COMPREHENSIVE HOUSING MARKET ANALYSIS Raleigh, North Carolina

U.S. Department of Housing and Urban Development Office of Policy Development and Research As of December 1, 2016

Summary

Economy homes (Table 1). The 1,900 homes Housing Market Area The economy of the Raleigh HMA currently under construction and a has significantly improved since 2011 portion of the 16,000 other vacant after the number of nonfarm payrolls units that may reenter the market will declined during 2009 and 2010. Dur- satisfy some of the demand.

Person Vance Warren Halifax ing the 12 months ending November Granville 2016, nonfarm payrolls increased by Rental Market

Franklin 18,200 jobs, or 3.1 percent, from the Rental housing market conditions in Orange Durham Nash previous 12-month period, to 598,000, the HMA currently are balanced, with and the unemployment rate decreased

Edgecombe an overall estimated vacancy rate of Wake Wilson from 4.8 to 4.3 percent. High-skilled 5.5 percent, down from 8.6 percent in Chatham technical and professional employ- April 2010. The apartment market is Lee Johnston ment is the foundation of the local also balanced, with an apartment

Greene Harnett Wayne economy. During the 3-year forecast vacancy rate of 4.2 percent in the third period, nonfarm payrolls are expected Lenoir quarter of 2016 (MPF Research). During Cumberland Sampson Duplin to increase by an average of 17,100 jobs, the forecast period, demand is expected The Raleigh Housing Market Area or 2.9 percent, annually. for 9,650 new market-rate rental units (HMA) includes Franklin, Johnston, (Table 1). The 4,000 units currently and Wake Counties in central North Sales Market under construction will satisfy some of Carolina and is coterminous with the The sales housing market in the the forecast demand. Raleigh, NC Metropolitan Statistical HMA is currently balanced, with Table 1. Area (MSA). The HMA and the nearby an overall estimated sales vacancy Housing Demand in the Raleigh HMA During the cities of Durham and Chapel Hill rate of 1.5 percent, down from 2.5 Forecast Period are often referred to as the “Research percent in April 2010. During the Raleigh HMA Triangle” because of the presence of 12 months ending November 2016, large research universities in each city. Sales Rental existing home sales totaled 22,300, up Units Units The city of Raleigh, in Wake County, is 2 percent from the 12 months ending Total demand 29,100 9,650 the state capital and economic base of November 2015, and the average sales Under construction 1,900 4,000 the HMA. price in­creased 9 percent to $254,300 Notes: Total demand represents estimated production necessary to achieve a balanced (Core­Logic, Inc., with adjustments market at the end of the forecast period. by the analyst). New home sales Units under construction as of December 1, 2016. A portion of the estimated 16,000 Market Details increased 5 percent to 6,900, and the other vacant units in the HMA will likely average price was up 2 percent to satisfy some of the forecast demand. The Economic Conditions...... 2 forecast period is December 1, 2016, to $326,700. During the next 3 years, December 1, 2019. Population and Households...... 6 demand is expected for 29,100 new Source: Estimates by analyst Housing Market Trends...... 7 Data Profile...... 12 Raleigh, NC • COMPREHENSIVE HOUSING MARKET ANALYSIS 2 Sources: Raleigh ChamberofCommerce;analyst Research Triangle Park. Notes: Excludes local schooldistrictsandgovernments. Includesfirmslocatedin the Table 2. GlaxoSmithKline plc. Fidelity Investments Duke Energy SAS InstituteInc. Rex Healthcare Cisco Systems,Inc. WakeMed Health&Hospitals North Carolina StateUniversity BusinessMachines Corporation International State ofNorthCarolina Economic Conditions

Major Employersinthe Name ofEmployer Raleigh and is one of thelargest employers in and isoneof ing Specialists).NCSUisinRaleigh in Wake County(EconomicModel $3.3billion nual economicimpactof 31,000,andhasan enrollment of university Carolina,withan inNorth State University (NCSU)isthelargest Carolina MSAs inthenation.North the100largest highly educatedof making theHMAseventh most- (2015 AmericanCommunity Survey), pared with30.3percentinthenation orhigheris44.4percentcom degrees adultsintheHMAwithbachelor’s of educated workforce. Thepercentage T cational, corporate, andgovernment edu­ of benefits fromthepartnership theHMA the HMA.Theeconomy of and currently employs 5,225 people in as aresearchprojectattheuniversity like SASInstituteInc., whichbegan companies through thefoundingof HMA leadsindirectly tojobgrowth availability. NCSU’s presenceinthe data 2015, themostrecentyear of or 2.6percent,from2013through 210employeesaverage annually, of government sector, increasedbyan at NCSU, whichisincludedinthe Chapel Hill,NCMSA.Employment Hill areintheadjacentDurham- Carolina-Chapel North University of the HMA;DukeUniversity andthe Education &healthservices Financial activities Transportation &utilities Information Education &healthservices Information Education &healthservices Government Information Government HMA Nonfarm Payroll Sector of theRaleighHMAisahighly of theeconomy he foundationof Employees Number of 10,000 36,800 2,600 2,900 3,700 5,225 5,300 5,500 8,425 8,725 - -

