Raleigh slips from top 5 hottest real estate markets, is second for home construction
Two years after landing the No. 1 spot for top real estate market in the country, Raleigh has slid in the rankings for the second year in a row, according to an annual report by the Urban Land Institute and PricewaterhouseCoopers.
This year’s “Emerging Trends” report placed the Raleigh/Durham market at No. 6 for overall prospects. That’s down from its second-place finish last year, quashing a four-year run that saw the Oak City hovering in the top three.
Nashville, Tennessee, claimed the mantle as top real estate market to watch heading into 2023 — bumping longtime rival Austin, Texas, to fourth place. Dallas/Fort Worth came in second and Atlanta came in third. Charlotte scraped by at No. 10.
On the homebuilding front, Raleigh dropped to second place after holding the top spot for the last two years. San Antonio came in first, while Charlotte nabbed the fifth spot behind Austin and Tampa.
The report is considered a leading industry benchmark, drawing insights from roughly 2,000 real estate professionals across the country to forecast trends and markets.
This year’s findings grapple with the worsening housing shortage, as well as uncertainties around inflation, interest rates and the possibility of an economic recession.
Among the report’s most far-reaching insights is the coexistence of two seemingly contradictory trends: parts of the real estate industry are “normalizing” and reverting to pre-COVID patterns while others have permanently shifted to the “new normal” that was adopted with the pandemic.
Reflecting the “normalizing trend,” almost every market in the country received lower ratings for both investment and development prospects, “illustrating that outlooks are darkening just about everywhere,” the report said.
On the flip side: the pandemic has reinforced the dominance of “Magnet” markets — including Raleigh and many others in the warmer Sunbelt region — at the expense of older and colder “Establishment” markets like New York and Chicago.
Magnet markets are migration destinations for both people and companies, and most are growing more quickly than the U.S. average in terms of both population and jobs.
“Many Magnet markets remain among the most favored, even if some of them have slipped a bit this year,” the report said.
Raleigh continues to see a growing pipeline of projects. From major developments in North Hills to the reimagining of Raleigh’s gateway with Downtown South and new high-rise residential buildings in downtown, construction is on the uptick.
The report warned, however, that Magnet markets also appear to be suffering some “growing pains.” Housing construction is not keeping pace with household growth, straining housing affordability.
This story was originally published October 29, 2022 at 12:43 PM.
