The housing markets of North Carolina’s largest metropolitan areas — Charlotte and Raleigh — are seriously and severely unaffordable, respectively, according to a recent report by urban planning policy firm Demographia.
Demographics ranked cities by median multiple, a figure calculated by dividing the location’s median home price by median household income. Charlotte’s average multiple of 5.0 is on par with Washington, DC, while Raleigh’s score of 5.1 is identical to that of Austin, Texas and Nashville, Tennessee.
According to the North Carolina Housing Coalition, market rent — which represents the cost of a median-priced two-bedroom unit for the local market — rose 17% over the past five years in both Mecklenburg and Wake counties.
“It’s a matter of supply and demand,” he explained Yongqiang Chu, director of the Childress Klein Center for Real Estate at the University of North Carolina at Charlotte’s Belk College of Business. “Every day, about 120 people commute in the Charlotte metro area.”
Trends that began in the Great Recession—namely, a housing shortage driving up housing prices—were compounded by the pandemic.
“The Charlotte area started to catch up in terms of supply in 2018 and 2019. A lot of houses or apartments were being built,” Chu said. “But the pandemic completely disrupted it because of (supply chain) issues and the restrictions of COVID. Those two years alone created a deficit of about 10,000 housing units.”
But as supply slowed, demand for housing in North Carolina did nothing but increase.
“When COVID hit, people were fleeing those coastal cities like New York,” he recalls Lorraine McDowelldirector of the Wake County Department of Affordable Housing and Community Revitalization.
“(Raleigh) was a big city that wasn’t that populated, so people flocked to us. It’s very true across the state. North Carolina has seen exponential growth, but Wake’s growth is astronomical.”
McDowell thinks her department is unique among American cities. “It’s good that we built this department, but we needed this department 20 years ago,” she complains.
Wake County now has a deficit of about 65,000 housing units, according to McDowell.
“A local, typical family that needs to get a mortgage can’t compete with someone coming from New York, or some other expensive market,” he said. Roberto Querciadirector of UNC-Chapel Hill’s Center for Community Capital.
“The bottleneck (in Raleigh) is primarily in single-family homes,” Querica said, where demand for permits far exceeds the number of permits available in the city.
But the problems in the housing market extend beyond the lack of affordable units. According to McDowell, the stock shortage in Wake County extends to $3 million homes.
“The solution is actually easy and everyone knows it,” Chu said. “The only solution is to build more houses. But it’s extremely difficult to go in that direction.” High interest rates make banks reluctant to lend, and a number of political and regulatory obstacles are holding back development.
The viewpoint often referred to as NIMBYism — meaning “not in my backyard” — is shared by many homeowners in the state: People don’t want green space in their neighborhoods to be stripped away by new zoning regulations that allow for higher densities.
Chu cited a recent case in Charlotte where a development project was scaled back in part because of a bald eagle nest in the area.
“(The nest) is probably legitimate to think about,” Chu said. “But because of those two bald eagles, you have to put 10 more people on the road. We have to think about that trade-off.”
For McDowell, the main obstacle to her department’s progress is more technical: “At the state level (in North Carolina), local municipalities are not allowed to require any affordable housing development,” McDowell said.
Because developers have no reason to build affordable units, the Wake County Department of Affordable Housing’s strategy is to incentivize developers by offering them money in exchange for including affordable units in their plans with contracts that keep them those in agreement for 30 years. .
Ultimately, the crisis-level deficit of affordable housing options (and its potential policy consequences) has no “silver bullet” solution, according to Quercia.
A combination of macro-level economic changes, such as the Federal Reserve reaching its target inflation rate and lowering interest rates, state-level political changes, such as state legislatures changing zoning restrictions to allow more density ; and cultural changes, like a lower level of stigma around building affordable units, could eventually reverse some of the housing trends that are pushing people out of the market.
This article originally appeared on Carolina Public Press and is reprinted here under a Creative Commons license.
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