Beyond the Tipping Point
Affordable housing has become a pipe dream for many people in the Triangle.
By Mark Cantrell
As newcomers to Raleigh and the greater Triangle area arrive from more populous places such as the Northeast, they often remark on our small-town feel. Longtime residents, however, have borne witness to a rapid pace of growth that saw the region’s population increase by 43.5
percent between 2000 and 2010. While some county commissioners have praised the influx—it’s certainly a boon for the area’s tax base—our quickly inflating population has brought challenges as well. Chief among them is finding affordable living spaces for people of low and average means.
To be considered affordable, housing costs should comprise no more than 30 percent of total income, according to the Congressional Budget Office. But a study contracted by the county commission and conducted by real estate consulting firm HR&A Advisors found that more than 49,000 local families spent more than a third of their wages on housing, putting them in the “financially burdened” category. For 42,000 additional families, that figure was more than 50 percent, causing them to be “financially overburdened.”
According to NCJustice.org, a single mother moving to the area with her two children would need to make $27.52 an hour in order to make ends meet—65.2 percent more than the median wage. Two-earner couples would fare somewhat better: Those making $50,000 a year would “only” spend $1,250 a month on housing to stay within the 30 percent guideline. But according to the N.C. Housing Coalition, the average renter can afford to spend just $817 a month.
A Critical Issue
“I would call the housing
affordability situation in the
Triangle a crisis,” says Wake County Commissioner Jessica Holmes. “The issue became so acute that I advocated forming an Affordable Housing Steering Committee to address it. While growth is great for many facets of our county, the current trends show that prosperity doesn’t
necessarily extend to each and every resident. Unmet housing needs are growing rapidly; right now there are 56,000 working families in our area who are unable to find housing they can afford. Current trends project
that number may increase to as many as 150,000 families over the next 20 years.”
One solution, of course, would be to build more affordable housing units, but the trend is actually in the opposite direction. The News & Observer reports that the county lost almost 5,000 low-income units between 2009 and 2015, while the need is projected to increase by some 3,700 more people a year. Meanwhile, housing costs have increased by 19 percent since 2006, with rental prices ballooning by 35 percent. Unfortunately, federal aid in the form of subsidies for affordable housing is expected to decline in the coming years, which could create a critical inflection point for low-income residents.
Roots of the Problem
How has Wake County found itself in such an unfortunate dilemma? According to the HR&A study, there are several causes:
• The rate of growth is outstripping developers’ ability to keep up with the need.
• Housing prices have risen faster than income.
• Renovations and teardowns have eaten into the supply of low-cost housing.
• A large percentage of new construction is unaffordable to low-income, and even average-income, residents.
Rising prices are among the most concerning issues, according to Alicia Arnold, Wake County Director of Housing and Transportation: “We’ve seen that incomes have not kept pace with housing costs. Over the past 10 years, those costs have increased by 35 percent, while the median income in this area has increased by only 16 percent. For someone who has no bachelor’s degree and is typically in a lower-wage job, their income has increased by just 10 percent. So that’s a 26 percent wage gap in just 10 years, where the cost of housing is outpacing our income.”
Arnold notes that post-recession housing starts are nearly back to previous levels. “We’re producing about 10,000 units a year, on average,” she says. “Unfortunately, only 4 to 7 percent of those have been designated affordable housing.”
That means many workers in the service sector can no longer afford to live near their jobs. According to the U.S. Department of Housing and Urban Development (HUD), transportation costs are the second-highest monthly expense for most families. Being able to live near where they work would reduce the financial burden, leaving more discretionary income for other important needs.
Advantages of Affordability
And the benefits of affordable housing don’t end there. “It helps to contribute to things such as stress reduction, better educational outcomes, and [improved] physical and mental health,” Arnold says. “People who don’t know where they’re going to lay their head at night are not going to be productive employees. Providing them places to live reduces the cost of social services, public health, and behavioral health, among others.”
In fact, providing adequate low-cost housing provides benefits that extend far beyond its residents. “Investment in affordable housing produces jobs, local income, sales, increased property values, and property tax revenues,” Holmes notes. There’s a popular perception that low-income housing lowers property values, but a study conducted by Trulia, a real estate consulting firm, found no evidence to support that claim. The study, which examined more than 3,000 low-income projects in 20 of the nation’s most expensive markets, found no significant effect on home values.
