The Triangle Housing Shortage Has Escalated Since the Onset of the Pandemic

This is the first of a two-part series on housing in the Triangle.

On a quiet street near downtown Raleigh, the percussive crack of a hammer on nail rises over the oak trees—on New Bern Avenue, construction workers are erecting a dozen new townhomes. Less than a mile away, from the steps of his lifelong home, 64-year-old Isaac White, Sr. can hear them remaking his neighborhood. 

“I never thought I would see half-a-million-dollar houses (for sale) in this neighborhood,” White tells the INDY. “They’re telling me now my house is worth six or seven hundred thousand dollars. That’s nothing to me because I don’t plan on selling my house, but they’re taxing me on it.”

White, who lives in the historically Black community of Battery Heights, is one of the only original homeowners left on his block, he says. Gentrification has forced out many of his neighbors, who were unable to afford increased property taxes.

His story is a familiar one. In recent years, Raleigh’s already hot housing market has turned supernova, sending home values into the stratosphere and creating intense bidding wars. As more people flock to the Triangle, builders can’t keep up with the need for affordable homes, says Samuel Gunter, executive director of N.C. Housing Coalition.

Raleigh was already short a few thousand houses when the coronavirus pandemic hit, raising the cost of construction and decreasing the supply even more. At the same time, Apple announced its new East Coast headquarters would be located in the Triangle, boosting demand.

“It’s the perfect storm,” says realtor Cecelia Zuvic. “I’ve seen, personally, a lot of people coming from California as well as from up north. Not all of that is because they want to live here, a lot of people are buying through LLCs, as investors. Ten percent of purchases in the Raleigh area have been for investment, which is a big chunk.”

A tired tale of gentrification

In the first three months of 2021, about 2,400 homes were sold in Raleigh and Durham. Of those, more than half were bought either by people from out of state or companies “preying on this market to make a profit,” states a report from the Triangle Business Journal. Many are wealthy investors who buy houses and flip them for cash. 

The rising price of home sales has increased the assessed value of neighboring homes, which in turn increases the property taxes for homeowners such as White. 

“That’s the issue so many seniors are facing,” he says. “You get older, you get on a fixed income and then all of a sudden your taxes have doubled, some of them tripled. I shouldn’t be burdened because you decided this is a good place to live. I know it’s a good place to live, all my life, that’s why I’ve been living here.”  

To White, the solution is simple—stop raising property taxes. 

Wake County already offers some help to homeowners, Raleigh Mayor Mary-Ann Baldwin says. She points to programs that give people tax relief based on age and income, such as the homestead exemption, which allows some low-income elderly residents to pay taxes on only about half their home’s value. 

Not everyone in need qualifies for these programs, however. White, for example, just misses the age cutoff. Young and middle-aged homeowners who make below-average wages are also out of luck. 

One solution may be to offer more widespread help to homeowners affected by gentrification. Durham started a program earlier this month that gives longtime, low-income homeowners up to $750 to help pay their annual tax bill, regardless of age. Similar programs in Orange and Mecklenburg counties offer grants to people who have lived in the area for many years. 

Baldwin says the city is considering a proposal from ONE Wake, a nonprofit affordable housing advocate. The program would offer tax relief to people who have owned their homes for at least 10 years, earn less than 80 percent area median income, and who are currently paying more than 2 percent of their income toward property tax, say ONE Wake officials. 

The nonprofit is interested in developing a program with the city and county that could go on for decades, with financial assistance scaling up to match future property tax increases. If enacted, such a program would be the biggest in North Carolina, similar to one in Atlanta that covers all increases in property tax for certain homeowners through 2030. 

No help for renters

As homeowners lobby for lower property taxes, some strained voices are also rising to help renters. Jamie Paulen, an eviction attorney based in Hillsborough, is one of the few people currently advocating for changes to the landlord-tenant law. She’s asking the state legislature to lift the ban on rent control, allowing local governments to put big management companies in check.

“In California, one of the ways tenants are able to live is that there’s only so much your rent can go up every year,” Paulen says. “In North Carolina, they’ve taken that away.”

Without rent control, low-priced apartments are disappearing, leaving many with no place to live. Landlords either raise the rent or renovate and sell their buildings to companies that seek wealthier tenants. 

In Wake County, 59 percent of apartments priced below $750 a month have been lost since 2010. In today’s dollars, that’s $940 per month, accounting for inflation. Forty percent of apartments priced below $1,000 a month—or this year, $1,250—have also vanished, according to county officials.

