Activities 3,600 Durham VA Health Care System Government 3,000 Primary Local Note: Excludes retailers, local school districts, and local governments. Economic Factors Sources: Triangle Business Journal; Duke University; University of North Carolina at Chapel Hill; estimates by the analyst The HMA is home to two top-tier research Figure 1. Share of Nonfarm Payroll Jobs in the Durham HMA, by Sector universities, each with a research hospital. UNC- Mining, Logging, & Construction 3% CH is the flagship of the public university system in Local 7% Manufacturing 8% the state, with 30,000 students, and was the fifth ranked public school in the nation by U.S. News State 13% Wholesale 3% and World Report in 2020. In the same rankings, Duke University, with 16,600 students, was the Retail 8% top university in the Southeast region. The two Government universities and their affiliated health networks Federal 2% 22% Trade 11% Transportation & Utilities 2% account for four of the top five employers in the Total Other Services 4% Information 2% HMA and anchor the two largest nonfarm payroll 303.8 sectors (Table 1). Duke University is part of the Financial Activities 5% education and health services sector, and UNC-CH Leisure & Hospitality 6% is part of the government sector, representing 23 and 22 percent of total nonfarm payrolls in the HMA, respectively (Figure 1). Professional & Business Services 14% In the 2019–2020 fiscal year, Duke and UNC-CH had operating expenses of $3.2 billion. A study Education & Health Services 23% by the North Carolina Independent Colleges and Note: The current date is December 1, 2020. Source: U.S. Bureau of Labor Statistics Comprehensive Housing Market Analysis Durham-Chapel Hill, North Carolina U.S. Department of Housing and Urban Development, Office of Policy Development and Research Durham-Chapel Hill, North Carolina Comprehensive Housing Market Analysis as of December 1, 2020 Economic Conditions 5 Universities estimated that UNC-CH, including the healthcare system, had a $7.1 double that of the HMA (2019 ACS 1-year estimates). Approximately 23 percent billion economic impact on the state, and Duke University and its Health System of all employed residents in the HMA commute to jobs within the Raleigh MSA created $5.8 billion for the state in the 2012–2013 fiscal year. compared with 54 percent who commute to jobs in the HMA (2018 ACS 1-year RTP includes facilities associated with Duke University, UNC-CH, and North estimates). Of the jobs in the Durham HMA, 30 percent are held by residents of Carolina State University (NCSU), which is in the neighboring Raleigh-Cary, NC the Raleigh MSA, while residents of the Durham HMA hold 45 percent. Durham County, the most populous county in the HMA, and Wake County, the most MSA (hereafter, Raleigh MSA). RTP was founded in 1959 and is a leading incubator populous county in the Raleigh MSA, account for the bulk of the commuting. The of biotech research and development that encourages collaboration among the counties share a significant border, which includes RTP and Interstate 40. universities, established companies, and start-ups. RTP consists of 70,000 acres of unincorporated land, mostly in Durham County. The park is one of the most popular locations for contract research organizations (CROs), which contract Current Conditions—Nonfarm Payrolls After adding jobs at a strong rate for much of the 2010s, economic conditions in to manage and support clinical trials by pharmaceuticals, biotechnology, and the Durham HMA weakened during the past year, largely because of the effect of medical device firms.