03/31/2014
In this scenic mountain town, where land is limited and wages lag behind other areas, everyone seems to have a story about the great quest for affordable housing.
Nearly one-half of all renters in Asheville and just under 40 percent of homeowners fell under the category of "cost-burdened," which are those paying more than 30 percent of income for a place to live, according to U.S. Census Bureau figures for a five-year span ending in 2013.
At the same time, wages in terms of earning power have slipped, putting what affordable housing exists further out of reach. Even with a high demand for low-cost housing, developers are finding greater profits in building upscale homes.
None of this surprises Rachel Rhodes, who, at 43, has found herself living with roommates she found on Craigslist just to pay the rent.
"The most disappointing thing is I feel like I can't live by myself," said Rhodes, a former special education teacher who moved to Asheville from Florida, where she lost her house after her neighborhood declined and her home value plummeted in the Great Recession.
"I moved here with my fiance, and we split up," Rhodes said. "When we first moved here, our rent was $890 a month for a really small house five miles outside of town. I went through three roommates in one year."
The affordable housing crisis also comes as no surprise to Scott Dedman, executive director of Mountain Housing Opportunities, a nonprofit that builds affordable housing in Buncombe.
"We're building 60 apartments at the corner of Eagle and Market streets downtown, and we fully expect to get 1,000 applications or more for those apartments because of the convenience of the location," Dedman said.
For the Glen Rock Apartments in the River Arts District, which leased in 2010, MHO had more than 1,000 applications for 60 units.
In Buncombe County, for every 100 extremely low-income renter households — those earning less than $17,500 annually — there were only 31 affordable rental units available in 2012.
The county had 10,308 households that meet that qualification but only 3,214 affordable rental units available, according to the Urban Institute, a Washington, D.C.-based, nonpartisan think tank that conducts economic and social policy research.
In 2000, Buncombe had 5,427 households that met that income qualification and 2,472 affordable rental units available.
Low wages, high housing costs
Wages and housing costs are intertwined, and the Asheville area struggles with both.
The average apartment rent for the Asheville market in 2013 was $864 a month, just $10 a month less than Charlotte, according to the Charlotte apartment research firm Real Data.
Greensboro came in at $705 a month, Wilmington at $800. Raleigh/Durham stood at $893.
Over time, rents have steadily risen in Buncombe, increasing from $690 a month in December 2004 to $839 in 2012. That's a 22 percent increase in eight years.
During the same period, the average mortgage rose, fell, then rose again following the Great Recession, according to Real Data.
In December 2004, the average mortgage was $878 a month, rising to $1,028 in 2009, then dropping to $979 last year. That amounts to a 12 percent increase over the span.
At the same, wages for many have remained stagnant, despite low unemployment, 5.2 percent in Buncombe for January.
The average weekly income in Buncombe County rose from $535 a week to $690 from 2001-13, but after adjusting for inflation, wages started to decline in 2010.
In real earning power, that $535 a week in Buncombe declined to $524, a 2 percent decrease.
At the same time, U.S. averages actually rose, by $12 in North Carolina and $25 nationally, according to Census data and local economist Tom Tveidt of Syneva Economics.
Affordable housing has been in short supply across the state, but it's more acute in areas such as the mountains "where some of the development costs are higher and the average wage for the growing employment sectors, like service and retail, are lower," said Bob Kucab, executive director of the N.C. Housing Finance Agency, which funnels bond funds, and state and federal dollars into affordable housing.
Since 1974, his agency has helped finance just over 4,200 homes and apartments in Buncombe County and has provided 5,100 households with rental assistance.
Asheville and Buncombe have done a commendable job in producing affordable housing, Kucab said, but the need remains great in part because of lagging wages, a problem statewide.
"The increase in wages has been slower than the increase in housing costs, and that's been a trend for about the past 20 years," Kucab said. "It's particularly harmful to low-wealth renters."
'Kind of outrageous'
For Rhodes, wages have everything to do with her struggle.
She's shifting gears in her life, pursuing a master's degree at UNC Asheville and working about 30 hours a week as a waitress. She started a new job last week at the Grove Park Inn, after four years at the Laughing Seed restaurant downtown.
Last year, she made about $15,000 waiting tables, and she pays $550 a month to share a house with a single dad she brokered a house-sharing deal with through Craigslist. That $6,600 a year in rent comes out to 44 percent of her income.
Rhodes took out a $10,000 student loan, which she also puts toward expenses.
Some Asheville residents opt for another path for acquiring affordable housing — buying a major fixer-upper and gutting the place.
"The house should've been torn down," Nick Reynolds said of his home in north Asheville, which cost about $120,000. "That's how I was able to get into it."
He got a good deal on the place because it needed so much work, which he mostly did himself. A lot of his neighbors do "air B&B to help afford their houses," he said, referring to the sometimes illegal practice of renting out rooms for short-term guests.
"It's kind of outrageous," said Reynolds, a lab technician in the city's Water Resources Department. "Everybody moves to Asheville, but there are no jobs. You can get plenty of jobs for $8-$10 an hour."
He's in the ballpark of $30,000 a year, what he considers a decent wage. Still, he has a common lament for Asheville.
"My mortgage is more than 30 percent of my income. Closer to 35 percent," he said.
