Apartment boom in downtown Raleigh leaves homebuyers with limited options

Since the financial crisis, new construction remains low and banks see properties like condos and townhouses as riskier investments, so the majority of new residential property in downtown Raleigh isn't for sale.

Posted 9:40 p.m. Aug 7 — Updated 1:22 p.m. Aug 8

Ali Ingersoll

, WRAL Data Journalist

RALEIGH, N.C. — When it comes to real estate, the saying is – location, location, location.

The lack of available housing downtown highlights that people want to live in the city.

Over the last decade though, most new construction in downtown Raleigh isn’t available for people to buy. The second-quarter report from the Downtown Raleigh Alliance shows apartments make up 94.5% of residential construction in the city since 2015.

Ryan Sabatini, a real estate agent with Rich Realty Group, explained the market while showing WRAL Data Trackers around a home on North State Street, just outside of the downtown area.

"Whether it’s new condos, attached homes, townhomes, things like this new duet style home Grayson Homes has built - we just need new density," he said.

Sabatini said his clients are interested in being in and around downtown.

"It’s the best of both worlds," said Sabatini who moved from California to the area more than three years ago. "Feeling like you’re somewhat in a small town but the city is right there."

There are challenges with finding his clients places to buy that are in downtown Raleigh.

"With high interest rates and low inventory, a lot of people are having to rent," he said. "Instead of putting money into rent every month, you could be building toward something, building equity. You can have ownership in something."

Apartments make money for those who build them, Sabatini said. Since the financial crisis, new construction remains low and banks see properties like condos and townhouses as riskier investments.

Bill King, the president and CEO of the Downtown Raleigh Alliance, says the lack of available housing for sale in this area could be attributing to high rental occupancy rates which regularly sit between 90% and 95%.

"I think there are people in apartments who would live in a house or condo," King said. "They want to own something but they aren’t finding it located where they want so they’re choosing location over ownership."

King said he feels there is demand for apartments, as shown by the occupancy rates, but there's also a demand for condos and townhouses. He described the construction trends as "mismatched" but says it is a macro issue all metros are facing, not just Raleigh.

King feels building more units that are for sale would be advantageous for everyone who is in the market and believes there needs to be a bigger conversation at the local level so developers feel incentivized to build a variety of housing that meets the needs of residents.

"If we could have another wave of that, it opens up single family homes for millennials and singles," King said. "That’s what they want -- they want the yard, the school district. So, it has a larger impact."

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