How Unaffordable? A Look at the Data

Last week, Chapel Hill’s economic development officer, Dwight Bassett, presented some data on Chapel Hill’s housing market to a reasonably-sized crowd at Town Hall. Bassett’s presentation followed a brief talk from Robert Hickey of the National Housing Conference about what’s happening in housing trends around the country.

Like many of the other audience members, it was Bassett’s data that struck me the most. (During the Q&A following the presentations, all but one question was directed at Bassett rather than Hickey). The one number that really stood out: 3117%. That is, since 1990, the number of houses in Chapel Hill valued at over $500,000 has increased by 3117%.

Compare this to more affordable price ranges: For houses valued between $100,000-$149,000, the number of houses has increased by only 32%. For houses valued between $150,000-$199,999, there has only been a 107% increase in the number of houses.

Bassett added some comparative data to further contextualize what’s happening in Chapel Hill when it comes to housing affordability compared with surrounding communities. While the median home price in Chapel Hill has risen to $388,000 in 2013, it’s only $315,000 in Cary, $237,00 in Raleigh, and $192,000 in Durham.

As these numbers alone suggest – and as Bassett emphasized during his presentation – the demand for affordable housing (for those below 80% of median income) in Chapel Hill is going unmet by quite a lot. Additional data presented by Bassett also showed that, in Chapel Hill, the growth in median housing value has outpaced inflation-adjusted median household income growth since 1990.

These numbers, along with the other numbers Bassett presented, paint a worrisome picture. How can our community, with its progressive reputation, be such an unaffordable place? The consequences of unaffordability are clear: Our community becomes a less diverse, less inclusive, less exciting and less vibrant place to live, as those who cannot afford the high prices are forced to move somewhere else more affordable.

Regional data confirm that this is the case. Intrigued by Bassett’s initial data, I wanted a few more data points, so I went to the American Community Survey to pull some comparative statistics looking at Carrboro, Chapel Hill, Chatham County, Durham (city), and Raleigh.

Housing Values

First, let’s look at the distribution of housing values among each community. You can click through the names of each area below to compare the distributions of house values (you can view the larger versions of these charts here):

As you can see from comparing the distributions, Carrboro’s and Chapel Hill’s are heavily skewed toward the higher end of the market with a very limited supply of affordably-priced houses. This becomes particularly clear when you collapse the categories and look at the percentage of houses in each community valued above and below $200,000:

 

Percent of Houses Valued Below $200,000

Percent of Houses Valued Above $200,000

Carrboro

18.7%

81.3%

Chapel Hill

18.8%

81.2%

Chatham County

48.8%

51.2%

Durham (city)

58.7%

41.3%

Raleigh

49.4%

50.6%

These numbers speak for themselves. There’s no question that people are being priced out of Chapel Hill and Carrboro and are looking to other, more affordable places in our region to live.

Rentals

Now, let’s take a look at the rental market. Here are the distributions of the number of rental units by the monthly rental price (larger charts here):

While, on the whole, what we see in the rental market seems less out-of-step with neighboring communities, Chapel Hill’s median monthly rent is nearly $100 greater than any neighboring community:

Community

Median Monthly Rent

Carrboro

$861

Chapel Hill

$944

Chatham County

$805

Durham (city)

$856

Raleigh

$860

Lessons to Learn and Policy Implications

As these data indicate, our planning policies are failing to live up to our progressive values. Housing prices are incredibly high and pricing individuals out of our community. It is vitally important that we take action now to implement policies that will enable the housing market to provide more affordable units, which means first and foremost improving our development processes to allow for more housing to be built to meet demand.

Robert Hickey posed these questions for any city looking to provide more affordable housing:

  • Are adequately sized sites properly zoned to support multi-family housing?

  • What underutilized publicly-owned land could be redeveloped with mixed-income housing?

  • Could new neighborhood plans or master developments incentivize additional affordability?

  • What would it take to reduce the time, costs and unpredictability of getting land use permits?

