Rising rents are pushing more apartments out of reach for very low income renters in Charlotte – and North Carolina – so quickly that such housing is on the verge of disappearing.
Those are the findings from a new study by Freddie Mac, released last month. The study found that it’s not just new apartments pushing up rents and replacing older, more affordable units – rents are going up fast at the more affordable apartments as well.
Freddie Mac looked at apartments that it financed loans for multiple times between 2010 and 2016. That means the company was comparing the same apartment units, not just looking at average rents across a marketplace.
“Our analysis looked at the affordability of the same rental units at two close but different points in time. In a matter of just a few years, we found that a large number of units previously affordable to very-low income families could no longer be considered affordable,” said Steve Guggenmos, vice president of Freddie Mac Multifamily Research and Modeling. “This is a trend that is worsening.”
Nationwide, the number of apartments affordable to families in the very low income category (with earnings less than 50 percent of the area’s median) fell 60 percent in the apartments Freddie Mac examined.
In North Carolina, the results were even more striking, with almost all – just shy of 100 percent – of the very low income units no longer affordable by 2016. That was mirrored in Mecklenburg County, where Freddie Mac found that almost all – 98 percent – of the apartments that had been affordable to very low-income residents.
Now, you have to drill down into the numbers a bit to sort out what they mean. The federal government defines median income for the Charlotte area as $70,700 – half the households in this area make more, and half make less.
A “very low-income” family of four has an income of $35,350 or less, under the federal guidelines.
Using the affordability benchmark that a family should spend no more than 30 percent of their income on housing, that means the very low-income family of four in Charlotte would have about $884 a month to rent an apartment – a tough proposition when the city’s average rent is $1,115.
Of course, all these families aren’t homeless. Many are spending a huge proportion of their income on rent, or scrimping by doubling up or staying with friends and families.
The properties Freddie Mac examined in Charlotte are necessarily a small slice of the market – about 3,000 apartments. But their numbers square with what other studies have shown in Charlotte: That the housing crunch is most acute at the lowest end of the income scale.
Charlotte’s building boom – almost 12,000 apartments under construction, and a similar number planned – isn’t likely to drive rents down either. That’s because almost all of that construction is for expensive, luxury apartments.
“Demand is still growing at the lower end of the market and supply is not changing,” Guggenmos said. “It's just very, very hard to get the economics to work out to build a property that is not going to demand really high rents.”