I’ve always had a soft spot for Raleigh. The incredible theater and art scenes, the majestic oak trees, and the rich history all have a special place in my heart. In the past, it hasn’t really been recognized as the fantastic city I believe it to be, but it’s finally starting to gain quite a bit of attention across the nation.
Thanks to its high quality of life and its thriving business climate, Raleigh is expected to experience major population growth in the next two decades. In fact, it is expected to become the third fastest growing city in the United States, with a predicted population increase of 72% over the next 25 years.
So what does this mean for real estate investors? Well, investing in real estate in any city with that much potential for rapid growth is wise, of course. But if we home in on Raleigh’s job market, key demographic, and housing climate, we can start to understand exactly what trends makes this southern city so potentially lucrative for real estate investment—especially when it comes to multifamily rental units.
Job Market Health Correlates with Real Estate Health
As we’ve said before, being able to identify real estate hot spots is an essential skill for any investor. But to do that successfully, you have to do your due diligence. Research into population trends and projected growth are hugely important, but you have to make sure to break down the numbers. In Raleigh, the anticipated 72% population increase will mean that there will need to be housing for an additional 93,000 people over the course of the next two decades.
It’s also important to look beyond the population growth and examine the well-being of the job market, as the financial capability of a population is strongly linked to the health of the employment market. In Raleigh’s case, the job market seems to be experiencing steady growth. In 2015, the job growth rate was 3.8%, ranking 18th in the nation and beating out the national average by 2%.
In addition, Forbes ranked Raleigh as the third best city in the nation for business and careers. As an investor, you can take these numbers and rankings as a strong indicator that the city has and will continue to have a real estate market that is healthy and worthy of investment.
A Case for Multifamily Rental Units in Raleigh
Determining the type of real estate investment that will be the most lucrative requires even more digging. What is the most populous demographic in the city? What are trends we see among this demographic when it comes to housing? What is the current rental situation in the city? These are all important questions to ask when considering how to invest.
In the case of Raleigh, millennials (ages 25-34) are the largest demographic, making up almost 20% of the population. As you may know, millennials tend to be renters more than homeowners, mostly out of economic necessity. This doesn’t, however, mean that as soon as they pay off their student debt, they are going to purchase a house.
Many young Americans claim to be more comfortable with renting, enjoying both the freedom and the low maintenance that they associate it with. Furthermore, in the next three years, it is expected that there will be demand for 9,650 more rental units in Raleigh, 4,000 of which are currently under construction. With the growing population and the tendency for the largest demographic to rent, it stands to reason that multifamily rental units will be in high demand, and would, therefore, be wise investments.
Partner with a Firm for Smart Investments
Given the projected population increase, the strength of the job market, the high millennial population, and the anticipated rental demand it stands to reason that Raleigh is and will continue to be a real estate hot spot, especially for multifamily rental units.
If you have a sweet spot for Raleigh and you trust in the numbers, this city could present a great opportunity to break into the world of investing. If you do decide that investing in real estate is for you, remember that it's crucial you choose the right asset, location, and have a management team that has serves your best interest. That’s why partnering with a trusted, reputable, experienced firm like CWS Capital Partners is a smart choice for an investor. Contact us today to get started.
The information provided here is for your general informational purposes only. It should not be considered a recommendation or personalized advisory advice. CWS has made this third party information available from authors it believes are knowledgeable and reliable resources. However, its accuracy or completeness cannot be guaranteed and sentiment may change due to legal or economic conditions.
All investments involve risk including the possible loss of principal. You should familiarize yourself with all risks associated with any investment product before investing.
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