‘Locked out’: Here’s why NC millennials are struggling to buy homes

A national study confirms what many millennial homebuyers in North Carolina already know: They’ve got it twice as hard as previous generations.

In the 1980s, when many baby boomers were in their 30s, it took about 3.5 years’ worth of household income ($23,620) to purchase the median-priced home ($83,200).

Today, it’s closer to 6.3 years’ worth of income, a study from Clever Real Estate found.

For homes to be as affordable today as they were in 1985, the median household would need to earn $134,000 per year — nearly double the actual median income ($74,580) – to purchase the median-priced home ($431,000) in the U.S.

The uptick: Homes are “80% more expensive” for millennials, ages 28 to 43, than they were for those born between 1946 to 1964 when they were starting out on the property ladder.

In the last 10 years alone, inflation has increased 31%, while home prices are up 63%. The analysis is based on data from the Federal Reserve, the Bureau of Labor Statistics, and the Zillow Home Value Index.

“If the trend continues at its current pace,” the report noted, “the median home in 2050 would cost 8.4 times the median household income.”

How does NC compare to other states?

North Carolina has the country’s 29th-highest home-price increase since 2000.

Median home prices (midway point) have risen 144% — from $129,409 in 2000 to $316,103 in 2023.

Of the 50 biggest U.S. metros, Charlotte ranked No. 30. Home prices have risen 154%, from $144,493 in 2000 to $367,282 in 2023.

Raleigh is close behind at No. 32. Home prices have risen 148%, from $173,419 in 2000 to $429,460 in 2023.

Matt Brannon, the report’s writer, called those increases “staggering.” The typical household in North Carolina earns around $67,481 annually.

“With that income, buyers would be massively overstretched even buying a median-priced home,” he said. “They’d have to aim for a home priced around $230,000, which is hard to find in more-developed metro areas,” he said.

The result is many first-time buyers are increasingly turning to smaller, more affordable alternatives: townhouses or condos.

In the Triangle area, they’re also expanding their search to bedroom towns like Zebulon and Knightdale further east and Pittsboro out west, where deals are more likely.

A trend reversal?

Historically, home prices have outpaced inflation. However, 2023 bucked the trend.

After the Federal Reserve raised interest rates to combat inflation a year earlier, home prices increased only 2.6% last year, while inflation rose 3.3%.

This isn’t enough to overcome decades of home-price growth exceeding inflation. But, at least for now, “prices aren’t accelerating faster than inflation,” Brannon said.

In the Triangle, home prices are down from their peak in 2022 — when the median price hit $422,000 — but they remain high. Small, detached single-family homes priced under $300,000 are scarce.

A median Raleigh home price was $378,830 in February, Redfin found. That’s down 2.7% year-over-year, but still somewhat competitive. Homes sold after 24 days on the market compared to 47 days last year.

In Durham, it’s even hotter. A median home price was $395,000 in February. That’s up 4.2% year-over-year. Homes sold after 20 days compared to 59 days last year.

For many Triangle millennials, today’s ‘starter home’ is a townhouse in the outskirts