Raleigh - Triangle rent prices increase - when will it stop?

By
Real Estate Agent with Keller Williams Preferred Realty

Rental prices are at an all time high nationally and in the Triangle area

As a Realtor® I'm hearing a lot about rental prices increasing all across the Triangle and the nation. I hate to see the financial challenges it is causing so many. 

Every where I turn, I see people posting about the rent prices going up in the area. Renters are as mad as a disturbed hornets nest! Who wouldn't be mad if they found out their rent is increasing by 10%-50% and another 10%-20% or more of their income has to be contributed to their housing expense? The national median rent price has increased by approximately 12% and expected to rise another 7.1% nationally in 2022. It is even higher in top areas like Raleigh, Austin, San Jose, Dallas and others. Typically, your housing expenses shouldn't be more than 28%-30% of your gross income.

Why have rental prices increased so much in 2021-2022?

There are so many factors. Here are a few:

  • Some renters got great deals on their rental because landlords couldn't fill their properties in 2020 and early 2021. Now that the demand is greater, landlords are increasing prices.
  • Because the home prices have increased, investors are paying a greater amount for properties they purchase which means they have to charge more for rent to cover their cost and make a little profit.
  • Investors who have owned their property for a while are increasing their prices to match what the market will allow. This will allow them to make a profit or increase their profit. This is why investors buy investment properties.
  • Taxes, insurance, and maintenance cost are increasing for investors.
  • There is a lack of affordable housing causing more people to rent and increasing the divide between the wealth builders and those who are financially strapped.
  • Many landlords lost money because of the ban on evictions. Even if you weren't part of the problem, you may be paying for it now.
  • The age of first time homebuyers increased as many people chose to wait to purchase their first home. This has created a tsunami of people purchasing their first home.
  • Large investor firms have and are purchasing properties because they saw the writing on the wall and knew there would be a demand for rentals. Unfortunately, it is trapping some people who may always be a renter.
  • In some areas like the Raleigh-Durham Triangle areas, people with higher incomes are moving here for jobs or for the lifestyle. The lack of housing has created a competitive market pushing those with lower incomes out of the areas they love. While this is good for current homeowners, it is a problem for everyone because we need everyone in every kind of job. People want to live in the towns they work in.

What can someone who rents do about the increasing prices?

  • The obvious solution is to become a home owner and not a renter. I understand this isn't possible for everyone and it isn't necessarily the best decision for everyone. For most, owning a home helps you build wealth or at the very least, financial stability. The goal is some day when you retire and/or no longer have an income from employment, you own your home out right. Rental prices, while they may be up and down at times, will always trend upwards. Owning your own home is one of the few ways to have a little control over your monthly expenses. Buying that first home can be difficult and I'll talk about owning your own home more toward the end of this blog.
  • If you find yourself in a situation where your rent has increased significantly, speak with your landlord to see if you can negotiate a happy medium. In North Carolina, landlords can increase rent as much as they want. If you're a good tenant and pay on time, maybe they'd rather take a little less and keep you as a tenant. If you haven't been a good tenant, now would be a good time to change that scenario. 
  • Some renters are choosing to move further out and commute to work. This isn't new. There are already people who live further out and commute to work. They will most likely get pushed even further out.
  • Some renters are choosing to have roommates. When I was single and early in my career, I almost always had 1 or 2 roommates. It isn't a bad idea if you can find a good roommate. Some people choose to buy and have one roommate to help cover their mortgage payments. In some areas like California and NYC it isn't uncommon to find people with 2-4 roommates.
  • Consider lowering your standards. I hate to even type that but the truth is, some people are having to choose a rental that isn't quite as nice as what they currently have just to stay in the area they currently live in.
  • Find out what affordable living opportunities there may be in your town and if you qualify for them. They're probably taken unless your town is building more affordable housing. You might be surprised to find out you don't qualify if your income is too high.
  • I've heard some people say they're moving to a different geographical location all together. Before you do that, do some research to see if salaries/income is still competitive and if rent to income percentages are the same or lower. Rent has increased nationally so while it may be lower in another area, other expenses could be higher or income potential could be lower.
  • Change jobs, careers, or find out what you need to do to get an increase from your current employer. Let's face it, home prices are up, inflation is up, and there is a labor shortage. Income will have to have a cost of living increase so people can survive. 

How to plan for home ownership?

