Raleigh Ranks as 2^nd Best Performing City – Milken Institute

The big news around Raleigh recently is that it was just named the 2^nd Best Performing City in the country by the Milken Institute, only second to the powerhouse Austin, Texas.

But, what does being the second best performing city in the country actually mean?  It’s a pretty vague description, so I took a look at the methodology to better understand what this accolade is really measuring.

Source:  BestPerformingCities2024.pdf (milkeninstitute.org)

The main theme around “best performing” revolves around economic performance.  The three major categories used to rank the cities are Labor Market Performance, High Tech Impact, and Access to Economic Opportunities.  

The Labor Market Performance category is all about measuring short and long term job and wage growth, which is the most direct economic measurement affecting the population on a day to day basis.

The High Tech Impact category measures the presence, impact, and growth of the technology sector.

And the Access to Economic Opportunity category measures the attractiveness of the city and availability of housing, internet and more in order for residents to take advantage of the job market.

So, when the ranking says, the “Best Performing,” it’s really a more robust, “health of the job market” ranking.

Source:  BestPerformingCities2024.pdf (milkeninstitute.org)

When looking at Raleigh NC job market performance in these categories that landed it the #2 spot overall, a few things stand out.

Raleigh NC placed in the top quartile of every category, with its’ highest performing categories related to wage growth, job growth, and presence of high-tech companies. 

Interesting, the two main types of employment that are boosting Raleigh NC job market performance were business and professional services, which is part of the high-tech sector, but also leisure and hospitality.  This highlights the return of jobs related to tourism in Raleigh, which is great to hear given the lack of tourism Raleigh experienced over the past few years.  

And Raleigh actually ranks 12^th in the nation for the number of apartments under construction, which is a pro now but was highlighted as a major aspect that needs to continue in order for it to hold its’ high rankings for years to come.

So to summarize, what it really means for Raleigh NC to be named the #2 best performing city in the nation is that it has one of the strongest economies in the nation in a city that has a healthy situation to allow residents to take advantage of the opportunities. 

Raleigh Ranks as the #13 Best City for Quality of Life – US News & World Report

Moving on to another very important ranking for Raleigh, NC is it’s quality of life, which it was recently ranked #13 in the nation by the US News & World Report.

Between it’s great weather, the significant number of outdoor offerings, healthy job market, and relative affordability, this has been a major pro for the area for quite some time now.

But in all honesty, I do believe Raleigh should have ranked even higher than this as I don’t believe weather was taken into account nearly enough, but Raleigh continues to rank very well in this category overall.  

So let’s take a look at the criteria, and I will note that the weighting of this criteria was determined by a national survey to gain resident’s perspectives on what matters most to them.

First up is Crime Rates at 25%, which looks at both violent and property crime.

Quality of Education is next at 19%, which looks at quality of public education and college readiness scores.

Well-Being is the most important category to me, and is weighted at 19%.  This uses the Sharecare’s Community Well-Being Index, a reputable index that measures purpose, social, financial, community, and physical well-being of a community.

Commuter Index is weighted at 16%, and is as it sounds, how challenging driving can be in the city.

And the last categories are quality and availability of health care at 9%, air quality index at 7%, and the FEMA National Risk Index at 5%, which measures the area’s risk to natural disasters.

This is a pretty comprehensive list, but I am very surprised how little weather was considered in these rankings, as it really only shows up behind the scenes in the well-being metric.  

Regardless, Raleigh continues to rank high in this area and continues to prioritize boosting this strength of their city.  

2^nd Hottest Real Estate Market – US News & World Report

Alright, let’s take a look at the most misunderstood category and one that concerns those looking for homes in Raleigh, NC, but I’m going to show you why this should be considered a good thing.  

Raleigh, NC was recently named the 2^nd hottest real estate market in the nation by US News & World Report.

When most people see that they think, oh no, this means we are back in the days of ridiculous competition with homes going well over asking price, and it’s going to be very hard to buy a home.

But that’s actually not entirely true.  While the ranking does measure demand, it also measures supply and financing to take a look at the market as a whole, and should be looked at as a measure of a market’s “health” versus meaning there will be crazy competition.  

So this is a good thing, it means that Raleigh Real Estate Market as a whole is the 2^nd best in the country for those who are buying AND selling.

Source: https://realestate.usnews.com/housing-market-index/interface 

Taking a deeper dive at the three main categories, we will start with housing demand.

The total employment and total household categories are measures of demand in the market, and you’ll see that Raleigh has been increasing in those categories, especially employment being up over 31k jobs since last year.  

It also looks at the unemployment rate, which at 2.9%, Raleigh is an entire percentage point below that national average.  I did find it interesting that while rent prices have increased here, they are still well below the national average.  Also, you’ll see that while Raleigh’s median housing price of $435k is above the national average, it’s not far off and is relatively affordable compared to the rest of the country.

The most interesting category here though is a measure of consumer sentiment, which looks at how optimistic or pessimistic potential buyers are of their ability to buy a home in the market.  With Raleigh’s score of around 68, it shows that over 2/3 of potential home buyers feel positive about the market.  

So, it’s not just about measuring demand as a whole, it’s about the health of that demand.

Source: https://realestate.usnews.com/housing-market-index/interface 

Moving into housing supply, it’s more or less how it sounds, a measure of the inventory of homes on the market for buyers to choose from. 

Right now, Raleigh is just below the national average at a housing supply of 2.4 months, which is calculated by taking the number of homes for sale divided by the current pace of sales.  The greater the number, the better your housing supply.

This category also looks at vacancy rates for rentals, which Raleigh is slightly above average.  

There are multiple categories related to new builds as well, such as builder sentiment, which measures builder’s confidence of building in the current market.  Construction costs is another category that shows a leveling out in the past year or two for Raleigh, but you’ll notice that costs overall are up 88% since 2005!  

Source: https://realestate.usnews.com/housing-market-index/interface 

And lastly, the health of the housing finance market is also measured, which looks at buyer’s ability to get loans and maintain their payments.

The price and rent to income categories are a measure of affordability, as it calculates the mortgage for the average priced home at the current interest rate against the average per capita income to see how affordable mortgages are.   The lower numbers are better, and Raleigh is on pace with the national average in the housing market and more affordable than the national average for rentals.

The measure also looks at access to credit for the region, which Raleigh is in good shape there, as well as delinquencies and foreclosures, where Raleigh is also below the national average on.

So overall, you can see how being ranked the 2^nd hottest real estate market in the country isn’t as it sounds, it’s actually a positive thing, meaning it’s a very healthy, balanced market for both buyers and sellers to comfortably operate in.

I hope this video gave you a better understanding of what it truly means to be the 2^nd best performing city and the 2^nd hottest real estate market.

If you’re looking to buy or sell in the greater Raleigh, NC area, we have one of the top teams in the area would love to work with you!

Please reach out via our contact information below:

Phone:  919-504-5265

Email:  alison@thewgroupraleigh.com

Website:  www.thewgroupraleigh.com