  • Could the town join others in the region in generating funds for affordable housing?

These are critical questions that our communities need to address, particularly when it comes to adequate zoning, long-range planning that incorporates concerns about affordability, and reducing the time, costs, and unpredictability of the development approval process. His last question about joining with regional partners is also of great importance, particularly given the relatively high rents we see across the Triangle.

If we fail to take action to change course on housing affordability, I worry what Chapel Hill and Carrboro will look like in the future. I especially worry that if we don’t start changing policies now and thinking long-term about who the future residents of Chapel Hill and Carrboro will be, those future residents will only be members of a very specific group of people.

Total votes: 157

Comments

As a builder, I know how expensive it is to build housing. And I think we need to fundamentally acknowledge that houses are unaffordable because a lot of people can't afford them. All the effort put into subsidizing housing and focusing on the "achievement" gap is actually subsidizing the business sector that does not value its workers enough to pay them a fair, living wage. I'm not saying we shouldn't work hard in these areas. It's just that we must be aware that our economic system generates so much resistance. Providing affordable housing in our hyper-capitalistic scoiety is like trying to pitch a tent in a hurricane. It's possible, but it sure is a lot harder than it should be.

I recall that Dwight Bassett mentioned a percentage of housing needs that are going unmet. It would be interesting to have data that would show how much of that unment demand could be met for each $1 hour paid to underpaid workers. And how much housing would become affordable if a living wage of $12 per hour was paid to all who currently make less? Unfortunately, local governments do not have "home rule" in NC and cannot pass a living wage ordinance. However, it would be very useful to understand the impacts of paying a fair wage.

As an attendee at the above meeting, i made my case, Affordable housing for whoam, obviously for people who can t afford to live here in Chapel Hill. Gary Kahn
 

You may be interested in the next meeting of Chapel Hill's Friends of the Downtown.

 

Downtown Chapel Hill  —  Where the Town Comes to Life.

Join us at the 1789 Venture Lab *

Thursday, February 26:
 

Unscrambling the Facts, Rumors and Politics -

Realities About Our Local Taxes and the Future
 

Presented by Steve Brantley, Director of the Orange County Economic Development Commission and Executive Committee Member of the Research Triangle Regional Partnership with a special introduction to the 1789 Venture Lab by our host Jim Kitchen.
 

Monthly Meeting: Thursday, February 26

Last Thursday of the Month    |    Coffee at 9:30 am    |    Free Meeting at 10 am
 

This month's meeting will take place at the

1789 Venture Lab
1731/2 East Franklin Street
(between Ye Olde Waffle Shoppe and Four Corners).

Conversation and coffee begin at 9:30.

Detailed Forecast

  • Wednesday NightSnow, mainly after 11pm. Low around 29. Calm wind becoming northeast 5 to 8 mph after midnight. Chance of precipitation is 80%. New snow accumulation of 2 to 4 inches possible.
  • ThursdaySnow, mainly before 7am. High near 38. Northeast wind 6 to 9 mph. Chance of precipitation is 80%. New snow accumulation of less than a half inch possible.
  • Thursday NightMostly cloudy, with a low around 21.
  • I look forward to this event. I hope it will be held even if the snow happens. It would be a good chance for everyone to enjoy walking instead of driving around Chapel Hill. Take a moment and get your shovel ready. Make a path in front of your home or workplace. Build a snowman. Think of the hot, humid Carolina summer just around the corner.

When I look at the numbers I am not very hopeful that market forces will lower the cost of housing in Chapel Hill/Carrboro. It seems pretty obvious that builders/owners can make a greater profit on a more expensive home and that there continues to be demand for larger, more expensive homes. It looks like we will have to have more private/public partnerships to create less expensive housing.

The higher the cost of land, the higher the cost of the house that is built upon it.  Banks don't like giving mortgages if the land costs $175,000  but the house to be built on it is only $125,000. They want the house to be more than the land.

The more we restrict land use, the higher the cost of the land that remains.

 

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