Real Raleigh Living

by Raleigh Magazine | Feb 26, 2024 | March 2024, Real Estate & Home

Raleigh ranks as one of the top capitals in the country with people moving here in droves. But with historic property tax hikes and decades-high interest rates, can the people who call Raleigh home still afford to buy in?

2024 came in hot with historic tax hikes. As residents around Raleigh—and Wake County—received their reevaluation letters in the mail, the sticker shock was real. Soaring values across the board present quite a different picture than the prepandemic landscape. 

While property tax is now assessed every four years—last Jan. 1, 2020—this year, Wake County wilded out. But the numbers are not arbitrary. According to Wake County Tax Administration, following the culmination of ~two years of work on 425K+ properties, “by law, properties are appraised at ‘fair market value,’ which is the most probable price a property would bring in a competitive and open market.” Translation: They determine the assessed value through a combo of field visits and in-office analysis “by comparing what similar properties are selling for, the cost to replace the property, the potential income generated, the highest and best use of the property, as well as many other factors that may affect value.” 

The largest ever, “the increase in values is unprecedented for Wake County” said Wake County Tax Administrator Marcus Kinrade, pointing to the county’s continued growth, and high housing demand vs. limited supply as key factors, “but we’re confident the updated assessed values reflect fair market value.”  

Clearly, Raleigh is a hot commodity. But beyond what those rapidly increasing real estate values say about Raleigh’s worth and appeal, there’s the bottom line. New tax values mean new tax bills for residents—and thus an escalated cost of living. But in the face of exorbitant leaps, residents have options. Essentially, silence equals acceptance. Per the administration, “if you accept your updated assessed valuation, no action is required.” But if you don’t, there’s an appeal process for that. 

Calculating Your Tax Bill

When it comes to calculating your tax bill—hold tight, as that depends on the budget (and the local budgets aren’t expected to be approved until June, in front of the July 1 fiscal new year). Instead of computing the current tax rate, property owners can find an estimate of upcoming tax obligations via the county’s Revenue-Neutral Tax Calculator. And for the curious, its Reevaluation Comparable Sales tool allows you to view a home’s assessed value and compare it to residences in the neighborhood. Plus, check the website for other useful information, including property search, comparable sales, tax portal, the appeals process and more. wake.gov/revaluation

How to Appeal

If you’re not too keen on your new property tax value, you can challenge it via an appeal. Here’s what you need to know and what to do to carry out the process.

Informal appeal
Submit by mail, in person or online at services.wake.gov/taxportal

What you need: Real estate ID and access code (contact the tax administration for a new one if you lost yours), as well as a recent appraisal or other relevant info and clarifications on the property’s characteristics

Deadline: March 1

Formal appeal
After submitting a formal appeal to the Wake County Board of Equalization and Review either by mail or online at services.wake.gov/taxportal, a letter will be mailed to you with a hearing date at the Wake County Commons Building.

Window: March 2–May 15

Note: You do not have to submit an informal appeal to file a formal one.

GETTING PRICED OUT

Single & owning a house in Raleigh: Virtually impossible

There’s no denying Raleigh’s missing middle is still, well, missing. Affordability has long been a hot topic, but the City of Raleigh is continuing to make strides in the realm of affordable housing. In the 2022–23 fiscal year, COR was able to create and preserve a total of 411 affordable units, with another 2,135 units currently in the development pipeline. But despite these moves to increase affordable housing options, rising housing costs remain a concern. 

Per the standard rule of thumb, you should spend 28% or less of your monthly gross income on your mortgage. Making that math, well, math, according to a recent Redfin analysis, Raleighites would need to earn an annual income of $120,000 to afford a median-priced home and live comfortably (a 17.4% jump from last year). To see how that stat stacks up to real Raleigh living, we take a deep dive into how much local essential workers earn vs. the cost of the lowest-priced two-bedroom, two-bathroom home available right now.*

ESSENTIAL WORKERS

In a city where it takes a single person $80K to afford a home, we wanted to know:
Can the people who make Raleigh run afford to own a home here?

