Ben Schachtman: So Kelly, you just pulled a bunch of rental data and ran the numbers. How does it look?
Kelly Kenoyer: Now this may surprise you, but rents have actually dropped in the past year and a half, after peaking locally in September of 2022. From 2017 to then, rents rose 63%. But they’ve dropped more than 10% since September of 2022.
BS: OK, so, one, that’s a shocking increase — and, two, I gotta say, anecdotally, my own rent hasn’t gone down at all, and I haven’t heard any of my friends’ or family members’ rent going down. So, that feels confusing.
KK: Well, that makes sense to me. Landlords aren’t in the business of giving discounts to their captive audience of existing tenants. But if they have a vacant unit, they might lower the rent for the first year lease to get someone in.
BS: That is true.
KK: I do think the numbers here in Wilmington are stunning, though. I was able to run this analysis with data from apartmentlist.com. They track it on the metro level, as well as nationally. And Wilmington really stands out in my mind. It started below the national average in 2017, with a 1 bedroom rental rate of just $789. Then, it peaked above the national average in the late summer and fall of 2022. And our rent has fallen back below the national average in the last year and a half or so.
BS: That… is a rollercoaster. Do we have a sense of why it’s so volatile?
KK: Well, when I compare Wilmington to other metro areas, we’re similar to other sunbelt cities around the country. Knoxville stands out the most, with a 90% increase in that 5 year period up to 2022. But we see places like Phoenix Arizona, Coeur d'Alene, Idaho, and Colorado Springs going up 50 or 60% or 70% also.
BS: Those are all kind of touristy places. Lots of sunbelt towns, or places with specific outdoor recreation. Maybe this has to do with the pandemic opening up remote work?
KK: I think so. Suddenly, tons of white collar workers all over America had the ability to keep their high paying jobs while moving to a place they’ve long dreamed of. When I rank these increases by state, Idaho is surprisingly #1, followed by Arizona and Nevada. North Carolina comes in at #11.
BS: Idaho. I didn’t see that one coming. Why Idaho?
KK: Well, there’s the outdoor recreation. But I also knew staunchly conservative baby boomers in Oregon who moved there out of political frustration during the pandemic. They didn’t like the masking restrictions in Oregon. There’s also the economic drivers, similar to what we experience here. According to a local TV report from KTVB in Idaho, most of the people migrating to Idaho are from Colorado, Washington, and California, and especially from the major metropolitan areas there. They’re moving to get the lower cost of living — and many of them are able to buy a home in Idaho in their first year after the move.
BS: That mirrors some of the patterns we see in North Carolina. We’re getting many people down from the Northeast, and they can afford to buy homes here with their salaries from New York or New Jersey. But that’s a statewide trend- how does Wilmington compare to other cities in NC?
KK: We’re second from the top in terms of highest rent increases in that five year period, after Winston-Salem. But we’ve actually had the biggest rent decrease of any other city! But of the metros I have data for, every single city in the state was above the national average for rent increases over that time frame.
BS: I’ll say, Wilmington’s housing market is even less predictable than most right now.
KK: Yeah. The surge in demand from the pandemic was completely unprecedented because of the unique appeal of a mid-sized city right by the beach in this beautiful, sunny state. And it’s hard to know how shifts away from remote work will impact the local housing market in the long term.
BS: Well, employers are clawing back their workers to the office, after all, so some of our remote workers might not stay. Or we might see the flood turn into a trickle.
KK: And, as we know, local market conditions have pushed the local renters to the brink. That’s why we’re seeing these drops in prices: the people who rent those lower-end units simply can’t afford the rates that peaked during the pandemic.
BS: As a renter, I do hope they keep dropping. But since we still seem to have a housing shortage, according to the county, the city, and just about every expert we’ve talked to — we know that market pressure isn’t going away. Good ol’ supply and demand!
KK: That’s one thing that does stay fairly predictable.
BS: Alright, Kelly, thanks for crunching this data for us.
KK: Sure thing.