- at RTP. atRTP Manyfirms areinthe respectively, alsomaintainlocations mately 5,500and2,600employees, GlaxoSmithKline plc., withapproxi (Table 2).CiscoSystems, Inc., and the HMAwith10,000employees tion, thelargest private employer in Business Machines(IBM)Corpora Major tenantsincludeInternational employ acombined50,000people. to morethan200organizationsthat Raleigh,ishome thecityof west of area which isinanunincorporated parks inthenation.RTP,corporate the premierresearchanddevelopment Research Triangle Park (RTP), oneof organizations exemplified inthe the 2004-through-2007 period,the construc growth throughincreasedresidential economic which causedfurther in-migration, highlevelssupported of Economic growth duringtheperiod 4.3 percentfrom2004through2007. payrollnonfarm growth averaging the nationaleconomy improved, with economy begantogrow rapidly as through 2003.However, thelocal 0.2percentfrom2001 by anaverage of payrollsbubble; nonfarm decreased thedot-com lowing thecollapseof with sluggisheconomicgrowth fol The HMAenteredthe21stcentury to only 2,600currently. approximately 5,000in2010 high of employment atRTP declinedfroma ployment atGlaxoSmithKline, where job gainshelpedoffsetdecliningem the RTP by600during2016.These software development workforce in financial institution,expanded its economy. FidelityInvestments, a high-­ but whichpredominately create theHMAjobs small percentage of sectors, whichdirectly accountfora financial activities andinformation wage thelocal jobsthatsupport ­tion andtaxrevenues. During - - - - Raleigh, NC • COMPREHENSIVE HOUSING MARKET ANALYSIS 3 Source: U.S.Bureau ofLaborStatistics Table 3. Source: U.S.BureauofLaborStatistics through November2015and2016. Notes: Numbersmaynotaddtototalsbecauseofrounding.Based on12-monthaverages Figure 1.

Labor force and Total nonfarmpayroll jobs resident employment Service-providing sectors Goods-producing sectors Government Other services Leisure &hospitality Education &healthservices Professional &businessservices Financial activities Information Transportation &utilities Wholesale &retail trade Manufacturing Mining, logging,&construction 390,000 440,000 490,000 540,000 590,000 640,000 690,000 Economic Conditions 12-MonthAverage NonfarmPayroll Jobsinthe by Sector ment Rateinthe Trends inLaborForce,ResidentEmployment,andUnemploy Labor force 2000

2001

2002

2003

2004 Raleigh HMA,

Continued 2005 Resident employment

2006 November 109,000 512,800 579,800 95,100 23,100 64,400 69,100 29,400 19,600 12,200 91,000 33,900 33,100 67,000 2015

2007 12 MonthsEnding

2008 sector,and construction even though inthemining,2010 occurred logging, job lossesintheHMAduring2009and the 2010. Approximately 43percentof or 2.1percent,ayear during2009and 11,100jobs,declined byanaverage of payrolls nonfarm after thenumber of have improved every year since2011, Economic conditionsintheHMA declined. sharply residential permitting as thenationenteredrecessionand payroll growth slowed to1.1percent percent, annually. In2008,nonfarm subsector added2,200jobs, or6.4 annually whilethelocalgovernment tor grew by2,400jobs, or6.8percent, mining, sec logging, and construction 2000Through2015 2009 November

2010 115,400 531,000 598,000 95,800 24,000 67,800 71,300 29,600 20,100 12,400 94,500 33,600 33,400 67,000 2016

2011

2012 Unemployment rate

2013 Absolute Change 18,200 18,200 Raleigh 3,400 2,200 6,400 3,500 – 300

2014 700 900 200 500 200 300 0 2015

Change Percent HMA, – 0.9 0.7 3.9 5.3 3.2 5.9 0.7 2.6 1.6 3.8 3.5 0.9 0.0 3.1 10.0 0.0 2.0 4.0 6.0 8.0 -

Unemployment rate - percent, fromtheprevious 12months, pay­ nonfarm ber 2016,thenumber of During the12monthsendingNovem­ growing atleast1percentannually. sectors except thegovernment sector was broad-based,withalleconomic Payroll growth duringthatperiod 3.4 percent,from2012through2015. 18,000jobs,average or increaseof or 1.9percent,thenacceleratedtoan 9,500jobs, 2011, withanincreaseof in thesector. Job in growth returned joblosses caused theconcentrationof dential andcommercialconstruction allpayrolls in2008.Decliningresi of the sectoraccountedforonly 7percent growth occurred intheprofessional, growth occurred thejob Approximately 45percentof annually from2010through2015. 4,500 jobs, an average or4.8percent, of 2008 and2009,thesectorincreased by 3,600jobs, or4.1percent,during of average. Afterdecliningbyanaverage centage pointsmorethanthenational jobs(Figure2),5per allnonfarm of in theHMA,comprising19.3percent sector isthelargest economicsector The professionalandbusinessservices through 2015. and theunemployment ratefrom2000 in thelaborforce, resident employment, through 2007.Figure1shows trends which averaged 3.8percentfrom2005 remains higherthantheprevious low, annually from2009through2011but 8.5percent than theaverage rateof unemploymentThe current rate is less during theprevious 12-monthperiod. 4.3 percent,down from4.8percent months endingNovember 2016was The unemployment rateduring the12 hospitality sectorledgrowth (Table 3). retail tradesector, andtheleisure sector,ness services thewhole­ to 598,000.Theprofessionalandbusi rolls increasedby18,200jobs, or3.1 sale and - -