• Wake County teacher: $56,341
• RFD firefighter: $46,540
• Registered nurse: $60,724
• RPD officer: $50,301

What we found? These Raleighites would not be able to afford a home on their income alone—right in line with the common gripe that you “can’t be single and own a house in Raleigh.”

The ADU Solution

Accessory dwelling units were the buzz word last year—but where do they stand now? To date, 160+ ADU permits have been issued since the city began tracking them in 2020, per recent permit data, with 93 reaching completion status (meaning a certificate of occupancy has been issued and the units can be occupied).

BY THE NUMBERS

• 247: Total applications submitted since 2020
• 8: Applications submitted in 2024
• 46: Completed in 2022
• 24: Completed in 2023

*As of press time

RENTAL REDUCTION

If you thought Raleigh has seen an influx of apartment buildings, it’s not your imagination. The market is currently absorbing a record number of units, with new deliveries over the trailing 12 months rising nearly 4 times the 10-year historical average, according to Kane Realty Corporation Managing Director of Residential Rob Reid.

Despite the comparable influx of people migrating to the area, the inundation of rentals has resulted in elevated vacancies, meaning—good news for renters—a leveling out or even decrease in rental rates across the board for new leases in existing apartments. In essence, supply vs. demand.

Per commercial real estate information company CoStar, the market is showing a ~6% decrease in rent compared to this time last year. (Note this stat solely applies to new rental agreements, so if you’re renewing, your rates are likely static or even elevated.)

While the exorbitant supply is “putting some temporary downward pressure on both occupancy levels and rent pricing,” maintains Reid, “the demand remains very robust.” And in keeping up with that demand, brand-new boutique apartment buildings—think like recently bowed 400H and Platform—are able to stay competitive with higher rates right out of the gate. That said, compared to competitive markets like Charlotte, Austin, Atlanta and Nashville, the City of Oaks remains relatively affordable.

“Raleigh’s diverse economy and high quality of life make it such an attractive place to live and work,” echoes Reid, “which is evidenced by the amount of new people who continue to move here and help fuel the vibrancy of the residential housing market.” 

That affordability gap not only attracts renters, but provides a major growth opportunity for investors. In the near-term, Reid predicts an attractive spring/summer leasing season, with Raleigh being a seasonal market. And, long-term, “when we’re sitting here this time next year looking back at 2024, I think we’re gonna find the average rent year-over-year stayed pretty flat relative to 2023, maybe grew 1–2%,” he says, adding: “We remain incredibly excited and optimistic about the long-term growth of the greater Raleigh area.” … And, naturally, once the market absorbs the stream of new deliveries, both rates and construction are poised to ramp back up.

The Complete Package

When it comes to apartment living, there’s a gift of abundance. And with seemingly limitless residential ops popping up in the City of Oaks, properties must continue to deliver the best new thing to stay competitive. Enter the next on-the-rise need for luxury apartment communities: resident services—think concierge services, private training access, package delivery, nutrition services and more. 

“As Raleigh continues to grow into a large destination city, developers and property managers will need to be innovative with new services and amenities focused on the tenant,” says Grubb Ventures President Gordon Grubb, whose portfolio includes de rigueur local developments like Raleigh Iron Works.

This goes hand-in-hand with the appeal of live, work, play communities, another growing trend across the City of Oaks. Iron Works and its apartment building Forge have banked on an amenity-rich community from the get-go with its impressive cadre of the tantalizing trifecta, leaning into work via on-site offices and play with a range of food, bev and retail, plus easy access to amenity-rich Dock 1053 and the greenway.  

“Residents from both in town and out of state are looking for walkable communities with the ability to build and network with a mix of offerings at their fingertips,” adds Grubb. “This lifestyle helps reinforce the appeal of Raleigh’s strong community ties and local feel of the small town-turned-big city.” Thus, the amenity race is only at the starting line. 

