By Calvin Brock
As a Charlotte native, I have watched our city’s growth skyrocket since 1991 following the construction of the Nations Bank Tower, which today is the Bank of America Corporate Center.
Charlotte is one of the fastest growing cities in the nation, and it is witnessing stunning commercial and residential development despite the aftereffects of the 2008 national housing crash.
Unfortunately, because the city’s population is growing as feverishly as it is, affordable housing development has lagged in proportion to overall residential development, leaving many residents with few housing options. Apartments are below 7 percent vacancy and home sales are below three months of inventory.
In a recent Charlotte Observer article, Jason Gentry, a real estate broker with Sotheby’s and president of the Charlotte Regional Realtor Association, predicted that the inventory storage was going to get worse and that “we’re seeing less new listings hitting the market and our absorption rate is not slowing down.”
This is a problem for residents who rely on affordable housing, as the greater the demand for rental apartments will mean more expensive rentals beyond the financial reach of many residents may be priced out of consideration.
As disturbing as this trend is, perhaps a more worrisome question is why apartments in so much demand? Are people losing interest owning homes, and if so why?
One of the reasons for this declining interest in home ownership is because young people are marrying later. Owning a home tends to appeal to families; whereas, single people want the flexibility of renting to respond to changes in their living arrangements, be it due to employment opportunities or personal relationship changes.
The growing number of young, professional, single residents in Charlotte is evidenced by the increased development of uptown luxury apartments. Unfortunately for some these luxury apartments have been built at the expense of the less lucrative middle and lower end apartments, which means creative residency solutions will be necessary to address the issue.
One residency alternative that has become more popular recently is the single-family home rental.
Corporate homeowners like Invitation, AH4R and Tricon recognize the difficulty first-time homebuyers face raising the down payment for a new home.
Single-family home rentals provide the option of living in a house instead of an apartment, usually for approximately the same monthly cost. Home renters receive the benefits of a home – more interior space, greater privacy, access to a backyard, etc. – without facing the financial demands of a down payment and a mortgage.
Seniors can also benefit from single-family home rentals because once their children move out they often need to downsize to a smaller home and refuse to saddle themselves with another mortgage. The home rental can provide that answer.
However, there is one major downside to the single-family home rental option: Although rental increases are stable in homes owned by corporate landlords/management companies because state law restricts increases to 3 percent, the same regulations don’t apply to private homeownership.
Landlords can, and often do, steeply raise rents to the point where young renters are unable to save for their own homes. History has proven this in large cities, such as Los Angeles.
There are no easy solutions to Charlotte’s housing problem, but it is important to remember the issue is a result of our city’s success and the promising future that awaits us.
According to the Charlotte Chamber of Commerce, as of 2016 Charlotte ranked in the top-10 nationally in categories such as Top Tech Momentum Markets; Destination for Most One-Way Moving Truck Rentals; Average Growth of Number of Small Businesses; and Best City to Start a Business. In 2017, U.S. News and World Report named Charlotte one of the top-20 “Best Places to Live in the United States.”
Although rental increase restrictions may work when applied to corporate landlords and management companies, Charlotte will be best served by allowing the market to fix the affordable housing issue among private ownership. It will a bumpy ride at first, but eventually the supply of apartments being developed will meet the demand in the marketplace, and it will force landlords to keep rents at a competitive rate. Eventually, the Charlotte housing market will find a balance just as other major cities have.
Charlotte native Calvin Brock is a 2000 U.S. Olympian and former world heavyweight boxing contender who after retiring worked for several years as a commercial broker and is now owner of the real estate firm Jack and Landlords. Jack and Landlords offers landlords and tenants a way to avoid the problems of security deposits when tenants move in.