Durham Real Estate Market
What does everybody think about the current market status for house flipping in Durham, NC? Median sales price in Durham county hovered right around 400k in March, which is close to 12k over the median sales price for the entire Triangle MLS. Supply has been trending down from 1.9 since October 2022, which has a direct correlation with the median sales price driving up from around 375k at the start of 2023 to where it now lies. DOM is incredibly low at a median of just 3 days. Anybody have any thoughts they'd want to share? Concerns with investing in Durham? I've seen plenty of Durham flip deals get passed on and was wondering why this might be when the market data is incredibly strong
I don't have a response to your question, but we too are looking into the Raleigh / Durham area. It keeps coming up as a top pick on our list of markets so I am curious to know what others have to say. We are looking for a buy and hold, likely a fixer upper where we can force appreciation.
There's generally a difference in asset type in Durham vs Raleigh, especially with most MLS flips in Durham being downtown where the areas are still quickly gentrifying, assets are 70-100+ years old, home size is significantly smaller than suburbs and parking can be challenging. These are all huge factors in both the renovation process as well as the resale market and what the end consumer is looking for. It's "much easier" to flip a 1970s 3/2 ranch w/ 1200 sq ft in S Raleigh or Garner vs a 1930s 2/1 bungalow w/ 720 sq ft and street parking in Durham. Especially when the $/sq ft on comps in Durham will be significantly higher than its competitor in Raleigh. You need more meat on the bone when dealing with older assets and it can be tough to find it and substantiate the work-to-profit ratio.
Flip the conversation (pun intended) and if you find that ranch style product in the Durham "burbs" like around South Point, then its a no-brainer. Too broad of a question to summarize an entire city's investment activity just like it's too broad of a statement to speak on an entire state's outlook in one blanket response.
Quote from @Pat Lulewicz:
There's generally a difference in asset type in Durham vs Raleigh, especially with most MLS flips in Durham being downtown where the areas are still quickly gentrifying, assets are 70-100+ years old, home size is significantly smaller than suburbs and parking can be challenging. These are all huge factors in both the renovation process as well as the resale market and what the end consumer is looking for. It's "much easier" to flip a 1970s 3/2 ranch w/ 1200 sq ft in S Raleigh or Garner vs a 1930s 2/1 bungalow w/ 720 sq ft and street parking in Durham. Especially when the $/sq ft on comps in Durham will be significantly higher than its competitor in Raleigh. You need more meat on the bone when dealing with older assets and it can be tough to find it and substantiate the work-to-profit ratio.
Flip the conversation (pun intended) and if you find that ranch style product in the Durham "burbs" like around South Point, then its a no-brainer. Too broad of a question to summarize an entire city's investment activity just like it's too broad of a statement to speak on an entire state's outlook in one blanket response.
Pat, appreciate the swift and detailed response! I was just looking at pure statistics on the market there. Parking space is a good point to touch on, as well as, the age of homes in Durham. How do you think it will change in the future?
I feel like the general attention to Durham flips have drifted elsewhere due to the entry costs and workload the properties are taking. It's been a haven for flippers the past few years but naturally that causes deals and seller expectations to change. On the Property Management side, the older downtown areas can be a maintenance headache for rental investors. Suburb areas are certainly the go-to option if the opportunity arises!
Hey Greg.
Ive seen a lot of the flips youre mentioning in Durham and i think the issue may be location. Durham is unique and values can really change within a small geographic area based on which direction you go. text me if you have any more questions.
@Zac Hales is right - location plays a big factor. Quality does as well. I'd say 2 out of every 3 flips are poor craftsmanship and lack a wow factor that attracts the buyers that are in the market now.
As an flipper, you have to put yourself in the shoes of buyers. If you're losing your pants and shirt to get in a home plus you're stomaching a serious monthly payment due to higher than recent interest rates, you want to maximize what you're paying for. I see the same groups every weekend and it's a piranha fest of buyers moving from the only good house one weekend to the only one the next weekend. Our inventory is a major issue, but that doesn't mean you can throw some spaghetti at the wall and it'll stick. Buyers are super picky right now.
How does your product stand out as a flipper? Are you putting in hardwoods instead of LVP? Double vanity in the master? Tile instead of a shower surround? These are things buyers are looking for and passing when they're basic builder grade. They'd rather overpay for something premium than settle for something middle grade.
You also have to consider Durham's permitting process. Like every city they take a while, but Durham is inundated with projects and don't have the planning department to process this high volume so things are really backed up. Complex projects are passed from planner to planner with no one making the final decision. My simple subdivision of a lot has taken 4 months to complete. The holding cost isn't fun when you're flipping a house and waiting on permits to pass through structural, plumbing, etc. and your home is ready to go but you're waiting on the city.
You really need to know the market down to the street level in downtown and the neighborhoods in South and North Durham if you're flipping something in those areas. The complexity of all of these factors - finishes, timeline and financing make margins hard unless you really know what you're doing.
Quote from @Kelly Reynolds:
I don't have a response to your question, but we too are looking into the Raleigh / Durham area. It keeps coming up as a top pick on our list of markets so I am curious to know what others have to say. We are looking for a buy and hold, likely a fixer upper where we can force appreciation.
I live in the Raleigh-Durham area, and I think flipping has made more sense for most investors for a while now. Assuming you're using the hard money to fund a fixer upper with plans to hold it long term, it will be tough to cash flow once you refinance the property. For data my house in Garner (10 minutes from downtown Raleigh) would sell for $375,000 but would only rent for $2,100, and I live in a more affordable area. I do think if you're betting on a market for appreciation, Raleigh-Durham market is one of your safest bets.