Zoning and Regulations Put Housing Out of Reach

As the home to a number of financial institutions, a bustling culinary scene and a unique cultural feel, the city of Charlotte has been economically successful and is the No. 1 spot for millennial relocation. Housing, however, is not able to keep up with demand, compounding the city’s housing affordability issues.

“We are very fortunate to be in a state that has seen continued growth,” observed Scott Farmer, executive director at the North Carolina Housing Finance Agency. “We have folks coming into the state each and every day, and that applies pressure to the lower-income households, more than to the middle or upper.”

The three biggest factors Farmer attributed to the development of affordable housing for homeownership and rental are construction costs, labor costs and regulatory requirements.

“In order to make a home affordable, you have to be able to control some of those aspects,” he added.

Government officials and community stakeholders from the Charlotte area and beyond came together this week to discuss how to address those factors in a way that makes housing affordable for all prospective homeowners during the second installment of The Hill and NAHB’s “Building the Dream” series.

One of the city’s more recent initiatives has been a $50 million bond referendum designed to help make Charlotte more affordable for the people who work there. The bond was approved by 69% of voters and has received additional financial support from the private sector, but the city is also looking toward other factors, including the cost of building, to best utilize these funds.

“Sometimes you have to ask yourself, ‘What do we do?’ before asking other people what they will do,” Charlotte Mayor Vi Lyles noted, including examination of government-owned land and governmental regulations. “Sometimes we just do things because they’ve always been done that way. And it is time for every mayor, every citizen in this community, to help us think about what’s the best way to do it that addresses both equity and financing so that we can do things.”

North Carolina State Sen. Paul Newton (R-36th District) also pointed to zoning and land-use regulations as key factors in the housing affordability crisis. These factors account for 25% — or more, in certain cities — of the cost of a home is around the regulations imposed on builders.

Other issues include access to transportation — a concern echoed by Charlotte Mayor Pro Tem Julie Eiselt — and diminishing population and employment opportunities in rural areas.

“If we think creatively around zoning and land use regulations, transportation solutions and the potential solutions that we find in our rural counties in North Carolina, I think we can get there,” Sen. Newton stated. “And I hope it won’t take a generation to do that. We could do this, if we work together.”

National Perspective

As Charlotte continues to think outside the box and explore new perspectives, it’s not the only city struggling with this effort. Alanna McCargo, vice president of Housing Finance Policy at Urban Institute, pointed to not only local policymaking, zoning and land use, but also how properties are used and financing constraints as additional factors affecting housing affordability — especially in regards to the racial homeownership gap.

“These are not Charlotte phenomenons, and not just the state of North Carolina or South Carolina,” she stated. &rlquo;It is something we’re seeing across the board.”

These issues are causing those in high-cost areas in particular to seek other options. Rep. Ralph Norman (R-S.C.) noted that California has lost $8 billion in revenue as local tax payers look toward more affordable markets, such as North Carolina, South Carolina and Georgia. Kelly Zuccarelli of Wells Fargo Home Lending echoed Norman's observations, noting inland migration not only from the West Coast to places such as Idaho, Texas and Utah, but also along the East Coast as well.

“It’s amazing how you’re seeing housing prices rise in those markets now, so that the people who lived there are now having to move even further inland,” she added.

Learn more about the factors contributing to the housing affordability crisis and what NAHB is doing to combat this issue at nahb.org. Stay tuned to NAHB’s Election 2020 webpage for more information, including videos and photos, as well as upcoming event details.