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Affordable Housing

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8/26/2021
The Need for Affordable Housing in Wake County
8/26/2021
Mismatch Game: Wake Demographics and Housing
By Janis Ramquist
Posted on 8/26/2021 6:20 PM

By Janis Ramquist, Affordable Housing Committee

If we choose, Wake County has the opportunity to implement housing policies that result in high-quality, livable communities—the kind with parks, easy mobility, and affordable housing for residents of all income levels. As our population changes over time, policies designed for lower populations and smaller households become unworkable. Unfortunately, current policies limit the ability of developers to respond to changing market demographics and make housing more generally affordable.

It’s true that the supply of land is finite, and increasing housing demand drives up land prices.  Since land generally makes up approximately one-third of development price, increasing land costs bring about significantly increased housing costs. As an example, land for condos near Wake Med ran to $500,000 an acre. This cost in turn pushed prices to $185,000 for a mere 500 square feet and $400,000 for a 120-square-foot unit.[1]

Housing units are not being built at a rate fast enough to accommodate both newcomers and long-term residents who are living longer.  The shortage, in turn, increases the cost of land and therefore housing, so market-rate housing has become out of reach for many middle-class residents.  Low-income and homeless residents have increasing trouble finding housing at all.

Meanwhile, the average number of people per household in Wake County is decreasing. Our existing housing stock does not offer choices or options to match the decreasing size of households and incomes. Put together the average size of existing housing units, the daily growth in Wake’s population, inflexible zoning laws, longer lifespans, and the lag in adding new housing, and the result is rising land and housing prices. Policies, single-family zoning, and development practices are driving costs up. Let’s look at the details of the problem.

New arrivals every day: Wake County’s population increased by 21% from 2010-2018[2]. Between 2017 and 2018 the arrival rate averaged 64 people per day, so that the total county population was at 1.1 million in 2018.
 

Residents per household v. rooms per average house: Residential zoning in Wake County favors single-family housing, with 77% in Raleigh and 76% county-wide zoned for single-family houses.[3] Single-family zoning increases the price of land and in turn pushes developers to build larger houses so they can recoup their land costs.  Semi-detached houses would be equally profitable if it weren’t for the restrictive zoning and planning process.

At the same time, people live longer, and household sizes have shrunk. The average household today has only one or two people. Sixty-six percent of Wake County households have only one or two residents. As households continue to shrink in size, available housing doesn’t match the average household sizes. The restrictive zoning for single-family housing creates twice the number of housing units needed for the 34% of households with 3 or more residents. [4] Smaller households have few options other than to purchase larger houses than they might want, assuming they can afford to buy a single-family home at all.

But most existing and new housing is still sized for larger families. The result is a mismatch.

  • Household sizes[5]: 66% have 1 or 2 persons, 34% have 3 or more persons
  • Existing house sizes[6]: 33% have 1 or 2 bedrooms, 67% have 3 or more bedrooms

Downsizing empty-nesters or single residents have trouble finding housing that fits their household size or income.

Wages are stagnant compared with housing costs: Since 2006, the median household income for Wake County residents without a bachelor’s degree increased by only 10%, while rental housing costs have increased by 35%.[7]  There are 8.9% of Wake County residents living at or below the federal poverty level; 70% of Wake households earn less than $84,300/year.[8]
 

A household is considered cost-burdened if more than 30% of income is spent on housing and utilities.[9] But in Wake County 27% of households are cost-burdened, with 42,000 spending half of their income on housing (2017).[10] Consider these typical salaries for a number of occupations:

  • Childcare $21,690
  • Retail sales $25,860
  • Construction $31,110
  • Police officer $51,640[11]

Now consider the Wake County costs laid out in the table below:

Median housing (2013-2017)
Annual income required
Reality
House purchase $250,700
$83,567
16% of homeowners are cost-burdened
Apartment rent $1,105/month
$43,380
41% of renters are cost-burdened


Approach to a Solution: Gentle Density Zoning that Maintains the Character of Existing Neighborhoods

Thus zoning and planning regulations lie at the root of much of the county’s problem in affordability: the supply and size of houses doesn’t match the income and household size of potential buyers.  Adopting gentle density policies is one aspect of an array of solutions that can lead to more affordable housing and thus help reduce the number of residents who fall into homelessness.

Gentle density is housing that's similar in scale and character to surrounding single-family housing but denser in number of residents, such as duplexes, townhouses, and triplexes. Unlike medium- or high-density projects, gentle density has minimal impact on established neighborhoods.  It can maintain the character and value of neighborhoods while increasing residents’ choices to downsize or buy smaller homes within neighborhoods. To maintain neighborhood characteristics, an assortment of conditions can be adopted such as establishing hidden parking and appearance standards.  Regulatory barriers can be eliminated so that building duplexes, townhouses, and triplexes is as easy as building a McMansion.

Regulations could be changed to increase the opportunities for existing residents to remain in their neighborhoods as land prices increase and older neighborhoods gentrify.  Such changes could allow for:

  • Modern tiny houses (smaller homes built close together in a small village)
  • Urban villages (an urban development typically characterized by gentle dense housing, mixed-income zoning, good public mobility within a 10 minute walk to transit and public space)
  • Accessory dwelling units (ADUs) such as backyard cottages, granny flats, laneway houses, apartments above garages, mother-in-law units, in-law units, secondary suites, and English basements are a small part of the solution. The fear of disrupting neighborhoods is unfounded. Portland residents had the same concerns as our residents. However Portland did allow ADUs in 2000 and found that by 2016 only 615 were built.  With Raleigh’s lower population, fewer units would likely be built here than in Portland. But the change could help some lower and middle-income residents keep their homes by renting an ADU or the primary residence.[16] 

Gentle density policies could be implemented rather quickly and without taxpayer investments. The Affordable Housing Committee will share other aspects of solving affordable housing in Wake County in future blogs.



[1] https://www.newsobserver.com/news/business/article231113598.html

[2] https://www.census.gov/quickfacts/fact/table/wakecountynorthcarolina/PST045218

[3] City of Raleigh Data Book 2017, Dept. of City Planning, 9/2018,  p. 23 (34.4% of the 44.3% of land zoned residential)

[4] https://www.census-charts.com/HF/North_Carolina.htm

[5] https://www.census-charts.com/HF/North_Carolina.htm

[6] Regional Housing Snapshot, Principal Planner, Triangle J Council of Governments, John Hodges-Copple, 11/8, 2018

[7] Wake County Affordable Housing Plan, Final Briefing Book. October 2017, p. 6.

[8] http://www.wakegov.com/data/bythenumbers/Pages/default.aspx

[9] https://nchousing.org/wp-content/uploads/2017/01 NCH-CountyProfile-Wake.pdf

[10] http://www.wakegov.com/data/bythenumbers/Pages/default.aspx

[11] https://nchousing.org/wp-content/uploads/2017/01 NCH-CountyProfile-Wake.pdf

[12] https://www.census.gov/quickfacts/fact/table/wakecountynorthcarolina/PST045218

[13] Using the rough rule of thumb that one can afford a house costing about 3 times annual income.

[14] https://nchousing.org/wp-content/uploads/2017/01/NCH-CountyProfile-Wake.pdf

[15] https://nchousing.org/wp-content/uploads/2017/01/NCH-CountyProfile-Wake.pdf

[16] http://www.buildinganadu.com/what-is-an-adu, “What is an ADU: Accessory Dwelling Units explained,” Chart #1