A National Problem
The critical shortage of affordable housing isn’t just a local issue; major metropolitan areas across the country are in the same predicament. The reasons are complex and manifold, and in addition to the previously noted causes, include the not-in-my-backyard (NIMBY) syndrome as well as the fact that contractors increase their revenue by
constructing high-end residences. Of course, builders and developers are in business to make money, and it’s understandable that they focus their resources on the areas where they can turn the most profit.
That leaves local government as the major recourse for those seeking economical living quarters. And Wake County has indeed taken steps to rectify the problem. In September 2016, the county Board of Commissioners established the Wake County Steering Committee on Affordable Housing, helmed by Commissioner Holmes, to address the issue.
In upcoming installments, we’ll examine some of the affordable housing solutions the committee has generated, and talk to some local residents who’ve been affected by the shortage. (The September / October issue of Midtown will include the next feature in our series on affordable housing.)
Building Blocks to Affordable Solutions
By Don Vaughan
Affordable housing has been a topic of discussion in Wake County for decades, as municipalities struggle to provide safe, low-cost housing for those who need it while simultaneously boosting tax revenue through higher-end construction.
While state and municipal officials debate the issue, Cary-based Ply Gem Building Products and Habitat for Humanity of Wake County are working to make a difference. The result has been newly constructed low-mortgage homes and significant exterior renovations on existing older residences—fixes that have improved the lives of dozens of Wake County residents.
“Housing is foundational for everything,” observes Kevin Campbell, president/CEO of Habitat for Humanity of Wake County. “When families don’t have a place to stay, or certainty about where they are living, it impacts everyone, but especially the children.”
According to Campbell, families who pay more than 30 percent of their annual income for housing are considered financially burdened and the most in need of assistance. In Wake County,
an estimated 91,000 families fall into this category, Campbell says.
Habitat for Humanity of Wake County is addressing the affordable housing issue by doing what it does best—constructing new homes and selling them at the appraised rate with a low, sustainable mortgage. By selling houses at the appraised rate, Campbell explains, such sales do not adversely affect the appraisals of surrounding homes. But regardless of the appraisal rate, approved homeowners never pay more than 30 percent of their annual income. If necessary, a portion of the sale price will be deferred until the homeowners sell the house. “We have shown that people in that income range can be good payers on mortgages,” Campbell says. “As a result, we have been able to convince some financial institutions to lend to our buyers.”
Three years ago, Ply Gem took a corporate lead on helping to make a difference through its Home for Good project, a multi-year initiative that helps families in need of a safe, affordable home. “We believe everyone deserves a safe place to call home,” says Susan Selle, CMO of Ply Gem, adding that the company has made it their mission to help address the affordable housing crisis. The company’s focus is four-fold:
• Donating products for the construction of new homes. (To date, Ply Gem has donated more than $1.8 million in building products, while helping to build more than 450 homes in 70 communities around the U.S.)
• Rallying associates, colleagues, and customers to volunteer with groups such as Habitat for Humanity that are involved in the construction of affordable housing.
• Encouraging leaders from all sectors of the construction industry to help find solutions to the affordable housing crisis.
• Boosting national awareness of the issue through celebrity ambassadors such as country music performers Darius Rucker, Brett Young, and Lauren Alaina.
Ply Gem is also working with Habitat for Humanity of Wake County on a new initiative to renovate the exteriors of older homes. “This year we’re working with five families who already own their own homes,” Campbell says. “The exterior renovations that we do will extend the life of the affordable units for those families.” Ply Gem donated all of the materials for those renovations, including vinyl siding and energy-efficient windows.
Such efforts couldn’t come at a better time, Campbell says. Data suggests that not only is the construction of affordable housing down, but also Wake County is losing 900 affordable units a year. “We have been doing advocacy work to help the community understand the issue, and to help our elected officials know there is broad concern for affordable housing,” Campbell reports. “The people who reside in affordable housing are integral to the community. They do jobs that we all interact with, and we think they should be able to live here. We have also been working with county officials to look at the land use policies and modify them in a way that would allow more affordable housing to be developed.”
Want to help? “Get involved,” Selle says. “Donate some hours of your time and put some sweat equity into building affordable houses. Become engaged with groups that are helping. And help spread the word.”