-

Raleigh, NC • COMPREHENSIVE HOUSING MARKET ANALYSIS 4 Economic Conditions

Continued com­ ­research organizations(CROs), industries, whichincludescontract scientific, andtechnicalservices 2016 theprofessional andbusiness the 12months ending November ally from2010through 2015.During by 1,700jobs, or11.7percent, annu ment agencies. Theseindustriesgrew employ which includetemporary industries,the employment services from 2010through2015came sector fessional andbusinessservices thegrowth inthepro remainder of the 2016 to2020.Themajorityof pand itsRTP workforce by260from Research, anotherCRO, planstoex the 2017-to-2021period.Premiere plans toadd550employees during in theHMAsinceearly 2015and added approximately 100employees ees intheHMA. INCResearch has LLC hasapproximately 1,600employ ProductDevelopment,Pharmaceutical employees, respectively. Additionally, have approximately 1,000and500 intheHMAand headquartered 10 largest CROs intheworld, are the and PRAHealthSciences, 2of CROs inthenation.INCResearch of MSA have thelargest concentration adjacent Durham-ChapelHill,NC manufacturers. TheHMAandthe clinical trialsforpharmaceutical Source: U.S.BureauofLaborStatistics Note: Basedon12-monthaveragesthroughNovember2016. Figure 2. panies thatconductandanalyze Education &healthservices11.9% Leisure &hospitality11.3%

Current NonfarmPayroll Jobsinthe Other services4.0% Government 16.0% Government - - - - - Mining, logging,&construction5.6% technical services industriesadded technical services jobs. Theprofessional,scientific, and 6,400 jobs, or5.9percent,to115,400 sectorledjobgrowth, adding services tax revenues inWake County, whose and hotels. foodandbeverage Prepared spending atlocalrestaurants, shops, increased, consumersincreased their improved andconsumerconfidence economy. Aseconomicconditions highly withthelarger correlated local are whosefortunes smallfirms of are similarbecausetheyconsistmostly or 5.1percent,annually. Thesectors and hospitalitysectoradded2,900jobs, percent, annually, whiletheleisure 2,800 jobs,added anaverage or3.4 of the wholesaleandretailtradesector (Figure 3).From 2011through2015, sector since2000inpercentage terms sector has grown morethanany other 2010. Theleisureandhospitality since in percentage andabsoluteterms, most jobgrowth, respectively, both have contributedthesecondandthird wholesale andretailtradesectors The leisureandhospitalitythe 100 jobsinRaleighduring2016. Inc., provider, aweb service bothadded andWalkMea rapidprototypingfirm, 1,200 jobs, or5.5percent.ProtoLabs, industriesadded employment services 2,500 jobs, or5.1percent,whilethe Professional &businessservices 19.3% Manufacturing 5.6% Financial activities5.0% Raleigh HMA Information 3.4% Wholesale &retail trade15.8% Transportation &utilities2.1% , bySector Raleigh, NC • COMPREHENSIVE HOUSING MARKET ANALYSIS 5 Source: U.S.Bureau ofLaborStatistics construction sector showednonetchange. Notes: Current isbasedon12-monthaverages through November 2016.During thisperiod, payrolls inthemining,logging,and Figure 3. Economic Conditions – 20 – – 10 SectorGrowthinthe 0 10

Continued 20 Raleigh HMA of thatjobgrowth camethroughthe of or 5.3percent, to reach67,800.Most hospitality sectoradding3,400 jobs, to reach94,500,andtheleisure and adding 3,500jobs, or3.8percent, the wholesaleandretailtrade sector months endingNovember 2016,with Growth continued duringthe12 rooms were builtinWake County. 2011 through2015,1,550new hotel and existing toexpand; firms from caused new toenterthemarket firms Revenue). Increasedspending ment of ­ CarolinaDepart in FY2015(North in fiscalyear (FY)2010to$1.22billion increased 42percent,from$858million increased; taxablesalesinWake County the sameperiod,retailspendingalso vention andVisitors Bureau).During percent in2015(GreaterRaleighCon­ creased from59percentin2010to70 while thehoteloccupancyratein­ increased theirrestaurantspending, to $25.3millionin2015asconsumers 44 percentfrom$17.6millionin2010 theHMA,increasedby population of the residents accountfor80percentof 30 40 , PercentageChange,2000toCurrent 50 60 70 80 of 2016and2017. of 250 employees duringtheremainder in theHMAandisexpected toadd Bank AG, isexpanding its workforce Deutsch of subsidiary a technology by 2020.DBGlobalTechnology Inc., isexpected toemployThe factory 700 Clayton, acityinJohnston County. insulin manufacturing facilityin manufacturer, whichisbuildingan Novo Nordisk,apharmaceutical growth include Additional sourcesof the leisureandhospitalitysectors. in thewholesaleandretailtrade gains sectorsupporting ness services growth intheprofessionalandbusi sectors,the service-providing with Most jobgainswilllikely occurin 17,100 jobs, or2.9percent,annually. to remainstrongatanaverage of non­ During the3-year forecastperiod, rants (Downtown RaleighAlliance). 15retailstoresandrestau increase of downtown Raleighexperienced anet 2016, September Through theendof smallfirms. creation andexpansion of 90 farm payrollfarm growth isexpected Total nonfarmpayroll jobs Service-providing sectors Goods-producing sectors Education &healthservices Professional &businessservices Financial activities Transportation &utilities Manufacturing Government Other services Leisure &hospitality Wholesale &retail trade Mining, logging,&construction Information - - Raleigh, NC • COMPREHENSIVE HOUSING MARKET ANALYSIS 6 estimates byanalyst Sources: 2000and2010—2000Census2010Census;currentforecast— 2019. Notes: ThecurrentdateisDecember1,2016.forecast Population andHouseholds Figure 4. Figure 5. estimates byanalyst Sources: 2000and 2010—2000Censusand2010Census; currentandforecast— 2019. Notes: ThecurrentdateisDecember 1,2016.TheforecastdateisDecember

