RALEIGH, NC (WNCN) – Rising rental prices in the triangle are making it harder for people who already live here than those who are flocking to the area, an industry expert says.
The average one-bedroom apartment in Durham this May cost nearly 40 percent more than a year ago, according to the publication formerly known as Rent.com’s price report.
Rent’s monthly report also shows a 44 percent annual price increase for a two-bedroom apartment in Raleigh.
This is the result of several things that could be working against them:
- There is more demand for housing and less supply, especially for those that are considered affordable.
- Higher interest rates have cooled the once sizzling real estate market, making renting a more attractive option for prospective homebuyers.
“It’s kind of a perfect storm for renters right now – in a bad way,” said Brian Carberry, senior managing editor at Rent.
But Carberry says those high interest rates could only keep rental prices high long before the pendulum swings back the other way, as sellers lower their prices and homebuyers have the upper hand, “which can have the opposite effect,” he said.
“And they’re actually taking some of the people from the rental market and bringing them back into the home buying market, which would help mitigate some of that demand and cool the rental market down a bit,” Carberry added. “We will be weeks and months away from anything like this happening. But there is a bit of light at the end of the tunnel.”
Right now, those rising prices are undoubtedly causing renters pain — and Carberry doesn’t want to sugarcoat that.
But he says it’s a matter of perspective: The big rental spikes reflect increases that actually happened in late summer but will show up for a few more months year-over-year.
“For example, if you renewed your lease in October and then have another lease renewal coming up at the end of the year, the increase may not be as significant as the one you just paid last year,” he said.
On a monthly basis, rental rates have actually been relatively flat, he said.
“It doesn’t make it any easier for tenants,” Carberry said. “It’s really a problem for a lot of people right now because a lot of people are struggling financially.
“I think for tenants, the silver lining, it might just be one round of big raises to contend with,” he added. “And after that, it’s more in line with the traditional level of increase that we expect.”
According to the Rent Report, apartment rents in Raleigh last month averaged $1,564 for one-bedroom apartments and $1,927 for two-bedroom apartments. These prices in Durham were $1,620 for a one bedroom and $1,707 for a two bedroom.
This 45 percent increase in Raleigh two-bedroom prices was the fifth-largest of any city in the country, and Durham’s one-bedroom apartment price increase was the eighth-largest in this category.
That made the triangle one of only two areas across the country to appear twice in these top 10 lists with the biggest increases: Rents in Fremont, California in the San Francisco Bay Area rose 43.2 percent for one One bedroom apartment and more 40.4 percent for a two bedroom.
While those prices have increased across the board, they remain below the national average of $1,722 for a one-bedroom and $2,047 for a two-bedroom.
This makes the quarter more attractive for newcomers, even if people who already live here have a harder time.
“People who have lived in the area for a while look at this and go, ‘Oh my god, it’s getting so much more expensive to live here,'” Carberry said. “But for people who are from the Northeast or the West Coast or wherever it may be — some of those bigger cities with excruciatingly high prices — an area in Raleigh and Durham will seem like a great bargain for them.”
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