A rise in housing costs is the evil twin of growth.
Raleigh is in the grip of this phenomenon, a squeeze tightened by an influx of highly paid tech workers. Creating more affordable housing was the top issue during the recent City Council elections. And it’s hardly Raleigh’s problem alone. Wake County has taken steps to provide affordable housing. Durham, faced with gentrification as its downtown booms, will vote on a $95 million affordable housing bond on Nov. 5.
When the housing market tightens as it has in Silicon Valley and Seattle, the affordable housing shortage can appear impossible to fix. But there is some good news on the affordability issue in the Triangle. Gregg Warren, president of the Raleigh-based nonprofit developer DHIC, put it this way: “Thank goodness we did not get Amazon.”
But a surge is still building. According to federal income figures, the median income for a family of four in Wake County shot up in the last year from $84,300 to $93,100. Warren, who has headed DHIC for 34 years, said, “I’ve never seen a jump like that.”
Home prices are riding the income wave that’s driven by the arrival of more high-income earners. Lower-income earners, whose wages are barely rising, are being left behind.
Against such market forces it would seem impossible to keep an adequate supply of affordable housing, a term that Raleigh defines as a housing cost (rent or mortgage and utilities) that is no more than 30% of a household’s income. But Wake County, Raleigh, Durham and other Triangle governments are taking aim at the problem and some of the most impressive work is being done by DHIC. The nonprofit combines government funds, grants, property income and other revenue to purchase land to build housing that is affordable in areas where housing costs are rising fast.
DHIC showed the power of its model earlier this month when it dedicated a new version of the Washington Terrace rental community in Southeast Raleigh adjacent to St. Augustine’s University. Built in 1950, Washington Terrace once offered the best rental housing for African Americans in Raleigh’s then-segregated market. But the property declined over time and DHIC bought the 23-acre, 245-unit housing project out of foreclosure in 2014 for $4.75 million.
Washington Terrace now has 162 new apartments for families and 72 new apartments for seniors. Rents range from $592 for seniors to $900 for a three-bedroom apartment for families. A second phase of development will add about 150 units, including some at market rate. Gentrification has pushed many renters out of Southeast Raleigh, but Washington Terrace was renovated without any residents being displaced.
“What we’re doing here is putting a stake in the ground for affordable housing in that neighborhood, which has gone through so much change,” Warren said.
But there’s much more to be done to push back against rising housing costs. “While we’re making a difference, but are we winning the war? I don’t think so,” he said.
What’s needed to prevent a Silicon Valley-style housing crunch in the Triangle, he said, is for governments, foundations and allied groups to buy land now as a bulwark against the high land costs of the future. “If you don’t have land, you don’t have anything. You just have an idea,” he said.
DHIC put the idea and the land together. It worked. If there’s more of that, there will be more affordable housing.