If Fayetteville home values increase, what does that mean for rent prices?

Fayetteville homeowners can expect to see home values increase over the next year, according to a new study based on data from Zillow, and that could also lead to rent increases.

In a GoBankingRates report, 34 Southern cities in 15 states with the largest housing markets in the south were analyzed, and the results project home values in Fayetteville will increase 3.5% by February.

The review looked at data from North Carolina, Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia. Washington D.C. was also included in the report.

Of the cities in the study, Fayetteville ranked No. 11, with an average home value of $236,601 in February 2024. The projected value growth is 3.5% over the next year, with the average home value at $244,882, according to the report.

When home values increase, rent prices follow, said Robert Gmeiner, assistant professor of financial economics at Methodist University in Fayetteville.

“Home values and rent prices tend to move together,” Gmeiner said Wednesday. “No one can predict the future with certainty, but if home values are going to go up, waiting to buy a home is not going to make it any easier.”

The median rent in Fayetteville is $1,300, which is $98 less than in April 2023, according to the city’s market summary on Zillow.

"I think increases have slowed, but I don't think home prices are going back down. Very rarely do they go back down," Gmeiner said.

What factors affect home values?

Several factors affect what a house will rent for, like how safe the neighborhood is, but if the average home value is going up, then rent in general will follow the same trend, Gmeiner said.

“When I hear that Fayetteville is going to increase more than other cities, I start to guess that people that work in Raleigh and in the Triangle area might be buying houses in Fayetteville and commuting because the houses here are more affordable,” Gmeiner said.

He said military personnel who receive a basic housing allowance will be negatively affected if home values increase and the allowance does not.

The Department of Defense determines the basic housing allowance by considering the rank of the service member, the size of their family, median market rent, utility expenses, the type of residence, number of bedrooms, housing preferences and comparing with civilians of similar income levels.

Basic allowance for housing rates increased by 5.4% on Jan. 1, with an estimated $27.9 billion paid to an estimated one million service members, according to the Department of Defense.

Read more: What Reddit users are saying about Fort Liberty basic allowance for housing

Did other N.C. cities see increases?

Eleven North Carolina cities are projected to see home values spikes in 2025, according to the report.

In addition to Fayetteville, those cities are New Bern (No. 32); Charlotte (No. 30); Burlington (No. 25); Wilmington (No. 23); Hickory (No. 19), Greenville (No. 18); Rocky Mount (No. 12); Pinehurst (No. 10); Lumberton (No. 9) and Wilson (No. 7).

Reporter Lizmary Evans covers growth and development for The Fayetteville Observer. You can reach her at LEvans@gannett.com

This article originally appeared on The Fayetteville Observer: Fayetteville home values and rental prices to increase in 2025