It was wonderful news when Infosys, a global technology consulting firm, announced plans to hire 2,000 people in the Triangle over the next five years. The news was especially good because the new jobs will pay on average, $72,146 a year, nearly $20,000 a year more than the average wage.
But the addition of more high-paying jobs isn’t without complications. It’s part of a trend in the Triangle in which newcomers are driving up rents and overall housing costs and those of lesser means are struggling to keep or find affordable housing. The situation is a growing problem for middle-income families and a crisis for those with low incomes.
Samuel Gunther, policy director at the nonprofit North Carolina Housing Coalition, says developers in the Triangle are tearing down more affordable apartments and homes and replacing them with luxury apartments and larger, more expensive homes.
“As the population has been growing in the Triangle, all the new housing tends to be high-end,” he says. “It’s often replacing B- and C-level stock, what we call ‘natural affordable housing,’ the older stock.”
The phenomenon is clear in Durham, where some neighborhoods are seeing triple-digit increase in home values in the recent revaluation. And in downtown Durham the average rent has increased 11.2 percent from the second quarter of 2016 to the second quarter of 2017, growing from $1,121 per month on average to $1,246 per month, according to RealPage.
The N.C. Housing Coalition and other experts recommend spending no more than 30 percent of your household income on housing. To afford $1,246 a month rent, a household would need to make $49,840 a year after taxes.
“We’re tearing down and rebuilding. We’re changing the shape of our communities pretty rapidly,” Gunther says. “It’s an open question about how folks across the economic spectrum are dealing with that.”
Generally, rental housing is considered affordable when the rent is 30 percent or less of a renter’s income. Those who pay above that percentage are what the Housing Coalition calls “cost burdened,” a description that fits about 45 percent of renters in Durham, Orange and Wake counties.
Many people adjust by living with their parents, taking in roommates or moving farther from downtown and their places of work, where they find lower rents but gain higher transportation costs. In Raleigh, police and firefighters told the City Council they can no longer afford to live in the city they protect. The city responded with raises ranging from 6 to 13 percent. Durham also approved raises for police and firefighters.
Raising public pay helps, but the more pressing need is to hold down rising housing costs. California illustrates how bad housing cost can get in an attractive market. The median cost of a California home is now $500,000, twice the national average. Housing prices have climbed as much as 75 percent in just five years in cities like San Francisco, San Jose and San Diego. More people are living out of campers and cars. Homelessness is increasing.
California is at the extreme, but the pattern of rapidly rising housing costs is occurring wherever growth is strong. “Anyone near a growing urban area is struggling with this dynamic,” Gunther says.
The Triangle’s City and county governments are well aware of the affordable housing problem. But this problem needs to be addressed at a state and regional level. Gov. Roy Cooper and legislative leaders should join with local governments in deciding what changes in taxation and local authority would help North Carolina’s fast-growing urban counties to provide housing for all incomes.