Average annual change Average annual change 10,000 15,000 20,000 25,000 30,000 35,000 10,000 15,000 2,0000 25,000 5,000 5,000 0 0

2000 toForecast Components ofPopulationChangeinthe Population andHouseholdGrowth inthe 2000 toForecast 2000 to2010 2000 to2010 Net naturalchange Population because of elevated unemployment because of percent, annually, from2009to 2013 averaged it 26,150people,2009; or2.3 32,900, or3.1percent,from2008to market. Population growth slowed to tight labormarketandastronghousing a July 1),becauseof estimates asof annually (CensusBureaupopulation 44,150 people,averaged or4.5percent, peaked from2005to2008,whenit ­­to-2007 period.Population growth strongjobgrowth duringthe2004- of percent, annually, primarily because period, adding33,350people, or3.6 the nationduring2000-to-2010 T resi which madeitdifficultforpotential rates andthenationalhousingcrisis, 2010 tocurrent 2010 tocurrent dents tosell their existing homes ­dents fourth fastest-growing MSAin fourth he RaleighHMAwas the Households Net migration Raleigh HMA, Current toforecast Current toforecast Raleigh HMA,

change (resident births minuschange (residentbirths resident populationof growth. Netnatural in-migration accounted for72percent date,from 2013tothecurrent whilenet 30,500 people, or2.4percent,annually an estimatedaverage to of increased recovered, populationgrowth has the laborandhousingmarketshave tion growth, from 2009to2013.As popula only 16,850,or64percentof during the2005-to-2008periodbut populationgrowth, or 76percentof in-migration averaged 33,350people, the HMAsince2008.Net in growth theslowdown inpopulation most of wasnet in-migration thecauseof and relo­ ity Survey 5-year estimates).Migrants Flows, 2010–2014American Commun­ Florida (County-to-CountyMigration theMidwest,from theNortheast, and intotheHMAoriginated migration interstate to theHMA.Themajorityof netin-migration mately 77percentof hasconstituted approxiin-migration dataavailability,year of domestic From 2010to2015,themostrecent allpop­ 72 percentof ex­ trendsare post-2013 migration the HMA.Duringforecastperiod, to economic growth attractsmigrants 3-year forecastperiod,ascontinued 30,650,or2.3percent,duringthe of to increaseatanaverage annual rate theHMAisexpected population of from April1,2010(Figure5).The approx­ of is 1,319,000,anaverage annual increase theHMA the estimatedpopulationof December1,2016, forecast date. Asof change intheHMAfrom2000to population shows thecomponentsof 2013 to2016,respectively. Figure4 people from2005to2008and 8,675 amount, averaging and 10,800 bydeclined deaths) a relatively small pected tocontinue, accountingfor cate totheHMA.Decreased imately 28,300, or 2.3 percent, imately 28,300,or2.3percent, u­ lation growth. - - Raleigh, NC • COMPREHENSIVE HOUSING MARKET ANALYSIS 7 Population andHouseholds Housing Market TrendsHousing analyst Sources: 2000and2010—2000Census2010Census;current—estimatesby Note: ThecurrentdateisDecember1,2016. Figure 6. 100,000 150,000 200,000 250,000 300,000 350,000 50,000 0

2000 toCurrent Number ofHouseholdsbyTenureinthe 2000

Continued Renter is toWake County. totheHMA in-migration international to Wake County, and96percentof is domesticin-migration 83 percentof Raleighalone. Approximately city of County, withabout35percentinthe theHMApopulationresidesinWake of com­ 12 and2percent,respectively. By and Franklin countiesaccountingfor in theHMAsince2010,withJohnston populationgrowth for 86percentof Raleigh,hasaccounted central cityof Wake County, whichincludesthe and relatively affordablehousing. strong jobmarket,temperateclimate, its are drawn totheHMAbecauseof overall estimatedsalesvacancy rateis December1,2016, the 2010. Asof excess inventory since of absorption population growth contributing to andincreasedeconomic and struction homecon with decreasedlevels of Raleigh HMAiscurrently balanced, The saleshousingmarketinthe Sales Market parison, approximately 80percent 2010 Owner Raleigh HMA, Current -

