Raleigh-Durham 2025 Real Estate Market Outlook

[Benjamin Carver]

Every year realtor.com releases a Top Housing Markets report based on anticipated sales growth (inventory) and price growth (appreciation). I find this data super interesting, and took the opportunity to dive into their 2025 edition this week.

Nationwide they say we can expect:

• Average mortgage rates of 6.3%, with rates edging down over the year to reach 6.2% by the end of the year.
• Home prices will grow by 3.7% across the US, which is pretty modest. It does beat the expected inflation rate of 2% set by the Fed.
• Rents will remain about the same

What’s interesting is they also expect:

• A 11.7% increase in existing home inventory followed by Single-family new home starts growing at an impressive 13.8%. Make sense with our need for inventory nationally, but this is also very market dependent.

     Months' supply, a key market balance indicator, is expected to improve from a 3.7 month average in 2024 to 4.1 months in 2025. Anything under 4 is             typically considered a seller's market, while 4 to 6 months of supply is typically considered a balanced market.

There are over 100 major cities on this list - I wanted to see how Raleigh and Durham stacked up (and North Carolina overall). Here were the results:

Sales Growth: As you can see, Raleigh and Durham are VERY different in terms of Existing Home Sale Counts YoY. They anticipate only a 2.2% increase for Raleigh, while Durham are slated to increase dramatically. In fact, Durham is in the top 25 on this list for sales growth, and Raleigh is 84th. 

Price Growth: 3% is the baseline here nationally. 2% is the fed target rate for inflation. Both of these cities (and Charlotte) are looking at very competitive price growth this year. The Triangle has been repeatedly voted one of the top places in the US. And North Carolina at large has become a popular pick for both investors and relocators over the last half a decade or so. All 3 cities show a 7-11% decrease in home sale counts over the 2017-2019 average, so we still have plenty of catching up to do in terms of housing supply - much harder to do when you're growing fast.

Durham and Charlotte are set to make large strides toward that goal - but Raleigh is barely budging. Why is that? For one, Raleigh is largely built out. New construction in the city limits is increasingly hard to find and increasingly expensive. A lot of what you'll see here is older homes in desirable areas and that scarcity keeps price growth high while keeping sales growth low. People are more likely to buy and stay here, versus move around. 

What this tells me is Raleigh is likely better for long-term, conservative investments due to steady value growth. There's no massive swings going on here, just consistent growth. As far as resale goes, you see less competition and a higher certainty of long-term appreciation. 

Durham on the other hand is a great opportunity for investors seeking more short-term growth, more options, and higher likelihood of cashflow. And it has been gaining recognition as a vibrant, desirable place to live, especially for younger professionals and first-time buyers. You can get in while prices are still relatively low and watch as it grows quickly over the next few years. But it's rapid price growth and sales activity could indicate a more volatile market, with the potential for corrections if demand slows as affordability becomes an issue. So buying the right location will become increasingly important here to protect you in the long-term

Food for thought. Would love to hear how others interpret this report and what your investing strategy is for 2025.