Summary:
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North Carolina’s housing crisis is only getting worse
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Local anti-housing restrictions and NIMBY resistance are holding back new construction
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State lawmakers have the power to unblock new housing – will they?
North Carolina has a housing crisis on its hands.
The basic contours of this crisis are readily obvious to anyone paying attention. In short: North Carolina is not producing enough new housing stock to keep up with demand. After the Great Recession of 2008, new housing construction in our state imploded and has never fully recovered. Even in 2021, with interest rates at a near-historic low, North Carolina still produced fewer overall housing units than it did in 2005:
During this same period, North Carolina’s population has continued to grow. Our state has ranked among the top 10 fastest-growing in the nation for at least the last decade, if not longer. That growth is a very good thing: it’s good for business, the average person’s livelihood, and general cultural dynamism and vitality. As our policy report Road to Home: Fair and Affordable Housing for North Carolina states:
“Like all dynamic states, North Carolina experiences a constant ebb and flow of new and native
residents: young people moving to larger areas for job opportunities, families moving to suburbs
to raise kids, retirees moving out to quieter corners, and so on – all Americans pursuing their own
dreams. The availability of housing, and at what price, is a throttle on that dynamism.”
But as demand for new housing has vastly outstripped the supply, the obvious result has been a steep increase in the price of housing. This phenomenon is often wrongly characterized as just an urban and suburban problem, but that is incorrect. According to Zillow, over the last 5 years, housing prices have also increased by 50% in rural Bertie county; 55% in Swain county; and 39% in Burke county. This eye-popping increase was tremendously accelerated by the COVID pandemic, and those prices show little sign of any material decrease.
State lawmakers have tools at their disposal to address this crisis. But will they?
The housing bill North Carolina needs
In the 2021-2022 session, a bipartisan group of state lawmakers introduced Senate Bill 349, titled “Increase Housing Opportunities.” The bill included a relatively narrow set of measures that would have, among other things, pre-empted local restrictions against what’s known as “missing middle” housing. This term refers to denser forms of residential development, like duplexes, triplexes, quadplexes, and the like. As long as water and sewer service was available, local authorities could not prevent landowners from building such dwellings.
This would be a game-changer in North Carolina, most especially in high-growth areas where more infill density is needed. Missing-middle development allows for more density on a smaller land footprint, which decreases the cost per inhabitant. It also encourages denser, less car-dependent architecture. Importantly, it also reduces the cost to build by allowing developers to add more density on a given parcel of land with fewer regulatory hurdles.
The bill would have also prohibited local authorities from “downzoning” a property – eg., reducing the residential density allowed there – except for in special circumstances. (Provided, again, that the property had water and sewer.) Finally, the bill would have required local authorities to allow accessory dwelling units (ADUs) on homeowners’ land.
Taken together, SB349 was a moderate pro-housing bill with influential Republican and Democratic support. Unfortunately, the bill never made it out of committee. While two of its three bill sponsors are no longer members of the legislature, one – Senator Paul Newton – is now Majority Leader of the Republican caucus. Senator Newton has already signaled that he intends to re-file the bill. With powerful Republican support, could we see bipartisan action on housing?
North Carolina can’t wait
The landscape of housing politics evolves under the specter of one outstanding and very public failure: the state of California. The Golden State’s famously broken and distorted housing market is a powerful cautionary tale about state leaders who let local elites pre-empt, and essentially block en masse, housing construction for nearly two generations. It is an example no one wants to see North Carolina repeat.
Yet there is a major backlash brewing. Under intense voter pressure, California lawmakers have recently strengthened the state’s so-called “Builder’s Remedy” law, which allows private developers to largely bypass local zoning laws completely in jurisdictions with a severe lack of housing. While the NIMBY crowd squeals in outrage, California may soon be on its way to building its way out of its housing deficit – which will take years.
Could North Carolina one day see a Builder’s Remedy-style law? It takes very little political imagination to envision it, especially given how acutely the pain of the housing crisis is felt in North Carolina’s most liberal-leaning areas. A Republican legislature might very well relish the chance to tweak some noses in Chapel Hill, Durham or Asheville by pre-empting local development review authority.
Yet a rising tide lifts all boats. Expanding housing affordability and supply would be very good thing for all of North Carolina. Local governments have had more than ample opportunity to address the housing crisis, and have largely failed. Perhaps it’s time for state lawmakers to take a turn.
The Road to Home: Fair and Affordable Housing for North Carolina outlines several key areas of reform that state lawmakers may consider to increase the supply the affordability of our state’s housing stock.
