Thoughts On Affordable Housing From Industry Forecast Breakfast

On January 26 the Greater Charlotte Apartment Association hosted its annual multifamily industry forecast breakfast. During the panel discussion the topic of affordable housing came up and here are a couple of takeaways captured by a reporter for the Charlotte Business Journal:

  • Inclusionary zoning measures don’t result in an abundance of affordable housing. Although there’s a clear housing-affordability problem in Charlotte — the average monthly rental rate is above $1,000 — putting in extra zoning or land-use regulations doesn’t result in more affordable housing. In fact, Olsen said, it often leads to fewer overall affordable units than if fewer regulations were in place. “Construction is very important to maintaining affordability,” Olsen said. “The places that build market-rate stuff faster, their naturally affordable (apartment communities are) younger and larger. That’s an important point when we think about policy — it’s hard to communicate to people that it’s actually good that we’re building higher-end apartments. It will eventually help all segments; it just takes a little bit of time.” She added that instead of inclusionary zoning, housing vouchers are a better option to address affordability.
  • Charlotte is seeing less naturally occurring affordable housing than other U.S. markets. Naturally occurring affordable housing is in older, outdated communities (a one- or two-star property, out of five) with non-subsidized, market-rate units that, because of newer development (four- or five-star properties) in the market, automatically have lower rents, according to Amon. Charlotte’s apartment inventory has only 14% naturally occurring affordable housing, while nearly half are four- or five-star properties, which represent the highest echelon of rent and amenities. Many older properties across the city have been torn down to make way for new — and often high-end — apartment development, which eats away at naturally occurring affordable housing. It’s creating a “drastic dichotomy” between older properties that are more affordable and luxury apartments. “As we keep building high-end properties, the difference between high-end and naturally occurring is just going to increase,” Amon said.
  • Why are we not building affordable housing? Porter focused his presentation on common questions the industry is asking. As Olsen and Amon addressed in their presentations, affordability continues to be a problem not just in Charlotte but nationally. He echoed Olsen’s comments that less building and more restriction will ultimately result in fewer affordable units. “If we want to produce housing at 60% (Area Median Income) or less, we’re going to need to subsidize,” Porter said. “A more restrictive environment for housing production always makes housing less affordable. When we want more roads and asphalt, we have to deal with stormwater and trees — all the things we talk about making livability better in the city costs more.” He called on those in the industry to help city leaders in coming up with ways to make housing more affordable and to consider opportunities in terms of rehabbing properties, value-add deals and development that can be done on existing zoned land.