I actually believed them.
About a decade ago, when I covered growth and development for the newspaper, I wrote a lot about apartment rents, apartment building, and the housing crisis we had in the area.
Back then we were starting to see a boom in apartment building, a boom that has pretty much been unabated. Thousands of apartments have gone up in our area, particularly in the south Asheville and Arden areas, near where I live.
At the time, developers touted a familiar refrain: When we get more product on the market, rents should ease, maybe even go down some. And I believed that.
But boy howdy, they have not gone down.
In fact, for fiscal year 2024, the fair market rent for the Asheville metro area, according to data from the U.S. Department of Housing and Urban Development, looks like this:
- Efficiency: $1,428
- One bedroom: $1,496
- Two bedroom: $1,680
In 2019 — just five years ago — the numbers looked like this:
- Efficiency: $794
- One bedroom: $799
- Two bedroom: $993
That’s an 87 percent increase for a one bedroom in five years, and a 69 percent increase for the two-bedroom.
So clearly, rents did not magically drop, even though developers have built thousands of apartments.
I called up one of those developers who said a decade ago rents should drop, Will Ratchford, vice president of Gastonia-based Southwood Realty. Ratchford said his company has built 2,498 units in and around Asheville since 2011.
While Ratchford said rents have been flat this year in Buncombe County for his company, he acknowledged that in general rents have doubled in a decade.
“It’s just the influx of people from the Northeast,” Ratchford said. “You’re getting so many people coming in, it was moving the rates because there was not enough housing.”
I’ve heard from real estate agents and others in the housing industry that they’ve seen a lot of migration here from California, Texas, Florida, and the Northeast, including a number of climate refugees.
“And you know, if you give a rent of $1,500 for a one bedroom, it seems high for Asheville,” Ratchford said. “But if you’re coming from Boston, it’s the cheapest thing you’ve ever seen.”
This influx is happening throughout the Carolinas, he said, and it’ll probably continue. His company does business in both North and South.
Ratchford also said developers’ expenses have gone up over the past few years, including employees’ wages, taxes and insurance, and construction and loan costs. In short, the inflation that wracked every other part of the economy hit them too.
“I think you’re gonna see rate increases still in the apartment market, but you’re gonna see it more based on inflationary rates,” Ratchford said.
“And you know, if you give a rent of $1,500 for a one bedroom, it seems high for Asheville. But if you’re coming from Boston, it’s the cheapest thing you’ve ever seen.”
Will Ratchford, vice president of Southwood Realty
He’s not lying about the insurance hikes. The National Multifamily Housing Council released a report last June that “looked across all types of multifamily housing and showed, on average, property insurance premiums soaring 26 percent year-over-year.”
Ratchford said their premiums can hit $100,000 per complex.
He also said he’s noticed some “softness” in the local market, with complexes offering rent discounts or other enticements. His company has been offering a $250 discount in some places.
“If that doesn’t work, rents will start lowering,” Ratchford said.
Not again, man! I’m remaining highly skeptical this go-round.
A huge need for housing
Of course, Ratchford and other developers say we still need a lot more units, and we do. In fact, “the U.S. is facing a pressing need to build 4.3 million new apartment homes by 2035,” according to a study commissioned by the National Multifamily Housing Council and the National Apartment Association. Right now, there’s a shortage of 600,000 apartments nationwide, primarily because of underbuilding after the 2008 financial crisis, the study said.
We’ve had a crying need for more units here, too. Remember the first “Bowen Report,” which the city of Asheville received in January 2015? As I wrote for the Citizen Times in a 2021 story, “It noted the vacancy rate in apartments in the Asheville area was 1.2 percent, signaling the need for a lot more units — 5,500. Some referred to that vacancy level as a crisis.”
By the way, the headline for that story was, “Apartment hunting? Shortage still critical in Asheville area; rents up 21.5%”
Bowen did another housing report in 2021, for the Dogwood Health Trust, and the picture wasn’t much better. Bowen looked at 18 western North Carolina counties and found the overall vacancy rate among 25,321 surveyed units was .9 percent, meaning there was a 99.1 percent occupancy rate.
And that’s with a lot of building. Bowen found that the number of units built in the study region from 2000 to 2021 totaled 10,091, with a 1.7 percent vacancy rate.
Bowen found the worst shortages were in public housing and subsidized units, but even market-rate apartments had waitlists — more than 1,300 households waiting for a unit in the region.
“On a county level, almost half (47.7%) of the households on a waitlist are within Buncombe County (2,645 households),” Bowen National Research reported. Not surprisingly, Bowen also reported the highest median rents were in Buncombe and Henderson counties.
