When it comes to developing investment strategies that aim to maximize returns, choosing the right location for your real estate investments is always a critical consideration especially in high-growth states such as North Carolina. This southeastern state has been one of the country’s most popular destinations for domestic relocations for the last 10 years. Between 2015 and 2016, the Tar Heel State ranked fourth nationwide for highest net migration numbers, with an overall population increase of 80,752 residents. Population growth is only one of the metrics that would indicate strong profit potential for North Carolina investments.
Overview of North Carolina’s Economy
The News and Observer states the gross domestic product for the state in 2018 reached $565.8 billion, which is a new record for North Carolina. GDP growth for the year was measured at 2.9 percent, which is higher than the nationwide GDP growth of 2.6 percent. In 2017, median household income in the state was $52,752. This number was expected to rise by 2.51 percent in 2018 to reach $54,076, which will surpass the record high of $53,127 achieved in 2008. The official 2018 numbers will be released in late 2019.
Based on reports from the Bureau of Labor Statistics, the poverty level in the state has trended lower over the past five years. In 2012, the poverty level was at 18 percent, but it has dropped consistently and fallen to 14.7 percent in 2017. Unemployment numbers may provide a partial explanation for the declining poverty rates. The unemployment rate in the state was 3.7 percent in 2018, which was much better than the nationwide figure of 4.0 percent.
The strength of the state’s economy may be attributed to a diversified economic base that spans various industrial, agricultural and service sectors including:
- Manufacturing for automotive, textiles and food industries
- Power generation and utilities management
- Information technology and engineering
- Research focused on health, medicine and pharmaceuticals
- Health services
- Financial services
The Housing Market in North Carolina
Rural areas have shown some decline in population and economic activity while metropolitan areas have grown tremendously due to an increase in jobs and corporate investments.1 As a result, there are hot spots in the housing market that could potentially be high ROI investments given the right approach. These opportunities may exist in suburban or metropolitan areas.
Aside from a diverse economic base, North Carolina also boasts of geographic diversity so that investors can choose lakefront, beachfront or mountain view properties. Homes that are priced below $450,000 are in great demand, with millennials seeking to own their first home or upgrade to a larger one. At the same time, houses in this price range are attractive to boomers and empty-nesters looking to downsize to retirement-ready housing. Median home price for the state is $318,366 for price-per-square-foot of $151. Housing values appreciated by 7.5 percent from 2017 to 2018, and demand for housing will continue to be strong as the state copes with in-migration.2 Rental income from traditional leases averaged $1,300 for a 2 percent cap rate while short-term vacation rental income averaged $2,280 for a 4 percent cap rate.3
Finding the Best North Carolina Investments
Identifying target areas where you can scout for high ROI properties in North Carolina is not an easy task, but we’ve made it easier for you. You can quickly identify properties that have potential for high returns directly from the property details pages. Properties that are considered HOT will have a HOT icon at the top of the page as indicated below.
Additionally, real estate professionals may recommend looking in metropolitan areas that are traditionally high growth regions due to their proximity to employment hubs, urban amenities and local attractions. However, some suburban and semi-rural areas may have the same profit potential due to lower prices, good access in relation to urban centers and built-in growth potential due to other factors.
Mecklenburg County
Mecklenburg County is on the southwestern edge of North Carolina. It is part of the Charlotte-Concord-Gastonia metropolitan statistical area. It is the county with the highest population, and the largest city is Charlotte, which is also the county seat. Fortune 500 companies with headquarters in this county include Bank of America, Duke Energy and Family Dollar.
Median home price for this county was recorded at $224,000 as of February 2019 with home values expected to grow by about 2.2 percent.4 Inventory of available housing has improved with a three-to-six months of supply. In-migration into Charlotte and nearby areas will continue, adding more pressure to what has been a sellers’ market for some time. Charlotte is among the cities with the highest population growth in the nation as a stable job market and the presence of big employers draws new residents every year.
Wake County
The state seat is located in Raleigh, which is also the county seat and the largest city in Wake County. The Research Triangle, a hub for research and STEM-driven corporations is in the county that also counts Cary as one of its big cities. County population exceeds 1 million residents, and this number will continue to grow in the foreseeable future. The median home value is $268,400 for a per-square-foot price of $147. Home values are expected to increase by another 6 percent in 2019. Traditional rental income averaged $1,429 monthly.5
Onslow County
Onslow County is one of the coastal counties of North Carolina. The county seat is Jacksonville, and the county is part of the Jacksonville MSA. The median list price for houses in Onslow County was $194,900 as of the latest 2019 data or a per-square-foot value of $108. These figures indicate 7 percent growth in year-over-year values. The median price based on actual sales was about $184,400. This area of the Carolinas is known for its beaches, and some of the best sites are part of the Hammocks Beach State Park.6
Cumberland County
Part of the Fayetteville MSA, Cumberland County is in the south-central region of North Carolina. Houses in this county are expected to remain affordable with a median sale price of $142,000. About 85 percent of the county’s real estate transactions consisted of resale homes, averaging $83 per square foot. Median rent per month for traditional rentals averaged $1,050 for Cumberland County properties.7
Guilford County
Guilford County is in the North Carolina’s north-central region with the city of Greensboro as the largest city and the county seat. The median sales price for Greensboro homes averaged $144,700 or $110 per square foot. Rents for traditional rentals averaged $1,105 per month indicating that housing is still affordable in this area. The biggest employers in the county include Cone Health, Guilford County Schools and High Point Regional UNC Health Care.8
Finding High ROI Properties
Your real estate investment strategies for North Carolina should ideally drill down to the local level. Each county presents its own unique challenges and ROI potential. Auction.com, the largest online real estate marketplace for distressed real estate, aims to provide the resources so that investors like you can zero in on North Carolina investments efficiently. Use the search tabs provided here to filter for listings suitable based on your investment strategies, and see for yourself how Auction.com can become an integral part of your portfolio development.
Sources:
1 Top Us Markets in 2019: North Carolina Real Estate Market: Mashvisor
Abdallah Allabadi – https://www.mashvisor.com/blog/north-carolina-real-estate-market-2019/
2 The Cost Of Living in North Carolina
Amelia Josephson – https://smartasset.com/mortgage/the-cost-of-living-in-north-carolina
3 Heba Baker – https://www.mashvisor.com/blog/high-cap-rate-cities-north-carolina-housing-market/
4 Mecklenburg County Nc Home Prices & Home Values
Zillow, Inc – https://www.zillow.com/mecklenburg-county-nc/home-values/
5 Real Estate Investing Blog
http://www.noradarealestate.com/blog/raleigh-nc-real-estate-market/
6 Onslow County, Nc Housing Market & Market Trends – Realtor.com®
https://www.realtor.com/realestateandhomes-search/Onslow-County_NC/housing-market
7 Sales Of Existing Units Dominate Fayetteville Regional Housing Market
Michael Futch – https://www.fayobserver.com/news/20190122/sales-of-existing-units-dominate-fayetteville-regional-housing-market
8 Greensboro Nc Home Prices & Home Values
Zillow, Inc – https://www.zillow.com/greensboro-nc/home-values/
