Photo by Breno Assis on Unsplash
Jay, a tech executive from Virginia Beach, had simple criteria for where he wanted to live: somewhere with a solid tech presence, decent weather and spacious, reasonably-priced housing. He was stunned by the high cost of homes in places like Seattle and San Francisco. Focusing his search instead on locations in the Southeast, Southwest and New England, he eventually landed on a place that met all his criteria: Raleigh, North Carolina.
Nationally, rents are up 3.4% compared to last year according to the Zillow Observed Rent Index (ZORI), and are now 29.9% higher than they were before the pandemic. As a result, a growing number of determined Americans are leaving their home states in pursuit of cities with more affordable housing opportunities, whether for rent or for sale.
North Carolina is quickly becoming a popular destination. Two locations in the state, Winston Salem and Greensboro, topped Zumper’s list of cities with the greatest one-year rent decreases. Raleigh had one of the largest increases in rental listings offering concessions, up 18.8 percentage points.
Sergey Fedorov, a real estate agent in Raleigh, says that business is booming, with many people coming in search of better prices and a calmer way of living. In fact, movers have swelled Raleigh’s population to roughly 1.6 million residents, compared with 1.3 million residents pre-pandemic. According to the Federal Bureau of Labor Statistics, the city’s cost of living is 10% lower than the average for the rest of the country.
“There’s different types of people from all over the country coming here, people with families, the elderly from New York and New Jersey, some people from California,” Fedorov said.
Jay and his wife initially began house hunting during the COVID pandemic. They considered buying a home in Seattle, an early favorite in their search, but one that proved unsustainable.
“You could get a fixer upper house there for like $800k,” he said. “Then you would have to pour probably like $200 to $400k into the thing to fix it up.”
None of his peers were able to buy a house in Seattle, and the rents were also high.
Jay opted for a 1960s-era rancher in the suburbs of Bellevue, which he and his wife rented for $3500 a month. But they couldn’t run the dishwasher and the washing machine at the same time, or the toilets would back up and start flooding the house.
They continued looking for other places around the country to live, particularly to fulfill their goal of home ownership.
Raleigh checked all of their boxes, boasting an intriguing culture, a greenway system and plenty of tech firms. At the heart of Raleigh is Research Center Park, which is the largest research, science and technology park in the country. Apple is building a huge campus there, while Google has a large office in neighboring Durham.
Jay currently pays upwards of $2000 for his 4 bedroom, 2.5 bath home, a much better deal than his previous “broken down sixties rancher.”
Raleigh’s first wave of migration came in the sixties, on the heels of the invention of air conditioning. By the nineties, when AC units were more commonplace, the state of North Carolina attracted Americans from colder climates, who no longer had to endure hot, sticky summers to live there. Then, being a non-union state drew the attention of firms who were looking to avoid foreign paid labor. In 1965, IBM became one of the first major tech firms to build a manufacturing facility in Research Center Park.
The icing on the cake was when local government officials realized early on that the decline of the state’s tobacco and textile industries meant they had to switch gears. There was a partisan decision to invest into higher education as a way to attract new kinds of firms.
Nowadays, there is a full cadre of technology and pharmaceutical firms in “the triangle” cities, not to mention established universities in each and an impressive industrial park at the center. However, there is growing concern that because such cities attract increasing numbers of internal migrants, their very affordability may be jeopardized over time.
Jessica Gustines, 26, was excited about her new job at a bank with a good salary. Born and raised in Raleigh, she had moved to Asheville for work a few years ago. Landing a new position at a bank in Durham meant she had to move again, with the added benefit of being closer to her sisters this time.
When Gustines first heard her $56,000 salary, she thought it was a considerable amount. Having worked in affordable housing, she had seen the reality of low incomes. But, Gustines soon found that she didn’t make three times the rent for places close to her job in Durham, that were listed at $1400.
But when she started searching Durham, another of the “triangle” cities, every option was out of budget. Renting an apartment by herself there meant she wouldn’t have as much savings or disposable income as she wanted.
“I could live in a nice building downtown in a shoebox apartment by myself, or I could live further out from my office and the rent goes down,” she said.
Now, Gustines is prepared to pay $700 for a 3-bedroom house that she will share with roommates. She says that the triangle cities are actually considered more expensive places to live in North Carolina by those who are born there, and with the influx of transplants, rents are going up.
“When you get tremendous population growth, that is going to put pressure on the housing market because people want to live in the cities and there’s only so much land,” said Michael Walden, an economics professor at North Carolina State University. “It makes the cost of land go up, which is the main driver of the cost of housing.” He said that there is a similar situation happening in South Carolina and Tennessee as well.
Anticipating the pressure on the housing market, Raleigh’s city council has taken measures to encourage more housing construction, for instance by eliminating certain rezoning laws that put limits on what can be built and where. Intentionally increasing the supply of available developments can allow these cities in North Carolina to remain affordable both for new arrivals like Jay, and longer-time residents like Gustines.