  • Start by saving as much money as you can. Regardless of whether your own a home or not, you should always have a minimum 6 months reserve for emergencies. If you use it, you need to build it back up. To buy a home you usually need money for a downpayment and closing costs. It will vary based on the type of loan you get. How do you save money when there isn't much left over? 
    • Cut expenses: Look at your expenses for the past 6 to 12 months and cut anything that isn't absolutely necessary. Those small charges can really add up. By small charges I mean coffee shops, nights out on the town, apps that may only cost $10 a month, do your own nails, eat lunch in most days instead of going out, etc. Get encouragement from your friends by explaining that you're saving to buy a house and for a short time you need to cut back.
    • Drive a different car: Is the car you're driving more expensive than a downpayment for a house? We see this often. Consider changing to a less expensive car. You'd be surprised at how much you can save just by cutting back. And remember, it is only temporary until you get settled in a more secure financial situation. I know plenty of people who sold their dream car so they could buy a house.
    • Lower the cost of your current housing: Consider a roommate if you don't have one. Splitting  housing expenses can really go a long way. Rent a room if you can. We're talking a year or two. Choose a rental that is less expensive. Live with family for a short time if that is an option.
    • Increase your income: Talk to your employer about a cost of living increase. Get a 2nd job or start your own side gig. There is a labor shortage making it a great time to work a second job when you're available. I know some say you shouldn't have to get a 2nd job to afford to live. I get it. I worked 2 jobs most of my single life. This isn't to pay everyday bills. It is to help you stash away some money so you can be a little more financially secure. 
    • Change careers: Some jobs have higher income potential than others. Consider whether it is worth it to change careers or stay where you're at. It is said the younger generations will have several career changes throughout their lifetime.
    • Invest: Invest your new savings and earnings where they will increase while you wait. Be disciplined and put the extra money into a savings or investment account so you're not tempted to spend it. Speak with a financial advisor about this to make sure you don't lose the money you've saved.
    • Sell and Consign: Sell things you no longer want or need. This won't add a lot but it could help.
    • Student Loans: See if there is any relief for student loans if you have them.
    • Food Pantry and 2nd hand stores: I know this seems a bit drastic. I mentioned it because I saw a post online by a single mom explaining how she makes it work on her salary. She said she goes to food pantries for her staples. I know that seems a bit extreme but this lady was quite impressive. Her attitude was amazing. Buying clothes at 2nd hand stores has become trendy. Find out where the best ones are. If you just need to save for a year, you may be able to go that long without purchasing new clothes. 
  • Improve your credit score. This means paying bills on time. Pay outstanding liens so they don't go against your credit score. Know what your credit score is. You need at least a 620 credit score but you should really aim higher. The higher the credit score the better interest rate you'll get. 
  • Speak with a professional. When you're ready, speak with a Realtor® to see what you can afford, what is available, and what else you need to do. Build a relationship with your real estate professional. They can keep you up to date on the market conditions.
  • Make a plan and stick to it. If you have any roadblocks or bumps, hang in there. For some, the process of going from renter to home owner could take a year and for others it will be 2-3 years or more. Set your goal and go for it!

*Keep in mind, even when you own a home, there are maintenance expenses and taxes and insurance can increase. You'll want to plan for those things.

 

Posted by

Raleigh Cary Apex Realtor Carla Freund Realty

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Comments (9)

Tony Busanich
TD Bank - Freehold, NJ
1-4 FAMILY HOME LOAN SPECIALIST

Thank you Carla for sharing your post on Raleigh NC.  Anyone looking for a local expert for help should call you. 

Jan 27, 2022 12:18 PM
Carla Freund

Thank you so much Tony!

Jan 28, 2022 05:25 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Loved your Headline and my answer is when people are not willing to pay more:) now with that said we have astronomical numbers in my market that is in Beverly Hills, CA and Bel Air , CA:))Endre

Jan 27, 2022 10:47 PM
Carla Freund

I agree. When people stop paying. I can't even imagine what rent prices are like in Beverly Hills. Have a great day Endre!

Jan 28, 2022 05:26 AM
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

Those that have not put themselves in a position to own a home are certainly in a tough position with rents continuing to rise.

Jan 28, 2022 05:07 AM
Carla Freund

I know Brian. I feel compassion when I see people posting about how much their rent has gone up. I hate to see people in that position.

Jan 28, 2022 05:27 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Great post, Carla... when I last took a glance at rental increases in the Charlotte region, they were up around 10%. That's a lot... most people's income didn't rise 10% and when you add 7% inflation it's crazy numbers for renters.

Jan 28, 2022 05:44 AM
Carla Freund

Thank you. It really is crazy. I feel bad for people. 

Jan 29, 2022 12:30 PM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Carla, great piece for renters to contemplate.  They are paying for their landlord's retirement fund!

Jan 29, 2022 01:52 PM
Carla Freund

I know. Although it isn't feasible, I wish everyone had a place to call home. Maybe someone will come across this and take steps toward homeownership. 

Jan 30, 2022 06:56 AM
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Flower Mound, TX
Selling Homes Changing Lives

Carla Freund - your report is absolutely accurate. Housing for renters is the worst I've ever seen and those investors who over bid and flipped are making a killing!

Jan 30, 2022 06:59 AM
Carla Freund

Yes, it is. I can't blame an investor. I mean, that is why they invest. They're just trying to get as much as they can. However, the divide between haves and have nots will grow larger if we don't help people.

Feb 01, 2022 10:01 AM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good afternoon Carla - It certainly is as bad as it gets.  The renters really need to have a plan and it will involve sacrifice.

Jan 30, 2022 12:20 PM
Carla Freund

You're right, it can involve sacrifice. Some people don't have to make as big of a sacrifice but many people do. I know we scraped our pennies together on our first two homes. My husband has to sell his dream car to get his first home. 

Feb 01, 2022 10:00 AM
Wanda Kubat-Nerdin - Wanda Can!
Red Rock Real Estate Brokered by Real - St. George, UT
So Utah Residential, Referral & Relocation REALTOR

Rent prices are going up here a swell and pets are not allowed in the majority of them, Carla. Another reason to purchase! What throw money away when it can be invested, right?

Jan 30, 2022 05:40 PM
Carla Freund

Oh that is another good reason, pets! It is hard to find a place that will allow pets. Thank you for bringing that up.

Feb 01, 2022 09:59 AM
Wanda Kubat-Nerdin - Wanda Can!

People love their animals but refuse to rent to those who have them. Geez, I just looked at my typos...LOL!

Feb 01, 2022 10:01 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Rental rates are rapidly increasing in many parts of the country.

Jan 31, 2022 07:18 AM
Carla Freund

Yes they are and it is unfortunate for many.

Feb 01, 2022 09:56 AM