North Carolina's housing crisis

Drive around most any city of size in North Carolina and you are likely to see neighborhoods transitioning before your eyes. World War II era bungalows and 1960’s split levels, houses ranging between 900 to 2,500 hundred square feet of living space, are being torn down and replaced with new “McMansions” of 3,000 to 6,000 square feet.

This building boom is disguising a huge housing shortage in North Carolina. Bowen National Research conducted a study that revealed between 2024-2029 our state would have a housing gap of 764,000 units; 442,000 for sale units and 322,000 rental units needed.

Not only does our state have a housing shortage but there’s also an affordability crisis.

Forbes data reveals that the median price of a home in our state is now $381,000. In 2024, it required 3.9 years of labor to purchase a median price home in the United States. In North Carolina, with a median yearly household income of $72,388, it requires 5.1 years of labor to purchase that median price house.

The rental picture is also revealing. According to Apartments.com the average monthly rental rate for a one-bedroom apartment in NC is $1,361per month; two bedrooms average $1,554 monthly. For a person working 40 hours per week, the one bedroom would require an hourly wage of $7.80 just to pay the rent; the two-bedroom unit would require an $8.98 hourly wage. Keep in mind that our state’s minimum wage has been $7.25 per hour since 2009.

The definition of what is considered “affordable” is that no more than 30% of your gross (pre-tax) income should be spent on housing. This figure includes rent, utilities and insurance for renters and the mortgage, property taxes, and insurance for home buyers.

There’s little doubt North Carolina is experiencing a housing crisis, so the question is what can be done to reduce the shortage and make housing more affordable?

Just about everyone agrees building construction takes too long and costs too much. While contractors cannot control the costs of building materials there are some areas where unnecessary time and money can be saved.

State and local governments need to become willing partners in this process by reviewing and revising policies, codes and approvals with an of not to sacrifice safety and good construction techniques but making construction simpler and more economical.

One thing that could immediately be done to bring down costs would be to relax zoning restrictions to allow more units to be built on an acre or parcel of land. This would not have to be enacted in the entire city or county but could be done in certain specified areas.

Another solution is to relax restrictions on prefab and modular construction. We’re not advocating the resurrection of mobile home parks, but offsite construction can speed up the building process and be more cost effective.

Fees and permitting is another area where time and money could be saved. And building codes can be standardized and, wherever possible, simplified throughout the state, again ensuring safety and good construction.

Inspections are a major factor in the length of and costs of construction. Builders constantly complain about having to wait around for inspectors to come spend very little time inspecting and signing off on plumbing, electrical and other aspects of building.

And the repairing and renovating of older construction can help ease the gaps. Many communities have buildings that could be repurposed to provide housing. Just as we offer incentives to new businesses and industries to locate here, state and local governments could encourage projects by offering generous tax credits in targeted areas where shortages are severe.

There are big payoffs for reducing our housing crisis. Dr. Mike Walden, one of our state’s leading economists, reported on the economic impact to closing this housing gap. His conclusion states, “Over 2 million jobs would be created paying a total of $144 billion in labor income. Also, the total value of the economic activity in the State generated by the construction would be $489 billion. Aggregate public sector revenues paid to local, state, and federal governments would be $51 billion.”

With our state adding thousands of new residents every year the current housing shortage will continue to grow unless a concerted effort is employed to reduce or eliminate the situation.

The potential payoff is well worth the effort.

Tom Campbell is a Hall of Fame North Carolina broadcaster and columnist who has covered North Carolina public policy issues since 1965.  Contact him at tomcamp@ncspin.com