Durham, NC · Member since 2021 · 10 posts · 9 votes
Like all of us, I'm looking at investment properties around the Triangle (mainly SFHs that meet .70% rule, mainly for equity). I'm starting to expand my search because of how "hot" the market is.
When does everyone think this market will cool down in terms of being a seller's market? Or is this out of the question for the next, say, 5 years?
Rental Property Investor · Raleigh, NC · Member since 2020 · 66 posts · 89 votes
5y
Google is moving into Durham as well, and will be looking to build a permanent campus in the next few years. I'm guessing that's going to be in RTP. Raleigh-Durham could quickly be in the position Austin was a few years ago
Lower crime, incredible jobs and job diversity, awesome universities, great entertainment, beaches, mountains, etc.... I'm born and raised in RDU (28 y/o) and this place ain't slowing down.
Rental Property Investor · Raleigh, NC · Member since 2020 · 66 posts · 89 votes
5y
If you're concerned about the "dip" and are okay with no cash flow, Chapel Hill is probably a great place to buy as well. All of these tech employees will want a great school system for their kids, and it doesn't get better than Chapel Hill for that. Areas with great schools saw far a far smaller drop in value in '08 compared with the baseline
There are not really many signs of Raleigh slowing down anytime soon. As everyone mentioned prior, Apple is building a headquarters there. Some of our investors have begun to obtain SFH toward the outskirts of Raleigh. Have you looked in the suburbs at places west or south Chapel Hill?
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
Just to clarify, Apple is not locating a headquarters in Raleigh. It is a campus. Their headquarters is in Cupertino and they employ 25,000 people there. Their Austin campus is also expanding and will employ around 15,000 people when complete. The Raleigh campus will employ 3000 people.
The main reason Apple is expanding in Austin and RTP is to capitalize on the local IT talent pool. These areas were already tech hubs based on big technology companies that have been there for 30+ years. Dell was started in Austin and IBM(Lenovo) has a huge operations in RTP. As these legacy computer companies have lost market share to Apple through the mobile revolution, Apple sees an opportunity to invade their operational centers to add talent. Even in Cupertino, the new Apple headquarters was built where an HP headquarters once existed.
My point is that some of this is a transition from the legacy "PC world" to the "mobile world". Where IBM, Dell and HP (Compaq) once dominated, we now have Apple, Google and Amazon in the mobile space.
One thing worth noting is these high profile companies are all choosing warmer destinations to expand. Big tech companies are not locating a new campus in Minneapolis, Chicago or New York (Amazon tried and they ran them out, haha).
Brooklyn, NY · Member since 2018 · 45 posts · 18 votes
5y
Never? Apple just announced their first east coast campus to be built in that area. Might be a good time to jump in before property values go even more bananas.
Real Estate Broker · Chapel Hill, NC · Member since 2018 · 31 posts · 10 votes
5y
For the Raleigh, Durham, Chapel Hill market known as the Triangle Area is not due to cool down anytime soon… Of course with Apple moving in prices will probably increase. It will be a little more challenging to find a starter home or downsize home for the average consumer. I am working with a VA to make calls now to find off market properties and will continue to do so over the next five years. That's gonna be the major source of finding semi affordable properties to sell here in NC.
Big tech companies are not locating a new campus in Minneapolis, Chicago or New York.
Yes, they are. The best compilation of actual job & leasing data is CBRE's Tech 30 report. Among its findings: NYC was in the top 5 markets for tech job growth in 2018-19; Bay Area-based companies are expanding faster in NYC, LA, Seattle, and Chicago than in Austin or Denver. Amazon, Apple, Facebook, and Google have 22,000+ office employees in NYC alone, and the sector is by far the biggest job growth engine in Manhattan. Uber, Salesforce, Facebook, and Google are all adding 1,000+ jobs apiece in downtown Chicago. No one city will be "the next Silicon Valley," and that's a good thing.
As for the original question, the market fundamentals in Raleigh have been good for decades. It would take a substantial economic slowdown, and a lot of catch-up new construction, to result in a substantial correction. That's why I'm focused on adding supply, rather than speculating.
Big tech companies are not locating a new campus in Minneapolis, Chicago or New York.
Yes, they are. The best compilation of actual job & leasing data is CBRE's Tech 30 report. Among its findings: NYC was in the top 5 markets for tech job growth in 2018-19; Bay Area-based companies are expanding faster in NYC, LA, Seattle, and Chicago than in Austin or Denver. Amazon, Apple, Facebook, and Google have 22,000+ office employees in NYC alone, and the sector is by far the biggest job growth engine in Manhattan. Uber, Salesforce, Facebook, and Google are all adding 1,000+ jobs apiece in downtown Chicago. No one city will be "the next Silicon Valley," and that's a good thing.
As for the original question, the market fundamentals in Raleigh have been good for decades. It would take a substantial economic slowdown, and a lot of catch-up new construction, to result in a substantial correction. That's why I'm focused on adding supply, rather than speculating.