Jake Boyd, a 40-year-old Asheville resident, took yet another approach to affordable housing, participating in MHO's Self-Help Homeownership Program, which provides low- or moderate-income families a pathway to homeownership. Participants have to commit to working on their homes for 700 hours, with this "sweat equity" serving as a down payment and reducing mortgage payments.
"If I didn't have this program, I'd still be renting," said Boyd, an arborist who makes $12 an hour. "Ain't no way I could come up with a down payment if not for them. I'd be stuck paying rent for a long time."
The mortgage on his 1,200-square-foot home will come to about $565 a month. A 17-year Army veteran who served in Iraq, Boyd is divorced and relies on a single income to make ends meet.
"This really was a miracle for me," he said.
Developers make less
The key to helping Reynolds, Rhodes, Boyd and the many others like them is to bridge the gap between what low-income people can afford and what developers can build and still make a profit, said Jeff Staudinger, community development director for the city of Asheville.
The city has a good group of organizations and developers attacking the affordable housing situation, but some of the problem comes down to simple economics, Staudinger said.
Land that can be developed here commands a premium price, and that can mean developers want to charge a premium price for houses and lots.
"It's very, very difficult for the private sector to do that alone," Staudinger said. "If you say to the private sector, 'Why aren't you developing more affordable housing? They're very quick to say — and they're right to say it — 'There's no money in it.'"
For example, he said, a developer could build a subdivision of 100 homes that would sell for $130,000-$140,000 and make $10,000 per house, or he could build 40 houses that sell for a half million or so and make $60,000 apiece. That means weighing a profit of $1 million versus $2.4 million.
So the public sector, through Housing and Urban Development funds and other sources, seeks to even the playing field with financial incentives or some easing of regulations.
The city provides a fee rebate to single-family housing developers who can meet certain criteria, and they can get 50 percent off a sewerage fee and a city permit fee.
Between federal dollars and the city's Housing Trust Fund, the subsidy averages $10,000-$20,000 per unit, Staudinger said.
Kirk Booth, of Kirk H. Booth Real Estate, is one of those developers building affordable housing, in his case mostly infill rental homes, and taking advantage of trust fund money.
Some of his homes are geared for people making 80 percent of the area mean income, some making 60 percent of AMI. That would translate to a two-bedroom house renting for about $705 for someone at 80 percent, or a one-bedroom house for $489 at 60 percent.
"Those rents are less than your typical market rents for housing in Asheville," Booth said. "That's why my housing I build in the city is in high demand and is rented before I've completed it."
The profit for him comes in the long-term, through rents, and he readily admits it's not the windfall big developers see. Factor in plenty of regulations and codes to follow, and developing affordable housing is not for everyone.
"The incentive to do it is not high on the motivational scale," Booth said. "I do it because I love real estate and helping people get into housing."
He'd like to see the city get involved in land banking, provide developable land and back off some minor restrictions that cost developers money.
Reynolds, who fixed up his own home, thinks the city has taken an aggressive approach toward affordable housing, but he doesn't know what the solution is. Taxes are high here, he said, and available homes are limited.
Making the effort
Asheville and Buncombe County have made a stronger effort to build affordable housing, sinking $17.4 million into developments between 2007-13, with money coming from federal, city and county funding.
During that time, the Asheville Housing Trust Fund accounted for $1.7 million in spending, while $3.6 million came through Buncombe.
Asheville has made strides, according to the "Affordable Housing Scorecard," authored by researcher Mai Thi Nguyen, putting 461 rental units and 223 homes on the market between 2007-13. The city paid $10,000 for Nguyen's report, and City Council again made affordable housing a top priority at a planning retreat.
She offered suggestions for addressing the problem ranging from creating a "community land trust" similar to those in Chapel Hill and Wilmington to considering raising more funding for affordable housing through a penny property tax.
She also lauded the city and county's financial contributions and recommended continued investment in the Housing Trust Fund, as well as identifying more potential areas for development, incorporating affordable housing into all neighborhood planning efforts and diversifying the local economy with higher paying jobs.
In her report, Nguyen said the lack of affordable housing in Asheville and Buncombe "threatens the livability and economic vitality of the city."
And that's exactly the point for Rhodes, the waitress and UNCA student. She will finish her degree in liberal arts in December and thinks she might return to the classroom as a teacher. Though she loves the mountains and Asheville, Rhodes said she has to consider the job market, pay — and housing.
She is dating a man in Charlotte and considering leaving Asheville. "I almost feel like I might have to move," she said.
Housing and wage information
• Working North Carolinians had less money for housing in 2010 than they did before the recession hit. Median income rose 6 percent from 2005-2010, but cumulative inflation was nearly 12 percent. Purchasing power was further eroded by food and gas cost hikes of 17 and 37 percent, respectively.
• Of the 64,200 owner households in Buncombe, 26 percent pay more than 30 percent of their income for housing.
• Of the 34,900 renter households in Buncombe, 51 percent pay more than 30 percent of their income for housing.
• For comparison, in North Carolina, 25 percent of owners and 47 percent of renters pay more than 30 percent of their income for housing.
• Of the 29,300 owner households in Buncombe that earn less than $50,000 a year, 42 percent pay more than 30 percent of their income for housing.
• Of the 34,900 renter households in Buncombe that earn less than $50,000, 72 percent pay more than 30 percent of their income for housing.
• Statewide, 45 percent of owners earning less than $50,000 and 67 percent of renters earning less than $50,000 pay more than 30 percent of their income for housing.
Sources: Census, N.C. Housing Finance Agency
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