DRAFT Morrisville Affordable Housing Plan, September 23, 2019 version

DRAFT SEPTEMBER 23, 2019

PART 1 | The Regional Market

The regional housing production system has responded better to the needs of owners than renters since 2000. Between 2000 and 2017, the region grew by more than 82,000 renter households but built fewer than 72,000 new rental units. At the same time, new construction in the ownership market grew faster than the number of owner households, with nearly 160,000 new owner units built for just over 130,000 new owner households. Why is the housing production system building ownership units that seemingly are not needed? Why is it not producing much needed rental units, especially with the deficit of units for low-income households? The simple answer is that new construction is expensive, and therefore is only affordable to incomes at or near the top of the market. Based on market data, stakeholder interviews, and data on local construction and land costs, czb estimates the break even rent—what is required to make construction feasible—for a new, modest two-bedroom apartment is $1,300, which is far out of reach for the region’s poorest renters who can afford no more than $500 per month. For a new single-family house of 1,800 square feet with three bedrooms and two bathrooms, czb estimates a required sale price of approximately $350,000. At these costs, there can be no new construction for renter households earning less than $50,000 or for owner households earning less than $100,000 unless the new construction is heavily subsidized. The marketplaces solves the mismatch between housing needs and new construction through filtering, which is the process of housing becoming older, less desirable, and therefore more affordable as new units are built. As part of the process, older ownership housing may convert to rental to satisfy the market for rentals at lower rents than new construction can offer. This is undoubtedly occurring in the region and is the only explanation of the gap between new renter households and new renter units. HOUSING PRODUCTION SYSTEM

Since 2000, the region has added

82,344 renter households

131,149 owner households

the region has built

71,200 rental units

158,768 owner units

Source: czb analysis of 2000 and 2013-2017 American Community Survey Data.

Affordable Housing Plan for Morrisville, NC | 2019

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