The report is from 2018-19, which doesn't reflect a post COVID world. I don't believe today you could say tech jobs in Chicago are expanding faster than Austin. Of course big companies will have offices and employees in any major metro area. Specifically in NYC there is strategic value in having offices due to the advertising and financial industries. What I said was "new campus" meaning large campus expansions or even head quarter moves. Apple is building a $1B campus in Austin that will house 15,000 employees. That are more employees planned there than they have in their spaceship HQ. Apple has about 4000 employees in NYC, but they also have 21 retail stores there, so half those employees are store employees. Amazon is building their HQ2 in Virginia, which will reach over 25,000 jobs by itself. Amazon has another 5000 jobs planned in Nashville. So even if Amazon, Apple, Google, Facebook have 22,000 employees in NYC, that pales compared to the number of jobs being located in smaller cities.
Amazon currently has plans for 6000 in Manhattan, vs. 5000 in Nashville. Google's largest campus outside the Bay Area is in Manhattan (and meanwhile, they're pressing ahead with a 25,000-job new campus in downtown San Jose). Google and Amazon have each written $1B+ checks to purchase entire blocks of Manhattan, and in Aug 2020, Facebook committed to a $1.2B whole-building lease in Manhattan. These are campuses for technical employees, but because they don't account for many net new jobs for these larger cities, they don't get as much attention.
Again, I invite you to read the linked (2020!) Tech 30 and Tech Talent reports, published by the world's biggest commercial real estate services company. There's a lot of tech job growth even in big old cities, as tech companies go where the workers are.
And again, so as not to stray from the OP: one opportunity in Durham is to use the new Expanding Housing Choices rules to split off a backyard into a separate "Small Lots" unit. Keep one unit to rent out (two, even, with an ADU), and sell another -- it's instant additional equity.
Attorney · New York City / Long Island, NY · Member since 2020 · 597 posts · 248 votes
5y
The Raleigh area is in a great position due to the general southward migration of the US population, more people choosing to retire there, & lots of well-paying jobs being added to its economy.
@Joe Splitrock Most New Yorkers were not happy the city didn't make a deal with Amazon, as you can imagine
Rental Property Investor · Raleigh, NC · Member since 2020 · 66 posts · 89 votes
5y
@Payton Chung
Totally off the original point, but I think Joe is right here. That CBRE article was a 2020 report, but based on 2018-19 numbers, which have little bearing on the market dynamics of a post-COVID world. This article has much more recent data on population trends, which IMO line up with the trends in tech talent:
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
5y
I tried hard to get my first realjob in Raleigh right after college. I was blown away by outdoors (William B. Umstead State Park is amazing), the fried chicken, and numerous colleges keeping things fun. Still wish I could move there and make a living.
Other than the people who can't drive in the snow it's a great city. I hope all you local investors crush it in the years to come!
Specialist · Grand Rapids, MI · Member since 2016 · 1k+ posts · 611 votes
5y
@Ava Miller I don’t see the market prices dropping much rather just flattening but with inflation maybe a better inflation indexed
price at that point in time. Government pumped 3 trillion dollars into economy in one month during COVID when it was projected to pump 2 trillion the whole year. That effect will linger
Real Estate Consultant · Houston, TX · Member since 2020 · 206 posts · 944 votes
5y
My professional guess is that once they start to open the market foreclosures start happening again, you're gonna see a large amount of inventory released out on the market and it will flip the market from where it's currently a low supply and high demand, it will then turn into a high supply the low demand, at which point the market will be in a fall position. That depends on when they release the foreclosures out into the market, because there is a large pent up shadow inventory being built up every month that the banks don't foreclose, which is restricting the inventories.
So I think that if foreclosures are released into the market, there's a large amount of shadow inventory, so supply will become greater than demand and the market will correct back. Based on current projections that could happen in Q3 2021, Q4 2021, or Q1 of 2022 is where you'll start to see it go off the cliff. Remember that most people want to buy sooner. This 3 recession has potential to be fairly deep. The longer the government props this thing up, the more the recession will last, the longer it will go. So one of the primary indicators is to watch as to when these guys lift the foreclosure restriction and they allow the homes to be taken to sale. The minute that happens at all these flippers out there will start buying that inventory and put it on the market, thus creating a greater supply, as opposed to what the demand might be.
Rental Property Investor · Raleigh, NC · Member since 2020 · 66 posts · 89 votes
5y
@David Ginn This is great analysis. Do you think this will apply to all markets? For example, Austin has seen such intense demand and limited supply that a 600 square foot house costs what a mansion does in other parts of the state. Applicable to this thread because RDU is starting to see the same tech-influx that Austin did many years ago, but also I'm just curious. I agree in large part that there will be a dip in the market when foreclosures begin selling, but in certain high-income areas I imagine this won't be as strong of a dip due to a lower concentration of foreclosures.