35 percent of householdgrowth from 35 percentof house­ thedecade. Renter first years of and atightcreditmarketduringthe aweak labormarket becauseof report) this 2010 (Table DP-1attheendof percent, down from66.8percentin ship ratecurrently isestimatedat63.9 population growth. Thehomeowner slower since 2010primarily becauseof 2010. Householdgrowth hasdeclined 3.5 percent,annually, from2000to household growth averaged 12,400, or annually, since2010.Bycomparison, 10,550 households, or2.3percent, 500,900 households, anincreaseof The HMAishometoanestimated declined from6,975 to6,625homes active residential listings number of in thesameperiod,however, the from 4.6monthsinNovember 2015; unsold, available inventory, down 2016, theHMAhad3.7months of November 2.5 percentin2010.Asof estimated at1.5percent,down from households tohomeownership. housing marketattractprospective omy, andincreasedconfidencein the new householdsasastrongecon­ of account forapproximately 45percent with renterhouseholdsexpected to next 3years, to536,200households, or 2.3percent,annually duringthe HMA isexpected togrow by11,750, householdsinthe The number of hold growth since2010(Figure6). house approximately 55percent of 2000 to2010buthave accountedfor holds accountedforapproximately - -

Raleigh, NC • COMPREHENSIVE HOUSING MARKET ANALYSIS 8 Sales Market Market TrendsHousing Continued homes sold,or19percent,annually 3,925 Sales declinedbyanaverage of conditions andpopulationgrowth. strong economic analyst) becauseof Logic, Inc., withadjustmentsbythe 26,900 homessoldannually (Core from 2004through2007,averaging homes, andcondominiums)peaked (including single-family homes, town home prices. Existinghomesales rate andputtingupward pressureon supply, lowering thesalesvacancy has increasedfasterthantheavailable Since 2012,thedemandforhomes listings available inNovember 2010. supply and9,425 had 11.0monthsof (Redfin). Bycomparison,theHMA and 2015.The slowdown ingrowth is 1,125,or6 percent,during2014 of slowed in2014,averaging increases and 2013.Existinghomesale growth 4,175, or32percent,during2012 homes increasedbyanaverage of existing job growth in2011.Salesof substantial of 2012 following thereturn The salesmarketbegantorecover in $207,400 from2009through2011. during the2007-to-2008periodto $223,900 decrease fromanaverage of caused existing homesalespricesto conditions andincreasedREOsales conventional resales. Poor economic substantially lessthan$217,700for and $195,700,respectively, in2011, salesaveragedand short $148,600 had increasedto20percent.REO distressed, butby2011thepercentage all existing homessoldin2007were substantially. Lessthan5percentof sales)increased [REO] andshort distressed sales(realestateowned both thenumber andpercentage of homessolddecreased, number of and stricterlendingstandards. Asthe pooreconomicconditions because of 11,250homessoldduring2011 of from 2008through2011toalow - - The average sales price of existing The average salespriceof from thepreceding12-monthperiod. 2percent homes sold,anincreaseof 2016, approximately 22,300existing the 12monthsendingNovember in anexisting home sales priceof average prices. From 2012 through2015,the created upward pressureforsales tion amongbuyers forexisting homes percent, annually. Increasedcompeti 10 or 1,725, increased byanaverage of and 2015,whileconventional resales and 26percentannually during2014 23 which declinedbyaverages of sales, REOandshort the number of partially attributabletodecreasesin number of new homessoldaveragednumber of $295,500 during2008.The high of the prerecession and, in 2014, surpassed has increasedeachyear since2012 anew home The average salespriceof themid-2000s. below thepeaklevels of the nationalrecessionbutare well stabilized andbeguntorecover since New homesalesintheHMAhave national ratewas 7.4percent. percent inJanuary 2012,whenthe 4.6 cant improvement fromahighof asignifi represents REO properties seriously delinquentloansand of Logic, Inc.). percentage Thecurrent 2.6percent(Core national rateof cent inNovember 2015andbelow the into REOstatus, down from2.0per­ or inforeclosure)hadtransitioned delinquent (90ormoredays delinquent per­ November 2016,1.6 the HMA.Asof affect existing homepriceswithin Foreclosures nolonger significantly months endingNovember 2008. $224,800duringthe 12 sion peakof significantly higherthantheprereces the preceding12-monthperiodand the sameperiod,up9percentfrom homes increasedto$254,300during ­creased 3percentannually. During cent of homeloanswere seriously cent of - - - - Raleigh, NC • COMPREHENSIVE HOUSING MARKET ANALYSIS 9 Sources: U.S.Census Bureau,BuildingPermitsSurvey; estimatesbyanalyst Notes: Includestownhomes. Currentincludesdata throughNovember2016. Figure 7. 10,000 12,000 14,000 2,000 4,000 6,000 8,000 Sales Market Market TrendsHousing 0

