I signed a new housing lease about a month ago in mid-October – a lease that won’t start until June of next year. This is how competitive student off-campus housing is in Chapel Hill, and the ever-high demand for student housing in Chapel Hill continues to negatively affect non-student renters.
Niche.com estimates that 90 percent of houses near campus fill up by October. From my experience, students looking to rent an affordable house (as opposed to a townhouse or apartment) begin the search as early as September. Every year this fight to find the closest, nicest and most affordable home puts additional stress on UNC students, and our desperation to sign a lease as soon as possible pits students against each other, increasing competition and driving prices up.
According to a 2010 report prepared by Development Concepts Inc., students make up about a third of all rented units in Chapel Hill (and rented housing comprises over half of all housing in Chapel Hill). We are a huge market for property owners and developers – on-campus housing can only accommodate 9,700 students, so the remaining 9,000 or so undergrads must find off-campus places.
The lease I signed for next year corresponds to a house in Northside, a popular neighborhood choice for students because of its close proximity to campus. Despite Northside’s low house value relative to other neighborhoods in Chapel Hill, the rate I will be paying ($650 per person in a four-bedroom house, not including utilities) is more expensive than that of my current house, which is the same distance from campus and in an area with higher house values.
The disparity between house value and rent price stems in part from property owners’ inclination to take advantage of a high-demand market. These higher rental rates are bad news for hopeful students, especially when 42 percent of undergrads receive need-based aid, but its effects extend beyond just the student population. Northside’s historically black and lower-income residents have also seen consequences.
New construction and renovations that developers have brought to Northside in hopes of gaining from the student housing market have priced many long-term residents out of Northside due to rising property taxes. This has been going on for a long time. Despite efforts within the past few years to halt construction in Northside, students, including myself, continue to unknowingly feed into the system, encouraging the high rates that property owners set for Northside rentals.
What is new and could worsen the situation is the development of two new apartment complexes in Chapel Hill. Shortbread Lofts and Lux at Central Park Apartments, which are marketed directly toward students, opened up this year and charge monthly rates ranging from $700 to $1,000 per person. While there was originally hope that these new options would attract students who would otherwise have chosen a Northside house, the rates are comparatively too low in Northside for these students to favor a luxury apartment.
Instead, these new apartment complexes could have a negative effect on housing affordability by increasing Chapel Hill’s Fair Market Rent. FMR, calculated from the 40th percentile of rent rates, determines rental subsidies for low-income residents. The addition of highly priced apartments could drive the FMR up, increasing the costs of rental assistance. With higher costs, rental subsidies (if limited by a fixed budget) will not be able to assist as many residents.
As we get into the lease-signing season, we revisit this issue: how can Chapel Hill provide affordable and close off-campus housing without disrupting these culturally rich neighborhoods? Comment below with your thoughts.
Useful related information:
- A good overview of Fair Market Rents http://www.huduser.org/periodicals/USHMC/winter98/summary-2.html
- Northside and Pine Knolls Community Plan, adopted in 2012 http://www.townofchapelhill.org/home/showdocument?id=11921
- Residential Market Study of Chapel Hill http://www.townofchapelhill.org/home/showdocument?id=8970
Comments
One thing
Thanks for sharing your experience, Becky. One thing I have to disagree with in your post, though, is that the addition of LUX and Shortbread could somehow worsen the affordable housing issues Chapel Hill faces. If anything, one of the reasons your rent is still lower in Northside than what LUX or Shortbread is charging is precisely because LUX and Shortbread exist. By adding to the housing supply, these developments help address some of the demand felt in the Chapel Hill rental market, meaning that older rentals, rentals further away from campus, and other rentals that may be less desirable cannot increase their rents, and some even dropped their rents. This last part likely means there was virtually no effect on FMR by adding these two developments. Adding more housing supply is one of the most important things Chapel Hill can do to improve housing affordability in our community.