• 93.6%: Apartment occupancy rate
• 20,906: Units under construction in The Triangle in January 2023
• 16,000: Units under construction in The Triangle as of February 2024
• 21%: Amount of income Raleigh renters spend on rent
• $69.7K: Salary needed to afford market rate rent in Raleigh
• 0.8%: YoY change in Raleigh rent
• $1,743: Typical rent in Raleigh
• $1,919: Median rent in Raleigh
• $1,958: Typical rent in the U.S.
• 15th: Largest increase in Raleigh rent prices among U.S. metros last year
• 19th: Raleigh’s rank as most-desired renting spot beginning of 2024
• No. 1: Most competitive rental market in 2023 (the Triangle)
• 34 days: Timeline for Raleigh rentals to become occupied
• 3.8%: Increase in new Raleigh apartments1.89%: National increase in new apartments

Market Outlook

Relocating buyers from other states amounts to ~23% of our buyer population.

“Sellers remain in an advantageous position with significant home appreciation over the past few years, and home equity is strong! A lot of opportunity exists on both sides of the transaction—whether buying or selling. It’s a great time for potential sellers to take advantage of their high-equity position, and buyers are feeling more settled and accepting of rates!” 

—Renee Smith, managing broker, Compass Raleigh Midtown

“An influx of tech-related jobs will likely influence the demand for housing and commercial real estate in the area.”

—Shawn Britt, broker/owner, Realty World-Triangle Living

“With consumers continuing to prioritize outdoor spaces and community experiences, developers are focusing on building homes in walkable neighborhoods with access to parks and green spaces, as well as amenities like pools, fitness centers and more. This trend could also lead to the development of mixed-use communities combining homes with retail, office space and entertainment options.” 

—James Flanagan, VP Community Experience, Tri Pointe Homes Raleigh

Memory Lane

Midtown childhood home becomes a memory.

In front of this feature, I had the (mis)fortune of experiencing the market firsthand as my family sold my Midtown childhood home. (If you’ve ever ridden the Super Shot at the Fair you have a sense of my epic expectations for a quick burst of exciting bids—instead it was more like the pirate ship, a swing of emotions and definitely drought.) 

Optimistically listing it in August with the expectation of a bidding war, the updated North Hills home instead sat on the market for months before a sudden and finite surge in showings and a super-quick scoop “as is” (read: zero hassle or modification requests—the seller’s dream—s/o City to Coast Realty’s Sarah Hunter, who stepped in and navigated the sale). 

This experience is not at all a reflection of the home—or its many peer listings, which encountered a similar fate. It’s a sign instead of a market gone cold thanks to home affordability and decades-high interest rates crippling the cutthroat seller’s market and stirring a short-lived stalemate. 

“Many buyers reluctantly paused in fall 2023 as interest rates rose for 20 consecutive months to an ~8% high,” echoes Compass Raleigh Midtown’s Renee Smith. That is, until, finally, Q4 cooling price tags and a dip in mortgage rates caused a sudden surge
in showings. 

“Our local real estate market has shown an unusually early surge this year,” says Realty World-Triangle Living’s Shawn Britt, “with a noticeable increase in home showings and a resurgence of buyers—likely attributed to the recent drop in interest rates to 6.5%.” 

As the 2024 No. 2 performing city behind Austin, Raleigh persists as the place people want to call home. Our house, case in point, ultimately sold to buyers looking to relocate to Raleigh from New York for their forever home. “Raleigh draws 70+ new residents daily” says Hunter—thus indicative of a projected 4% growth in the 2024 Triangle region housing market.

While it’s impossible to know exactly what a year from now will look like—who could’ve dreamed we’d go from yard wars and buying sight unseen to long listings in a blink. And the Midtown abode I called home since 1988 (for a shocking then-sticker price in the north $80Ks) is a harbinger for what we, alongside local experts, predict as another relatively quick swing for a seller’s market to reemerge. And, with that, a bittersweet goodbye to the house that raised me.  —Melissa Howsam