Mosley: ‘It’s just unsustainable’
This is a complex problem, involving private developers, land availability, governmental policy, and of course, the pandemic, as well as migration to our area, which is often driven by retirees or those with portable jobs. We’re growing in western North Carolina, but it’s not because births are outpacing deaths, according to Tom Tveidt, founder of Waynesville-based Syneva Economics.
“Basically, each year the number of deaths in Buncombe outnumber the number of births, so the ‘natural growth’ is negative,” Tveidt told me for a November column I wrote about tourism.
Buncombe had a population of 273,589 in 2022, according to the U.S. Census Bureau, and it’s added 2,000 net new residents per year, an average annual rate of .8 percent, according to Tveidt.
What this means is demand regularly outstrips supply around here.
It’s not like local governments have been ignoring the issue of affordable housing; it’s front and center with both Buncombe County and the city of Asheville. And everybody knows what’s at stake.
“If we don’t get rents under control, the very people who make up the engine of our economy are going to have to live somewhere else,” Asheville City Council member Antanette Mosley told me. “So eventually — and I know other tourist towns have grappled with this — if folks can’t afford to live here, they won’t be able to work here. And it’s just unsustainable.”
Mosley serves on the council’s Housing and Community Development Committee, and she’s liaison to the Affordable Housing Advisory Committee and to the Housing Authority.
The city, Mosley said, is “trying to utilize the tools in our tool belts to at least increase the number of more affordable housing.”
But even the term “affordable” is “a term of art,” she said, noting that it’s determined by HUD, and typically set at 80 percent of the Area Median Income. That means someone making 80 percent of the area median income would qualify for an “affordable” unit with a rent lower than market rate.
The city lists 80 percent of the AMI for one person as $47,600 and $54,400 for two people, based on 2023 data, and that’s considered “low/moderate” income. So the maximum rents for that income level for an apartment that doesn’t include utilities would be $1,011 for an efficiency, $1,083 for a one-bedroom, and $1,293 for a two-bedroom.
“But we’re finding that that 80 percent range is no longer where we need to be,” Mosley said. “We’re going to move further toward that 50 percent mark.”
It’s an issue for everyone, but particularly minorities, said Mosley, who is Black.
“I’m of the belief that that number needs to be lowered, because the data show that Black and brown households in particular, their median income is far below that (80 percent AMI),” she said.
The city has conducted a “missing middle” study that looked at ways to tweak regulations to allow more housing to be built, including duplexes or triplexes and other non-single family homes. It’s also looking at its Land Use Incentive Grant program, created in 2011 to incentivize the inclusion of affordable housing in developments, but usually at that 80 percent of AMI mark.
We all know that is extremely tough to find in Asheville.
Rent Control? It’s Illegal Here
I know a lot of folks who say, “Why don’t they just enact rent control?” That’s not legal in North Carolina.
Governments also can’t tell people to stop coming here, not that they’d want to.
“I don’t know that anyone wants us to take active steps to reduce demand,” Mosley said. “Generally, a lot of municipalities would love to have growth. It’s just we’ve got to figure out a way to manage the cost of living here.”
A lot of this does come down to Econ 101, as she put it — supply and demand. In a market with plenty of units, or possibly even a surplus, prices should start to flatten or decline.
At Just Economics, the local nonprofit organization that sets a living wage for this area, Executive Director Vicki Meath said her organization looks at rents and other HUD housing data every year to help calculate what it takes to be able to live here. This year that wage is $22.10 an hour, which means that’s the minimum wage a worker needs just to afford basic necessities, without public or private assistance.
Just Economics uses a four-year average for rents to allow for fluctuations. It doesn’t exactly go down very often.
“The last time the fair market rent went down from the year previous was in 2018,” Meath said.
In 2017 fair market rent was $713 for a one-bedroom apartment, and it dropped in 2018 to $660. It’s gone up every year since.
Meath points out that the housing shortage is a national phenomenon, and it simply merged here with what was already a crisis. Contributing factors include the lack of inventory and portable jobs, but also rising mortgage rates that slow home sales and increase home prices in general. That translates to people staying in apartments longer.
Locally, when you add in people moving here from other areas and bringing their jobs, with higher wages, that deepens the crunch.
“The second thing is, we’ve built all these apartments, but we haven’t been building housing or apartments really for the working class — people who are working in our restaurants and hotels and grocery stores,” Meath said. “We still have a very limited supply, even though we’re building, building, building.”
She’d like to see an “all of the above” approach to the problem, including local, state, and federal incentives for more affordable housing, because that’s what it’s going to take. And Meath would like employers to realize when employees are asking for raises, they’re not being greedy — they’re just trying to get by.
