On Tuesday, more than 300 local leaders and citizens gathered to discuss housing affordability in Charlotte. On Friday, dignitaries gathered to celebrate the latest milestone in the construction of a glittering new luxury apartment tower atop the Mint Museum uptown.
The two events this week highlighted the growing issue of apartment affordability, as rents continue to rise faster than wages. They also spotlighted a paradox: There are more apartments under development in the Charlotte market than ever before, but the growing supply isn’t bringing down prices.
The latest rent numbers, released this week by Charlotte-based Real Data, confirmed what renters are experiencing. The average apartment rent in the Charlotte region was $1,011 in February, up 7.7 percent from a year ago, when it was $938. Rents at existing apartments rose 4.9 percent, indicating many tenants likely face a significant bump when they renew leases. And the vacancy rate actually dropped to 6.2 percent, as the market easily absorbed another 5,827 new apartments over the last year.
“The rent index continues to rise at a much faster rate than the wage index or mortgage index,” wrote analysts in the Real Data report.
The effect is more pronounced when you look back over a slightly longer time frame: Over the past five years, the average rent for an apartment in Charlotte has risen by 38 percent.
Average Charlotte-area apartment rent in Feb. 2011.
Average Charlotte-area apartment rent in Feb. 2016.
Source: Real Data
The reasons are varied. More people are delaying home ownership and a greater share of people are renting, meaning there’s more demand. A decade ago, 64 percent of houses in Mecklenburg County were owner-occupied and 36 percent were renter-occupied, according to a study last year by the UNC Charlotte Urban Institute. By 2013, the share of owner-occupied houses in the county fell to 57 percent; 43 percent were occupied by renters.
Apartments close to uptown, the light rail and other close-in neighborhoods are especially sought-after, meaning landlords can fill them easily even with relatively high rents.
And many of the new projects under development are replacing older apartments that are naturally cheaper, such as Spectrum Properties tearing down apartments at Abbey Place and Park Road, or Goode Properties building a new apartment community at the former Silver Oaks location at Idlewild and Monroe roads.
The pain disproportionately falls on low-income renters, many of whom cannot save enough to accumulate a down payment and buy their own house.
“They take food out of their mouths to pay for a roof over their heads,” Satana Deberry, executive director of the N.C. Housing Coalition, said of the working poor at Tuesday’s forum.
Average rent for a one-bedroom apartment in the Charlotte market.
Average rent for a two-bedroom.
Average rent for a three-bedroom.
Source: Real Data
Janet Stewart remembers the stress of constantly looking for new places to live when the rent keeps going up. She’s been in a Habitat for Humanity house for 25 years, but before that, she felt like she was always scrambling.
“It’s hard trying to feed your children when you only have so much money,” said Stewart, who was a data entry worker raising two daughters as a single parent while moving frequently to find apartments they could afford. “My girls were quiet, like me. Once they were settled and made friends, we were moving.”
Of the current boom in high-priced one- and two- bedroom apartments, Stewart said, “There’s no places for families to go.”
In Mecklenburg County, there are an estimated 33,393 renter households making less than $20,000 a year, according to the North Carolina Housing Coalition. Another 25,556 renter households make between $20,000 and $34,000 a year.
That’s a big reason why about 46 percent of all renters in Charlotte are “cost-burdened,” according to the UNC Charlotte study. That means they spend more than 30 percent of their income on housing, considered a benchmark of affordability.
New construction focused on the high end
There are 12,782 apartment units under construction and another 13,425 planned in the Charlotte market, according to Real Data. Most of those are upscale apartments targeting affluent millennials and Baby Boomers looking to downsize.
Even though the number of apartments in the pipeline is enough to increase the supply of units in the Charlotte market by about 22 percent, it’s not guaranteed that will drive rent down. Real Data forecasts vacancy rates could tick up to 8 percent as the newest wave of apartments opens over the next year, but even that would probably just slow, not reverse, the trend.
There are some affordable units under construction, typically restricted to people making a predetermined percentage of the area’s median income. But they’re a small fraction of development in the pipeline.
The Charlotte Housing Authority is building 81 units to replace the aging Tall Oaks project in the Cherry neighborhood, and 92 apartments for low-income seniors at Park and Marsh roads. Private developer Synco Properties is including 55 income-restricted apartments out of 990 planned for the Colony redevelopment in SouthPark, and Levine Properties is including 50 such apartments at its 10th and Brevard streets apartment development uptown.
But local governments don’t have the authority in North Carolina to mandate that new developments set aside a portion of their units for low-income renters, a policy called mandatory inclusionary zoning.
As high-end apartments proliferate in uptown and the surrounding neighborhoods, some worry that those renters who are displaced will have to move further out to find a place to live, away from job centers, public transportation and social services.
“If we don’t think about creating mixed-income communities or diverse communities, all we’re going to do is take the families who have fewer resources and suburbanize poverty,” said Renee Glover, a former Atlanta Housing Authority director who now consults on development and urban revitalization. “If we don’t do this now, we'll be 10 years down the road having the same conversation.”