RALEIGH, N.C. (WNCN) — Rising rent prices in the Triangle are making it harder on people who already live here than on those flocking to the area, an industry expert says.
The average one-bedroom apartment in Durham cost nearly 40 percent more this May than it did a year ago, according to the price report from the publication formerly known as Rent.com.
Rent’s monthly report also shows a 44 percent year-over-year increase in the price of a two-bedroom apartment in Raleigh.
That’s the result of several things working that could be working against them:
- There’s more demand for apartments and less supply, especially for those considered affordable.
- Higher interest rates have cooled what had been a red-hot real estate market, making renting a more attractive option for potential homebuyers.
“It’s more or less a perfect storm for renters right now — in a bad way,” said Brian Carberry, the senior managing editor at Rent.
But Carberry says those high interest rates might only keep rental prices high for so long before the pendulum swings back the other way, as sellers lower their prices and homebuyers have the upper hand, “which may have the reverse effect,” he said.
“And they actually take some of the people from the renter market, put them back into the home buying market, which would help alleviate some of that demand and cause the rental market to cool down a little bit,” Carberry added. “We’re going to be weeks and months away from something like that happening. But there is a little bit of light at the end of the tunnel there.”
For now, those rising prices undoubtedly are causing pain for renters — and Carberry doesn’t want to sugarcoat that.
But he says it’s a matter of perspective: The big spikes in rent prices reflect increases that actually took place late last summer but will keep showing up in year-to-year comparisons for another few months.
“If you renewed your lease in October, for instance, and then you have another lease renewal coming up at the end of the year, it may not be as significant of an increase as you just paid this past year,” he said.
On a month-to-month basis, rent prices have actually been relatively flat, he said.
“It doesn’t make it any easier for renters,” Carberry said. “That really is a problem for a lot of people right now, because a lot of people are struggling financially.
“I do think for renters, the silver lining behind it is, it might just be one round of major increase they have to deal with,” he added. “And then after that, it’s more in line with kind of that traditional increase level that we expect to see.”
According to the Rent report, apartment rents in Raleigh last month averaged $1,564 for a one-bedroom and $1,927 for a two-bedroom. Those rates in Durham were $1,620 for a one-bedroom and $1,707 for a two-bedroom.
That 45 percent increase in two-bedroom prices in Raleigh was the fifth-largest in any city across the country, and the hike in rates for one-bedroom apartments in Durham was the eighth-largest in that category.
That made the Triangle one of just two areas across the country to show up twice in those top-10 lists of largest increases: Rents in Fremont, California, in the San Francisco Bay Area were up 43.2 percent for a one-bedroom apartment and up 40.4 percent for a two-bedroom.
While those rates are up across the board, they remain below the national averages of $1,722 for a one-bedroom and $2,047 for a two-bedroom.
That makes the area more attractive to people moving in, even if people who already live here are having a tougher time.
“For people that have been living in the area for a while, they’re looking at and saying, ‘Oh my gosh, it’s getting so much more expensive to live here,’” Carberry said. “But for people coming from the Northeast or the West Coast or wherever it might be — some of these larger cities within torturously high price tags — an area in Raleigh and Durham is going to seem like a great bargain for them.”