For tenants looking to stay in their apartments, rent control is the obvious answer. Another solution may be giving renters the first right to purchase the building they live in when it goes up for sale. Such policies can help residents retain control of a community, rather than large-scale investors. In Washington, D.C., tenants have the opportunity to buy their buildings and turn them into co-ops with the help of a low-interest loan program. 

The North Carolina legislature, however, is not on board with such progressive housing laws, and neither are local leaders. Baldwin says Raleigh officials aren’t lobbying for those policies. Instead, they’re asking the state to redevelop their underused property like the former Rex Hospital. She and other city council members are focused on building more mixed-income housing. 

Large advocacy organizations, too, have held off lobbying the state legislature for rent control. Some are waiting for state leaders more willing to lift the rent control ban, Gunter explains. They were expecting different results from the 2020 election when Republicans held onto their majorities in the General Assembly. 

“A large part of it is the political climate we’re in and folks focusing on what they can do,” Gunter says. “It feels out of reach as a win.” 

Today, the N.C. Housing Coalition is throwing its support behind a shorter-term solution, the renter’s tax credit. The policy, similar to existing tax credits for homeowners, would allow certain low-income renters to deduct money from the taxes they pay each year, Gunter says. North Carolina is one of the 28 states that does not offer a renter’s tax credit, but there are two nationwide proposals currently under consideration in the U.S. Senate. 

Trust the community to preserve affordable housing

Keeping people in their homes isn’t just a matter of offering them financial help. With property taxes rising so quickly, a one-time payment isn’t enough to keep people housed, says Sonia Barnes, a Southeast Raleigh resident advocating on behalf of her community. Officials also have to prevent affordable homes and apartments from being destroyed, upfitted, or redeveloped as market-rate housing. 

One way to prevent the loss of affordable housing is for local governments to buy property directly before it’s sold to investors seeking a profit, says Gunter. In Durham, city officials are awarding federal money to the Durham Community Land Trust to buy homes and convert them into permanently affordable housing. 

After the community land trust buys property, the nonprofit owns the land beneath the house and leases it back to the homeowner for a nominal monthly fee. By removing the cost of land, the trust can sell homes to people at up to 30 percent below market rate, putting them within the reach of cashiers or waiters. 

The strategy, which has worked in Seattle and Minnesota, is a way to create housing that remains affordable for decades, if not longer. That long-term affordability creates housing stability, which is key in preventing gentrification, says Sidney Betancourt, a housing advocacy organizer with the National Low Income Housing Coalition. 

In San Francisco, a “right-to-purchase” policy has bolstered the efforts of nonprofits to preserve affordable housing. The law gives nonprofits first dibs on property up for sale. The policy came in the wake of the 2008 financial crisis when swathes of foreclosed homes were bought up by investment groups and turned into high-end rentals. A similar policy could be a powerful tool in North Carolina for the preservation of affordable housing, says Gunter. 

Next steps 

In the past 30 years, the Durham Community Land Trust has helped convert 280 homes into permanent affordable housing. But in order to truly make an impact, cities need to scale up these initiatives to cover thousands of homes, says Gunter. Similarly, Raleigh’s narrow tax programs need to expand in order to make a dent in gentrification. Such widespread projects require tens of millions of dollars.

Wake County may have taken the first big step earlier this month when commissioners created a $10.5 million fund to preserve affordable housing. The money will let the county buy properties before they’re lost to the for-profit market, according to a news release. Wake County commissioners plan to grow the fund to $61.2 million with additional money from city and town councils, companies, and nonprofits. The Raleigh city council will soon vote on whether to commit $4 million. 

For Gunter, it’s ultimately a matter of whether local officials are willing to commit the amount of money needed to truly make a dent in the affordable housing crisis, he says. Raleigh and other local governments are getting a big chunk of federal money this year, but how will they spend it?

So far, the city has allocated $10 million toward affordable housing from the American Rescue Plan Act. Another $44 million is on the table and looks to be divided between housing, economic recovery, community health, and infrastructure. When it comes to affordable housing needs, however, the list is lengthy. In addition to new programs, the city has a backlog of repair needs to public housing going back decades, Gunter says.  

“To the credit of the Durham city council, the Raleigh city council, they have acted,” he says. “But all of this is a question of political will. What are you gonna choose to tackle and tackle in scale? If this is it, there’s more you could be doing.” 

This story has been updated to correct a spelling error in realtor Cecilia Zuvic’s name. 

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Follow Staff Writer Jasmine Gallup on Twitter or send an email to jgallup@indyweek.com.