While the bidding wars over homes in the Charlotte area that occurred during the pandemic are over, experts say, the market remains unpredictable and out of reach for many homebuyers. File / Caroline Willingham / Wmforo

The housing markets of North Carolina’s largest metropolitan areas — Charlotte and Raleigh — are seriously and severely unaffordable, respectively, according to a recent report from urban planning policy firm Demographia.

Demographia ranked cities by median multiple, a figure calculated by dividing the location’s median house price by the median household income. Charlotte’s median multiple, 5.0, is equal to that of Washington, D.C., while Raleigh’s score of 5.1 is identical to that of Austin, Texas, and Nashville, Tennessee.

According to the North Carolina Housing Coalition, the fair market rent — which represents the cost of a moderately priced two-bedroom unit for the local market — increased 17% over the last five years in both Mecklenburg and Wake counties.

“It’s a matter of supply and demand,” explained Yongqiang Chu, Director of Childress Klein Center for Real Estate at University of North Carolina at Charlotte’s Belk College of Business. “Every day, about 120 people move into the Charlotte metro area.”

The trends that started in the Great Recession — namely, a deficit of housing units that drives house prices up — were compounded by the pandemic.

“The Charlotte area started to catch up in terms of supply in 2018 and 2019. Lots of houses or apartments were being built,” Chu said. “But the pandemic completely disrupted that because of the (supply chain) issues and COVID restrictions. Those two years alone created a deficit of about 10,000 housing units.”

But as supply slowed, demand for housing in North Carolina did nothing but increase.

“When COVID hit, people ran from those coastal cities like New York,” remembers Lorena McDowell, director of Wake County’s Department of Affordable Housing and Community Revitalization.

“(Raleigh) was a major city that wasn't as densely populated so people flooded us. It's very true all across the state. North Carolina has seen exponential growth, but Wake’s growth is astronomical.”

McDowell thinks her department is unique among American cities. “It is great that we've built this department, but we needed this department 20 years ago,” she laments.

Wake County now has a deficit of about 65,000 housing units, according to McDowell.

“A local, typical family that needs to get a mortgage cannot compete with somebody coming from New York, or some other expensive market,” said Roberto Quercia, director of UNC-Chapel Hill’s Center for Community Capital.

“The bottleneck (in Raleigh) is predominately in single-family homes,” Querica said, where the demand for permits greatly exceeds the number of permits available in the city.

But the problems in the housing market extend beyond a shortage of affordable units. According to McDowell, the shortage of stock in Wake County extends all the way up to $3 million houses.

“The solution is actually easy, and everybody knows it,” Chu said. “The solution is just to build more houses. But it's extremely difficult to move in that direction.” The high interest rate makes banks unwilling to lend, and a number of political and regulatory roadblocks are halting development.

The perspective often referred to as NIMBYism — which stands for “not in my backyard” — is one shared by many homeowners in the state: folks do not want the green space in their neighborhoods taken away by new zoning ordinances that allow for higher density.

Chu referenced one recent case in Charlotte, where a development project was reduced in scale in part because of a bald eagle nest in the area.

“(The nest) is probably legitimate to think about,” Chu said. “But because of those two bald eagles, you have to put 10 more people on the streets. We have to think about that trade off.”

For McDowell, the chief roadblock to her department’s progress is a more technical one: “At the state level (in North Carolina), local municipalities are not allowed to require any affordable housing development,” McDowell said.

Because developers have no reason to build affordable units, the strategy of the Wake County Department of Affordable Housing is to incentivize developers by offering them money in exchange for the inclusion of affordable units in their plans with contracts that hold them to the agreement for 30 years.

Ultimately, the crisis-level deficit of affordable housing options (and its possible political repercussions) has no “silver bullet” solution, in the words of Quercia.

A combination of macro-level economic shifts could eventually reverse some of the housing trends that are pushing people out of the market.

The Federal Reserve could reach its target inflation rate and begin lowering interest rates. State-level political shifts could take place, such as the General Assembly changing zoning restrictions to allow for more density. Cultural shifts are also possible, such as a lowered level of stigma concerning the construction of affordable units.

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Jane Winik Sartwell is a staff reporter for Wmforo, who focuses on coverage of health and business. Jane has a bachelor's degree in photography from Bard College and master's degree in journalism from Columbia University. She is based in Wilmington. Email Jane at [email protected] to contact her.