Skyrocketing rent prices in the Triangle are finally cooling. Here’s what that means.
Renters, finally some good news: rents are coming down — slightly.
After prices shot up by as much as 50% in parts of the Triangle earlier this year, the region’s rental housing market appears to be stabilizing, according to industry experts and data from Apartment List’s November report.
Raleigh’s rents dropped 1.1% over the past month — the second straight month that the city saw rent decreases. Currently, median rents stand at $1,325 for a one-bedroom apartment and $1,507 for a two-bedroom.
In Durham, average rents slipped slightly more at 1.9%, marking a three-month stretch of declines. Now, the median rent for a one-bedroom in Durham is $1,192, while a two-bedder is at $1,433.
Across the board, however, that’s still up significantly — roughly 5.8% — compared to this time last year, the report said.
“Growth is still going up, but it’s much slower than it was even six months ago,” Dustin Engelken, government affairs director at Triangle Apartment Association, told the N&O. “Whether that’s a long-term trend, that remains to be seen.”
The reversal of widespread price hikes follows a national trend. Both one and two-bedroom prices are down across the U.S., reported rental listing site Zumper. The national median for a one-bedroom home fell slightly to $1,491.
Zumper’s analysts believe the cooling market is being fueled by several factors: rising vacancy rates in some markets, a return to more typical seasonal moving patterns and, above all, fear of recession.
The trickle-down effect is being felt on the ground here in the Triangle.
“It’s kind of like the perfect storm,” said AnnMarie Janni, a Realtor with Allen Tate Realtors. She also runs her own property management firm, Element Property Management, based out of Apex.
“People were very frustrated by rents going up so high, so they did other things. They moved in with family members; they got roommates. People who were renting while they were building are now in their homes. More rentals became available.”
New apartment supply jumped
After a year of “record-breaking” demand, Raleigh’s apartment market recorded two quarters of pullback in absorption, reported RealPage, with sales slowing during this time.
“In 2022’s third quarter, Raleigh absorbed just 180 units,” said Kim O’Brien, a RealPage analyst. “Along with second quarter’s net move-outs for 560 units, (it) was one of the weakest showings the market has displayed since 2019. Two quarters of softness in Raleigh pulled annual demand down.”
Meanwhile, new apartment supply jumped, data showed. Raleigh saw 1,761 units completed in the third quarter, and a total of 6,126 completed this year. In contrast to demand, O’Brien said annual supply has ticked up in the past two consecutive quarters and is now “well ahead of five-year norms for this market.”
Even so, Janni said she doesn’t expect prices to drop drastically anytime soon. Rising interest rates and inflation continue to push potential buyers out of the market, she said. While there might be a “softening,” she believes demand will remain strong for red-hot suburbs like North Hills or Cary. Those looking for better deals may have to look elsewhere.
“I had a client who was from New York; at their price point, Sanford was a good option for them. They weren’t going to be able to afford, say, Apex or Cary, but they could easily afford Sanford. The further out you go, the better your rents are,” she said.
A slow shift in the rental landscape
Derrick Thornton is a Realtor with Coldwell Banker Advantage out of Northeast Raleigh. He also sits on the board of Raleigh Regional Association of Realtors. He said renters still don’t have a ton of bargaining power. But the landscape is shifting slowly.
“I had some (clients) who were able to negotiate a cheaper rent with their apartment,” he said. “It was cheaper in the sense that it only went up by, like $200, instead of $300.”
He expects nominal rent increases going forward.
“I don’t think it’s going to be anything crazy like what people experienced where it was, say, $200 to $300 more. Or in worst cases, landlords cashing out and selling the property altogether, leaving (tenants) to scramble. That has kind of subsided a little bit. It’s a slight reprieve.”
This story was originally published November 25, 2022 at 10:29 AM with the headline "Skyrocketing rent prices in the Triangle are finally cooling. Here’s what that means.."
