Older Raleigh apartments see falling rent prices amid new apartment surge
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Rents at Raleigh's oldest apartments continue to fall this year as the Triangle absorbs a record amount of new apartments hitting the market, according to a new analysis.
Why it matters: Like many fast-growing metros, Raleigh grapples with providing ample affordable housing. As more high-end apartments flood the market, longtime residents are seeing some relief as the oldest rentals become cheaper.
The big picture: There is a divergence happening in the U.S. between areas like the Sunbelt, where apartment construction has been strong, and other parts of the country like the Northeast and Midwest, where construction has been slower, according to Jay Parsons, a rental housing economist.
- In places with high rates of construction, like Raleigh and Denver, rents for the oldest apartments have been falling this year.
- In places that haven't — like Albany, New York, and Providence, Rhode Island — rents for older apartments are up.
Flashback: For longtime Triangle residents, the cost of living still feels high because of the stunning 20% spike in rents that happened in 2021 during the COVID-19 pandemic.
Driving the news: But Parsons' analysis tracks rents at different classes of apartments, like Class A (the newest apartments hitting the market) and Class C (typically apartments 20 years or older with fewer amenities), since that peak rent growth.
- "What's happened in the RDU area and all around the Sunbelt regions that are building a lot of supply, is that rents are falling," Parsons told Axios. "But they're falling even more in these Class C apartment properties."
By the numbers: In October, rents at Class C apartments in the Raleigh area were down 7% year over year, Parsons said, citing RealPage data.
- Rents overall in Raleigh were down 3.4% over the same time frame, according to RealPage. Many new apartments are offering discounts, like two months of free rent, to attract new residents.
State of play: Parsons said Raleigh and other Sunbelt cities are experiencing a concept known as "filtering," and it's happening quickly due to the country's fastest rate of apartment construction in nearly a half century. (Though that building boom is now slowing, in part due to rent growth slowing.)
- "When we build these brand new units, some of the people moving into them are people that have been living in more moderately priced apartments," he told Axios. These renters are "trading up" either because their incomes have grown or they didn't have better options before.
- "When they move to a new apartment building, that opens up availability at these more moderately priced apartments that are maybe 10, 20 or 30 years old," he added.
What's next: As the wave of new construction in the Triangle continues to be absorbed and the region's population grows, rents will begin to tick
up again.