Jun 7, 2022 - Business

Triangle rents are surging with no cooling period in sight

Data: Apartment List; Chart: Axios Visuals

Triangle residents getting renewal offers from their landlords have been experiencing sticker shock, as rents continue to rise at torrid rates.

Why it matters: In the past two years, median estimated rent is up 28.4% to $1,500 in Raleigh and up 23.7% to $1,350 in Durham, according to data from Apartment List. It’s putting pressure on affordability for renters during a time of escalating prices.

Yes, but: The Triangle isn't alone in seeing huge price increases. The San Francisco Bay Area is the only big metro area where prices haven't recovered back to pre-pandemic levels.

The price hikes aren’t likely to end soon, either.

  • "Everybody we're talking to is expecting double-digit rent growth for the next three years in the Triangle," Steven Peden, a principal with Avison Young's Capital Markets North Carolina team, told Axios.
  • It's going to take a lot of new construction to bring rent growth down, he added.

Why it's happening: Demand, Peden said, is outstripping supply of apartments in the Triangle. An influx of new residents, along with people being priced out of homeownership, is creating a larger pool of renters than before the pandemic.

  • “It's coming from people moving to the area post COVID," Peden said, "Grandparents moving back to be close to kids and grandkids, a new cycle of college graduates, folks just trying to get out of the Northeast or the West Coast, and the Apple and Google job announcements."
  • "It was like a perfect storm," Peden said.

Despite the price hikes, renewal rates in the Raleigh-Durham area increased by 5.8% year-over-year, according to Avison Young data, showing that many renters are staying in place.

  • Yet, Apartment List labeled Raleigh — and several other tech hubs — as becoming a revolving door for renters.
  • San Jose and Raleigh were the only two major metros that were top 10 on ApartmentList.com for both inbound and outbound apartment searches.

ApartmentList found the top three sources of interest in Raleigh apartments came from Charlotte, Durham and Atlanta.

  • Raleigh residents, however, were most interested in moving to Charlotte, Durham and Charleston, South Carolina.
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