The policy solutions outlined in the three reports all contribute to a greater understanding of how affordable housing can be created or preserved within station areas, or of how housing affordability in general can be kept at reasonable levels. One rather obvious way to preserve housing affordability, however, is to simply increase the stock of all housing types. This straightforward solution is rather intuitive: housing becomes unaffordable when demand exceeds supply and the market is willing to pay more for it. By increasing supply to better meet demand, value which is created as a result of the D-O LRT investment does not need to lead to increased housing burdens for low-income residents.
In early 2014, Triangle Transit completed a policy brief which outlined how housing affordability had changed throughout the Triangle over the past few decades, connecting worsening affordability with an inability of municipalities to bring housing to the market in a timely manner. Since 1996 the U.S. Census Bureau has collected annual statistics on the issuance of residential building permits for municipalities, as well as the total number of distinct housing units included in permit issuances. Over the 1996-2012 time period Chapel Hill issued 4,249 residential building permits for 5,855 housing units. By comparison Cary issued 20,981 permits for 28,090units, Durham issued 24,871 permits for 38,637 units, and Raleigh 49,117 permits for 77,520 units.
31 Chapel Hill’s rate of housing unit production lags considerably
behind other municipalities in the Triangle Chapel Hill’s housing production has
been when accounting for the differences in size between the four primary Triangle communities. Between 2000 and 2009 Chapel Hill approved 3,608 new housing units, equivalent to 19 percent of its year 2000 housing stock. This is well behind the rates of other area communities. On a per acre and per capita basis, production of new housing in Chapel Hill also falters. Between 1996 and 2012 Chapel Hill approved a little under 12 new building permits per land acre, which
is 87 percent the rate of Durham, 59 percent the rate of Raleigh, and 52 percent the rate of Cary. Partly as a result of these conditions, it was found that between 2000 and 2008-2012 (using American Community Survey [ACS] data from that five-year period) home values in Chapel Hill increased at a higher rate than in the other Triangle communities.
By adding housing units at a rate demanded by the market, a municipality can help keep aggregate prices reasonable. In his essay Growth Management, Smart Growth, and Affordable Housing, Downs (2004) writes, “Even if most of the newly built units were expensive, the overall rise in supply relative to demand would cause housing prices in general to decline, including prices of the older existing units used by low-income households” (p. 268).
This process, also known as “filtering”, asserts that when new housing enters the market, older housing “filters” down the price scale. For example, in the absence of new housing supply, increased housing demand may cause rents to rise in older housing. With new housing on the market absorbing this demand, there is less pressure on rents to increase, as there is less demand for older housing. This phenomenon is difficult to ascertain, as an avoided rent increase cannot be measured.
There is abundant support for artificially restricting the supply of housing in a market. Many stakeholder groups, including homeowners, mortgage lenders, realtors, and insurers, have invested trillions in existing housing and wish to see market values rise rather than fall. Especially in suburban communities local governments are largely controlled by homeowners who typically oppose policy measures, such as increasing the supply of affordable units, which reduce home values and are perceived to threaten school quality and raise property taxes (Downs, 2004, p. 268). This may be the pattern in a suburban community like Chapel Hill, whereas in Durham these pressures may be reduced.
In the context of promoting affordable housing as part of new multi-unit developments in Durham, it is important to keep in mind that even in proposed developments with scant accommodation for affordability, it is still better for the market to absorb these new units than to prevent the project from taking place entirely. Many of the policies in this section are rooted in good intention, but any mandates which restrict
development activity to the point where developers will refuse to build is a negative outcome for the community.
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4. Indicators of Gentrification Risk
This section details the demographic and physical characteristics of neighborhoods which I consider to be the strongest indicators of gentrification in association with the future construction of the D-O LRT. Six
indicators, as well as one qualifying condition which sets apart those neighborhoods where gentrification can actually take place, are specified. Each of these indicators, save one, utilizes 2008-2012 five-year estimates collected by the U.S. Census Bureau’s American Community Survey at the block group level.
The six indicators included in the gentrification risk index are: Walk Score, percentage of renter-occupied households, percentage of housing units built before 1940, distance to employment centers along the D-O LRT corridor, percentage of residential structures with three or more housing units, and percentage of vacant housing units.