2000 Single-Family HomesPermittedinthe 2000 toCurrent

2001 Continued 2002

2003

2004

2005

2006

2007 New homesalespricesaveraged 6,900. months endingNovember 2016,to but increased5percentduringthe12 home salesremainedstablein2015 prices forexisting homesrose. New existing homeswas absorbedand of 18percent,asexcess inventory rate of sales increasedatanaverage annual From 2012through2014,new home lower-priced existing homes. tories of access tocredit,andincreasinginven poor economicconditions, decreased 4,100in2011becauseof a low of annu­ de­ 12,400 during2005and2006but the 12monthsendingNovember 2016, A HanleyWood Company). During 2,400 square feetin 2009 (Metrostudy, 11 percentlarger thantheaverage of through 2015was 2,650squarefeet, new homessoldfrom2013 size of theincreaseinprice;average of increased insize, accountingforsome in 2008.Onaverage, new homeshave $295,500reached prerecession highof annually the and,in2014,surpassed $13,200,or5percent, an average of 2015, new homepricesincreasedby falling demand.From 2012through builders reducedpricesinresponseto from 2009through2011,ashome declined toanaverage $264,900 low of $292,300 during2007and2008but 2008 clined an average of 20percent clined anaverage of

2009 ally from2007through2011to

2010

2011 Raleigh HMA,

2012

2013

2014

2015

2016 - late 2000sandremainssubdued. HMA declinedsignificantly inthe inthe Condominium construction new homessoldduringtheperiod. all less than 1percentof representing iums soldeachyear in2014and2015, onlyan average 45new condomin­ of thenext 6years, however,5 of with condominium salesdecreasedduring A HanleyWood Company).New allnew homesales(Metrostudy,of annually, accountingfor5percent 520new condominiumunitssold of From 2006through2008,anaverage $326,700. increasing by$7,225,or2percent,to new homepricescontinued torise, during theprevious 12-monthperiod to 9,475,comparedwithpermitting 12 monthsendingNovember 2016, or10percent,duringthe permitted, and 2015butincreasedby830 homes homes builtannually, during2014 relatively stable, averaging 8,175 homes. levels Construction remained and increasingpricesforexisting strengthening economicconditions ally during2012and2013becauseof 1,650,or30percent, annuaverage­ of increasedbyan home construction from 2009through2011,single-family onaverage4,600 homespermitted (Figure 7).Afterreachingalow of 2009 asdemandfornew homesfell percent, annually, during2008and 4,200homes,by anaverage or41 of annually,homes permitted thendeclined 13,400 through 2007atanaverage of homebuilding peakedfrom2005 boom inthemid-2000s. Single-family levels reachedduringthehousing remains below thehistorically high 2011but in theHMAsinceendof hasgenerallypermitted, trendedup homes measured bythenumber of as Single-family home construction, ward ­ward

Raleigh, NC • COMPREHENSIVE HOUSING MARKET ANALYSIS 10 Table 4. Source: Estimatesbyanalyst demand. The forecast period isDecember 1,2016,toDecember 1,2019. mated 16,000other vacantunitsintheHMA willlikelysatisfysomeoftheforecast Notes: The 1,900homescurrently under construction andaportion oftheesti analyst Sources: 2000and 2010—2000Censusand2010Census; current—estimatesby Note: Thecurrent dateisDecember1,2016. Figure 8. Sales Market Market TrendsHousing 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 600,000 450,000 350,000 300,000 250,000 200,000 150,000 From

Estimated DemandforNewMarket-RateSalesHousing in theRaleighHMA

Current Rental Vacancy Ratesinthe Price Range($) Continued 2000 8.7 and higher 599,999 449,999 349,999 299,999 249,999 199,999 To During theForecast Period is estimatedat5.5percent,down from 2010. Theoverall rentalvacancy rate vacant inventory since of absorption hold growth having contributedto balanced, withstrongrentalhouse in theRaleighHMAarecurrently Rental housingmarketconditions Rental Market and five-bedroom homescurrently and in theHMA.New three-,four-, themostactive subdivisions is oneof Raleigh, 253 homesitesinthecityof Creek Preserve, whichencompasses Highland Raleigh. Thethirdphaseof Interstate 540looparoundthecityof sions outsidethepartially complete insubdivi isoccurring construction data).Mostnew home (preliminary 2010 8.6 Demand Units of Raleigh HMA, 5,825 4,375 4,375 2,025 2,900 5,250 4,375 2000to Percent of Total 20.0 15.0 15.0 10.0 18.0 15.0 7.0 Current 5.5 - - - by 6,5,and4percent, respectively. atclass A,B,rents grew andCproperties complexes. During2014and2015, both recently completedandexisting 2014 and2015,averaging 5percentfor steadyduring since 2011 butincreased respectively. Rent growth hasbeen two-, andthree-bedroomapartments, $942,$1,090,and$1,461 for one-, of 2015, to$1,069,withaverage rents of 4 percentfromthethirdquarter average rentintheHMAincreased 2016,the of During thethirdquarter cent ayear earlier (MPFResearch). 2016,down from5.0per of quarter 4.2percentduringthethird rate of balanced, withanaverage vacancy occupied unitsintheHMA,isalso renter- approximately 60percent of market,whichmakesup apartment 8.6 percentin2010(Figure8).The Demand isexpected in tobegreatest thedemand. ket willsatisfysomeof units thatmay reenterthesalesmar the16,000othervacant of portion anda currently underconstruction the forecastperiod.The1,900homes during thesecondandthirdyears of (Table 1),withincreasingdemand 29,100 new homesintheHMA demand isexpected foranestimated During the3-year forecastperiod, Hanley Wood Company). to bebuiltoutin2017(Metrostudy, A Preserve; thesub­ at Highland Creek sold homes new at $250,000.During2016,120 are avail range. for market-ratesaleshousing, byprice Table 4shows theestimateddemand the $200,000-to-$349,999pricerange. ­able, withpricesstarting division is expected expected divisionis - - Raleigh, NC • COMPREHENSIVE HOUSING MARKET ANALYSIS 11 Sources: U.S.Census Bureau,BuildingPermitsSurvey; estimatesbyanalyst Notes: Excludes townhomes. Currentincludesdata throughNovember2016. Figure 9. 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Rental Market Market TrendsHousing 0

