Over the last two years, the median price of a home in North Carolina rose roughly 25% in 2021 and an estimated 5% in 2022. Also, the state has 347,275 extremely low-income renter households, but only 156,365 rental units considered affordable for those families. The NC Budget & Tax Center estimates that North Carolina could see the gap between housing units and residents’ need grow to 900,000 units by 2030. North Carolina is hardly alone in this housing crisis. U.S. Census Bureau data shows that 40% of renters nationwide meet the definition of cost-burdened. From 2019 to 2022, the average price of a home in the United States rose from $391,900 to $543,600, a 38% increase. The reasons for this affordability crisis are myriad and complex. Looking specifically at North Carolina, and going back decades, the state has seen a huge increase in urbanization. Just 60 years ago, jobs were not concentrated in the urban core, but in smaller communities across the state, with cotton mills and less-mechanized agriculture serving as primary drivers of employment in the state. Losses in textile and agricultural employment, combined with the explosion of high-tech industries and the rise of concentrated professional service jobs, has caused North Carolina’s largest cities and the surrounding areas to see a majority of job and population growth in recent decades. Those changes in the state’s economy began in the 1960s and accelerated in the 1980s, but they have continued to mean that land prices—which typically dictate the size of home that homebuilders construct—have risen fastest closest to the urban core. The more recent surge in home prices has been driven by other factors, including cyclical building supply price increases and pandemic-related supply chain disruptions. According to the National Association of Home Builders, building material prices have risen more than 35% since January 2020, with 80% of that increase coming since January 2021. Examples include exterior paint rising by 50% and gypsum by 22%. NAHB also reports that skilled labor shortages mean higher labor costs and an increase in the time required to build a home. Meanwhile, interest rate increases pushed the average mortgage rate to 5.9% in January 2023, the highest level since 2008, making home ownership more difficult. In this already challenging landscape, the rise of corporate buying of homes for both short-term rentals, like AirBnb, and longer-term rentals, puts more pressure on housing costs. continued from page 23 The cause of the rise in the cost of housing is complex. It encompasses everything from a 60year trend of urbanization to labor shortages to supply chain disruptions created by the COVID-19 pandemic. Nonetheless, some critics have wanted to place the blame on cities and counties themselves, without recognizing that these same communities, with their job growth and attractive amenities, are simply facing the consequences of their own success. SOUTHERN CITY Quarter 2 2023 24
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