That brought up another stickier subject that I’d written about lately: greedflation, or companies bumping up prices basically because they can, and then blaming inflation. Sadly, we both agreed that’s probably a factor in all this too.
Personally, I expect rents to keep going up, at least in the next couple of years. And that’s not good for any of us.
Asheville Watchdog is a nonprofit news team producing stories that matter to Asheville and Buncombe County. John Boyle has been covering Asheville and surrounding communities since the 20th century. You can reach him at (828) 337-0941, or via email at jboyle@avlwatchdog.org. The Watchdog’s reporting is made possible by donations from the community. To show your support for this vital public service please visit avlwatchdog.org/donate.
Thank you for covering this!!! And thank you for uncovering the complexity of the issues at hand. The apartment boom here has been on my mind a lot, and as the research points out, more development has not made housing here affordable. I also fear the County’s/planning department’s support for building apartments as being key to density/affordability is very short-sighted. How do people in WNC –not the middle class/upper middle class/uber wealthy moving here– I mean the average person in WNC how do they build equity, and the peace of mind and security that comes with it, in an apartment? I realize some folks want to rent, not own, but creating more rentals does not benefit many people who are only renting because there’s nothing to buy. If these apartments were at least condos (which I know are not perfect, difficult to get loans for, etc.), more people might be able to put their money toward something that builds over time, instead of throwing their money away month after month, year after year on rent.
As an example in my employment travels since 1998, I paid $750 for a one bedroom in Jefferson County Colorado. In 1999 in Fulton County Georgia I paid $1100 for a one-bedroom carriage house in an apartment complex. After that I moved two hundred miles to buy an affordable home with no traffic after that job. Yes, and I might have to move again since my children won’t be able to afford housing even after they finish their engineering degrees. It’s crazy how things are more expensive, and you can blame inflation but it is not. The fact is that wages have not kept up with the cost of living, and you can quote me on that.
JD, please explain how inflation has nothing to do with everything being more expensive?
Cost of living is part of inflation!
It’s more complicated than blaming inflation. It’s more of a wicked problem that has to do with factors cited in the article, such as lack of building/development during/since the 2008- recession; many many people moving here with remote work jobs or as retirees, particularly from places that are much more expensive, so they can sell their pricey property in CA, FL, etc. and buy/rent something here that they consider much cheaper WHILE also continuing to be paid their higher salaries b/c their company is based in a pricey city. And then there is also climate migration as a factor–for now, our region is seen as a climate haven. Then there’s the terrain here–it’s not flat, so not as much land can be used (or should be built on, imho) for development. I think these are some of the biggest factors, and this issue isn’t limited to AVL/Buncombe–it’s affecting other parts of the country where the climate is good, where people want to live, etc. since the 2008 recession hit just about everywhere.
It saddens me to look upon the mountains near me and see so much building on the ridge tops. And on the mountainsides themselves. And houses on columns jutting out from tiny hills along a stream. $50,000 for a tiny postage stamp lot barely big enough for the footprint of a small house. Places grandpa said could never be built on are now being snapped up. We are beginning to look like the crowded hillsides in Los Angeles. That is our future Sad but true.
Part of the problem may be what happened to us. We moved to an apartment in buncombe from CA, with cash to eventually buy. The managers do a credit check, and we found out they are able to give different rent prices to everyone on the fly. We were given a handwritten rate sheet and didn’t question the 2000 rent for a nice but not luxury two bedroom. We became friends with a neighbor whose better apartment was only 1600. When she renewed it was only 1700. We think they’re probably all jacking up rents based on your financial position, not fair market value. If the next people who rented our unit a year later also had plenty of money, I bet their handwritten rate sheet showed 2400. So who’s giving honest answers on these supposed market statistics? I urge renters to get multiple bids on different complexes. Bring the numbers to your favorite one and say “Complex A is offering 300 less. Will you match it?” We didn’t. We hadn’t rented in 40 years and didn’t know the system. If we had, we might have known we were being gouged.
Meanwhile, developers are given tax incentives left and right with little oversight. Just more corporate b.s. like HCA. What a grift…
Adding more apartments will never make living here affordable. Adding more apartments here will, however, slow the rate of increase in average rents. Without all those extra units, the local housing crisis would be much worse. Prices would be far higher.
My friend was sitting on the floor of his empty room when I walked in to help with the move. “I don’t want to leave” he was sobbing, “this is my home.”
The four-plex had been purchased by someone from Florida who was raising the monthly rent from $900 to $1700 (without doing any repairs or updates to the existing mid-60s units). Even with a decent job at a financial institution my friend just couldn’t afford it, and had to move out of Asheville.
I wish landlords had to sit on the floor with people during moments like that.