2000 Multifamily UnitsPermittedinthe Current

2001

2002 Continued

2003

2004

2005

2006

2007 area accountsforapproximately 10 student housingintheCentralRaleigh proximately 23,000 students. Private ap has anoff-campuspopulationof Raleigh areaincludesNCSU, which market area,at$1,124.TheCentral Cary/Morrisville suburban North area, at$1,198,andtheestablished revitalized CentralRaleighmarket market area.Rents arehighestinthe Raleigh percent intheNortheast 5.6 Raleigh marketareatoahighof the MPFResearch-defined Far North 2.7percentin ranging fromalow of across theHMArelative toayear ago, 2016were constant of third quarter vacancyApartment ratesduringthe in condo­ decreases a softrentalmarket,sharp annuallyunits permitted because of 2009 through2011,averaging 900 declined tovery low levels from unitspermitted, by thenumber of multifamily asmeasured construction, (Figure 9).Following therecession, multifamily construction levels of rates andstrongrentgrowth with high Builders respondedtolow vacancy respectively. have $976and$945, average rentsof Raleigh andSoutheastareas has lower average rents;the Northeast the HMA students. sideof Theeastern area andhousesanestimated3,500 per­ 2008 cent of all of the units in the market theunitsinmarket allof cent of

2009 Raleigh HMA,

2010 and minium construction,

2011

2012

2013 2000 to 2000to

2014

2015

2016 - is mostconcentratedintheCentral throughouttheHMAbut occurred has Recent construction apartment 12-month period. nearly 7percentfromthepreceding units were anincreaseof permitted, November 2016,approximately 4,000 2015. Duringthe12monthsending units annually from2013through but remainedhigh,averaging 3,550 tion declinedinsubsequentyears construc apartment The volume of multifamily since2000. construction in2012,thehighestlevelpermitted of quickly rebounded,with6,500units How strict multifamily lendingstandards. households are expected tobecome period, asanincreasing number of theforecast second andthirdyears of with decreasingdemandduring the market-rate rentalunitsinthe HMA, demand isexpected for9,650new During the3-year forecastperiod, areamedianincome. 60 percentof market ratestotenantsmakinglessthan willbeoffered atbelow-Apartments ­ tion andexpected toopenin2017. property, iscurrently underconstruc a 42-unitincome-restrictedapartment the HMA.Sycamore Run Apartments, in housing isalsobeingconstructed Income-restricted andsubsidizedrental $945, $1,220, and $1,735, respectively. at and three-bedroomunitsstarting 341-unit addition,withone-,two-, downtown Raleigh,isbuildinga communityan apartment west of respectively. Post Parkside atWade, at$1,185and$1,900, units starting it willofferone-andtwo-bedroom When thedevelopment iscomplete, expected toopeninJanuary 2017. ment intheCentralRaleigharea,is Cameron Village mixed-use develop complex inthe a 207-unit,apartment Raleigh marketarea.616attheVillage, ­ever, multifamily construction -

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Raleigh, NC • COMPREHENSIVE HOUSING MARKET ANALYSIS 12 Data Profile Table 5. Source: Estimatesbyanalyst ber 1,2016,toDecember2019. will likelysatisfysomeoftheestimateddemand.TheforecastperiodisDecem not includeutilitiesorconcessions.The4,000unitscurrentlyunderconstruction Notes: Numbersmaynotaddtototalsbecauseofrounding.Monthlyrentdoes Rental Market Market TrendsHousing Total 1,750 ormore 1,550 to1,749 1,350 to1,549 1,150 to1,349 950 to1,149 Monthly Gross Rent ($) One Bedroom Sources: U.S.CensusBureau;DepartmentofHousingandUrban Development;estimatesbyanalyst December 1,2016. and the12monthsthroughNovember2016.MedianFamilyIncomes arefor1999,2009,and2015.Thecurrentdateis Notes: Numbersmaynotaddtototalsbecauseofrounding.Employment datarepresentannualaveragesfor2000,2010, NA =datanotavailable. Table DP-1. Median FamilyIncome Rental vacancyrate Owner vacancyrate Total housingunits Percent renter Renter households Percent owner Owner households Total households Total population Nonfarm payroll jobs Unemployment rate Total resident employment

