Is Raleigh’s Housing Supply Finally Catching up to Demand?

As we noted in a recent post, as well as a post last May, Raleigh’s housing affordability crisis is in large part due to supply constraints, not rapid population growth. As the chart below illustrates, Raleigh’s housing production crashed after 2007 and never recovered. That seems to finally be changing.  In 2021, overall housing production exceeded 2007 levels for the first time and blew past those levels in 2022.

Hover over the chart (or tap on mobile) to see the numbers for each category.

If housing production continues to grow at these most recent rates, the cost of housing will moderate-at least for renters.  While this is undoubtedly good news for renters, the outlook for home buyers is less optimistic. Because production of single-family detached homes continues to lag pre-Great Recession levels, the cost of buying a home in Raleigh will remain out of reach for many.  Demand will continue to exceed supply for those looking to buy single-family detached homes because there is simply less land available in Raleigh for the production of large housing developments like those built across Raleigh in the 1980’s through the early 2000’s.  

However, data from 2021 and 2022 suggests subtle signs of a possible shift in Raleigh’s housing market.  Since the supply of single-family detached housing will remain constrained, Raleigh must start producing a more diverse mix of housing options to satisfy the demand for home ownership opportunities.  One subtle indicator that this diversification may be starting is the recent increase in permits for townhouses and ADU’s.  While it is still too early to draw solid conclusions, this could be related to the enactment of Missing Middle reforms, the elimination of parking mandates and other recent regulatory reforms intended to address housing affordability.  

One thing that is not in dispute: overall housing supply will increase dramatically based on the number of housing permits issued in 2021 and 2022.

At the same time, this added supply is unlikely to significantly help residents in the low and very low income ranges. The City, County, Raleigh Housing Authority and other nonprofit partners will need to continue to find ways to leverage their collective resources to continue expanding the supply of permanently affordable, deeply subsidized housing units.