It’s cool that you can admit you were wrong. But given your platform and reach as a journalist, that is not sufficient. To avoid reproducing the same mistakes (or adjacent ones), it’s necessary to evaluate not just what you were wrong about, but WHY you were fooled you.
In other words, you should interrogate what the source(s) of your credulity that led you astray.
In this case, it seems to be an inherent trust of what developers — those with the most vested interest in spinning the story in a way that legitimizes raking in huge piles of cash — said and taking it at face value.
But I think the problem goes deeper. Even as you say you will increase your skepticism, you continue to give credence to the bedrock of all of these failed predictions: the supposedly infallible “law of supply and demand” — Economics 101 as you call it. If you aren’t willing to question that received wisdom, you’re vulnerable to being duped again.
Here’s what I mean: even as you say that creating more units hasn’t lowered prices, you repeat the idea that in a “market with plenty of units, or possibly even a surplus, prices should start to flatten or decline.” Well, which is it? And if the only way to find out is to keep building, developers get exactly what they want and we get to find out whether this time they were right/honest. Yes, eventually we’ll reach saturation if we keep builidng, but this isn’t just a thought experiment — there are real, serious costs associated with doing more of the same and hoping for a different result.
These costs are financial but also impact quality of life for the people who live here. Sure, new residents and building generates some revenue, but does it outpace the drag on infrastructure? Does it take into account the myriad, complex environmental impacts of more construction? Etc…
Most importantly, are massive displacement/gentrification and the creation of housing-unstable communities among the non-wealthy a casualty you’re willing to wager as we find out whether the so-called “law” of supply and demand turns out to actually BE a law, or simply a capitalist figment? We don’t have to wait to see the impact of rising rents on displacement and housing insecurity — it’s happening as we speak.
And what happens when we complicate the picture by analyzing “supply and demand” market conditions alongside other uses of housing stock, namely for short term rentals? Maybe they don’t “cause” the housing crisis, but with a market this tight they do have an impact. As does the fact that a lot of our public funding goes toward reproducing a tourist economy that ensures things like attractive housing stock and high end businesses receive disproportionate resources and attention, while anything that goes toward making life more livable — updates to, say, the water system — require debt financing to accomplish.
One indication that you might be questioning some of those sources of credulity include your nod to the concept of greedflation, albeit at the very end of the article. While I commend you for acknowledging greed might be part of the story, the way you’ve laid this idea out for the reader still prizes “Economics 101” over the reality of corporate greed and price gouging — as if the actually-existing behavior of the market is a blip, even though it gets worse by the year (decade) and materially determines life outcomes for millions of people.
I even went back and read your greeflation piece; there, again, you offer an acknowledgment of having gotten the story wrong. But where is the proof that you are learning to get the story right? While you’ll admit blind spots here and there, it seems that you still don’t want readers to believe there is any way to interpret economic conditions outside of the venerated intellectual legacy of Economics 101, no matter how many times the “law” turns out to be, at best, only part of the picture, and at worst, a total dupe.
How often does a “law” have to be wrong to finally get demoted to a (weak) theory?
Why didn’t the market behave as it was supposed to? Why didn’t the predictions and promises pan out? “Because, well … greed,” you write, as if greed is just a bug, not a feature. After seeing a factor like greed pop up without fail, over 100s of years of capitalist history, why isn’t “greed” analyzed as an actual factor of the market?
Don’t just learn your lesson — learn how to do the next one better. If you are willing to break out of your ideological cage, you might not have to offer so many mea culpas in the future…
Well said. I also suggest that anyone in leadership or positions of power/decision-making should read ‘Black Swan’ by Nassim Taleb.
I know this was an opinion piece, but has anyone ever bothered to look into the costs of being a landlord or building an apartment complex? . I am sure their taxes, repairs, and maintenance and building costs go up also every year. Maybe, in the spirit of fairness, you can talk to some landlords/ building owners (both large and small ) and get an idea if their costs are rising also due to inflation. Just a suggestion John.
Just sold an apartment building I had owned for 30 years.
Up keep cost is unbelievable, not including taxes, insurance, advertising, etc.
Also dealing with tenants that don’t pay on time, damage their apartments, living like pigs and the story goes on and on…
Once you sale, then you hand over a big chunk of change in capital gains tax.
End of story.
Golly, who could have predicted this?
https://mountainx.com/opinion/the-future-of-coolville/
You can trace nearly all of these issues back to the fact that minimum wage has not kept up with cost of living. Companies now rely on government subsidies to bridge the gap of minimum wage and cost of living, saving them a ton on the bottom line. As tax payers we are the ones that pay to bridge that gap. The minimum wage in NC is $7.25. That is just over $15K a year. This is below the poverty line and our government considers this acceptable.