North Carolina's Housing Crisis: What Real Estate Professionals Need to Know

The latest North Carolina Housing Supply Gap Analysis paints a stark picture of the housing market in our state. With a projected need of 764,478 housing units over the next five years (2024-2029), the gap between supply and demand is reaching critical levels.

For real estate professionals, this data offers both challenges and opportunities. Understanding these trends will help brokers, agents, and developers make informed decisions that benefit their businesses and the communities they serve.

Key Takeaways from the Housing Supply Gap Analysis

• North Carolina’s Housing Shortage is WidespreadThe state is projected to add 218,160 households by 2029, yet there aren’t enough homes being built to keep up with demand. This shortage is particularly severe in high-growth areas like Wake and Mecklenburg counties, but even rural areas are struggling with limited housing availability.

• For-Sale Housing Market is Severely ConstrainedThe statewide availability rate for for-sale homes is only 0.8%, far below the 2%-3% range considered healthy. This shortage, combined with rising home prices, makes it increasingly difficult for first-time homebuyers and middle-income families to find affordable housing.

• Affordable Rental Housing is Virtually UnavailableThe overall vacancy rate for multifamily rentals is 5%, which is within a normal market range. However, when looking specifically at affordable rental programs (such as Low-Income Housing Tax Credit and government-subsidized units), the vacancy rate is near zero. More than 41,000 households are currently on waitlists for affordable rental housing.

• Housing Shortage is Hindering Economic GrowthIf the state could meet the full housing demand, it could generate $489 billion in economic activity and create nearly 2.2 million jobs. The inability to provide adequate housing for workers could ultimately limit business expansion and economic development.

What This Means for North Carolina Real Estate Professionals

As real estate professionals, we are on the front lines of this crisis. The insights from the report provide several takeaways that can help us navigate the market more effectively:

1. Shift Focus to Entry-Level and Workforce HousingWith a shortage of homes priced under $200,000 (only nine counties have median list prices below this level), agents should advocate for more affordable new construction. Builders who can produce housing that meets this demand could see significant growth.

2. Prepare for Increased Demand in High-Growth AreasCounties like Brunswick, Johnston, and Currituck are expected to see double-digit percentage growth in household numbers. These areas will need more homes, more rental units, and more infrastructure to support this expansion.

3. Educate Clients About Competitive Market ConditionsThe shortage of available homes means buyers must act quickly and decisively. Agents should prepare clients for multiple-offer situations, and sellers should understand that listing their homes now could yield higher-than-expected returns.

4. Leverage Rental Market TrendsSince affordable rentals are nearly impossible to find, real estate professionals can assist investors in developing rental properties in areas with high demand. Additionally, property managers should ensure they are maximizing occupancy rates while maintaining compliance with rental regulations.

   

5. Advocate for Housing Policy SolutionsThe state will need a combination of new construction, zoning changes, and incentive programs to close the housing gap. Real estate professionals should engage with policymakers, local planning commissions, and housing organizations to push for practical solutions.

6. Educate Clients on Alternative Homeownership OpportunitiesWith traditional homeownership becoming less attainable, real estate professionals can guide clients toward rent-to-own programs, co-housing opportunities, and down payment assistance programs to help bridge the affordability gap.

Final Thoughts

The housing crisis in North Carolina presents both obstacles and opportunities for real estate professionals. By understanding the trends and adapting strategies accordingly, brokers, agents, and developers can position themselves to thrive in a changing market. More importantly, by actively engaging in solutions, the real estate industry can play a key role in helping North Carolina communities meet their housing needs.

What ideas do you have for addressing NC's Housing Shortages? Leave a comment below or share with a colleague in an upcoming CE Class!

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References

Bowen National Research. North Carolina Housing Supply Gap Analysis (2024-2029). NC Chamber Foundation, North Carolina Home Builders Association, & NC REALTORS®, 2024.