Estimated DemandforNewMarket-RateRentalHousing in theRaleighHMA Continued

Demand Units of 4,350 1,300 1,950 220 220 650 Raleigh HMA Total 1,950 ormore 1,750 to1,949 1,550 to1,749 1,350 to1,549 1,150 to1,349 Monthly Gross Rent ($) Two Bedrooms During theForecastPeriod DataProfile, 2000toCurrent

329,513 207,536 306,478 797,071 439,300 444,815 Demand Units of 98,942 4,350 1,525 1,525 32.3% 67.7% 2000 8.7% 2.5% 2.5% 220 220 870 NA Three orMore Bedrooms Total 2,300 ormore 2,100 to2,299 1,900 to2,099 1,700 to1,899 1,500 to1,699 1,300 to1,499 Monthly Gross Rent ($) 1,130,490 $76,900 466,095 143,076 287,501 430,577 500,100 539,102 33.2% 66.8% 2010 8.6% 2.5% 8.6%

Demand Units of 970 190 240 430 30 30 40 1,319,000 $78,800 532,300 180,800 320,100 500,900 596,900 644,000 Current - 36.1% 63.9% 5.5% 1.5% 4.4% of bedrooms. of the HMA,byrentlevel andnumber for new market-raterentalhousingin Table 5shows theforecastdemand thatdemand. of will meetaportion units currently underconstruction homeowners (Table 1).The4,000 2000 to2010 Average AnnualChange(%) 3.5 3.8 3.3 3.5 3.6 1.3 1.9 NA 2010 toCurrent 0.4 2.0 3.6 1.6 2.3 2.3 3.0 3.1 Raleigh, NC • COMPREHENSIVE HOUSING MARKET ANALYSIS 13 not reflected intheresidential buildingpermits.not reflected are some unitsclassifiedascommercialstructures For buildingpermit. example, a differenttypeof orareissued or createdwithoutabuildingpermit occurs inanHMA.Someunitsareconstructed sarily allresidentialbuildingactivity that reflect Building Permits: donotneces­ Buildingpermits Census Bureau. specifiedas“other”vacantthe category bythe workers;or occasionaluse;usedbymigrant and but notoccupied;heldforseasonal,recreational, thereforeincludes unitsrentedorsold The term units thatarenotavailable forsaleorrent. analysis, othervacant unitsincludeallvacant Housing andUrbanDevelopment’s (HUD’s) Other Vacant Units:IntheU.S. of Department the development pipeline. orunitsin for unitscurrently underconstruction excess vacancies. Theestimatesdonotaccount theanalysis, growth, losses, and dateof the as-of the3-year forecastperiodgiven conditionson of needed toachieve abalancedmarketattheend thetotalhousingproduction the estimatesof buildingactivity.are notaforecastof Theyare Demand: Thedemandestimatesintheanalysis 28,2013. February Budget (OMB)intheOMBBulletindated Management and established bytheOfficeof arebasedonthedelineations in thisreport The metropolitanstatisticalareadefinitions Forecast period:12/1/2016–12/1/2019— date:12/1/2016—Analyst’sCurrent estimates 2010: 4/1/2010—U.S. Decennial Census 2000: 4/1/2000—U.S. Decennial Census Data DefinitionsandSources Analyst’s estimates huduser.gov/portal/ushmc/chma_archive.html For onothermarketareas, additionalreports please goto Adam Tubridy, Economist Contact Information CMARtables_RaleighNC_17.pdf for thisHMA,goto For tothehousingmarket additionaldatapertaining family andmultifamily buildingpermits. single- theseestimatesareincludedinthediscussionsof of activity. thisadditionalconstruction Some an estimateof As aresult,theanalyst, throughdiligent fieldwork, makes on localeconomicandhousingmarketconditions. government officialswhoprovided dataandinformation sourcesandstatelocal appreciation tothoseindustry modified bysubsequentdevelopments. HUDexpresses its national sources. Assuch,findingsorconclusionsmay be datefromlocaland availableinformation ontheas-of aspossiblebasedon ings areasthoroughandcurrent and MarketAnalysis Division. Theanalysis andfind guidelines andmethodsdeveloped byHUD’s Economic The factualframework forthisanalysis follows the may beunderconsiderationbytheDepartment. insuranceproposalsthat anymortgage of acceptability regardingthe tomakedeterminations does notpurport housing marketconditionsandtrends. Theanalysis builders, mortgagees, withlocal andothersconcerned tion, findings, andconclusionsmay alsobeusefulto HUDinitsoperations. Thefactualinforma guidance of This analysis fortheassistanceand hasbeen prepared [email protected] 206–220–5339 Seattle HUDRegional Office huduser.gov/publications/pdf/ . .

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