Finding a place to live in Buncombe County has gotten slightly easier in the past two years as a result of some 1,500 new rental units coming available. But monthly rents continue to rise, despite these new residences and the promise of thousands more currently under construction.
A growing vacancy rate highlights, one expert notes, the possibility of the Asheville housing market becoming saturated with available units.
Those are some of the findings of a report conducted by Bowen National Research, released by Asheville city officials at the end of December.
The report “makes clear that new affordable housing remains a dire need in Asheville and Buncombe County,” said Jeff Staudinger, Asheville assistant director of community and economic development. “It also provides evidence that, despite a small increase in the availability of market-rate apartments, the strong demand continues to push rents higher,” Staudinger said in an email.
The report’s conclusions roughly tracked third-quarter Asheville metro area data released earlier by two other real estate research firms.
Two years ago, Bowen, an Ohio-based real estate market consulting firm, pegged the rental vacancy rates for Asheville and Buncombe County, respectively, at less than 1 percent.
The new Bowen assessment found the county rental vacancy rate had risen to 2.7 percent, or 337 units in October and November of this year, from 99 during the same period in 2014.
Those figures include market-rate housing and “affordable rentals” such as tax-credit and government-subsidized housing.
The occupancy rate in the latter category remained about 100 percent, Bowen researchers concluded. But the market-rate component eased a bit to 96.4 percent this year, down from from 98.8 percent in 2014.
Both figures are above the national average of 95.1 percent, wrote Patrick Bowen, the firm’s president and report’s chief author in a Dec. 20 letter to Staudinger.
Apples to apples?
“Healthy and well-balanced rental housing markets have overall occupancy levels of around 95 percent,” Bowen wrote.
Rental-unit data from Reis, a New York-based company, paint a rosier picture for the Asheville metro area. The federally designated metro area, which comprises Buncombe, Haywood, Henderson and Madison counties, shows a 6.8 percent vacancy rate during this year’s second and third quarters and 7 percent for 2016’s first three quarters combined.
However, Axiometrics of Dallas reports lower metro vacancy rates during this year’s first three quarters. According to Axiometrics, the rate dropped to 4.1 percent in the third quarter from 4.5 percent in the second. It stood at 4.8 percent during the first. The company’s report did not provide a percentage for 2016’s first three quarters combined.
Bowen researchers surveyed 105 multifamily rental properties to produce its report.
City officials paid Bowen $4,500 for the new report and $29,750 for the 2014 assessment, which examined Buncombe, Haywood, Henderson and Transylvania counties.
No date had been set, as of Dec. 28, for Asheville City Council to discuss the findings of the new Bowen report, Staudinger said. Although the city’s Housing and Community Development committee is scheduled to review the updated data on Jan. 17. Asheville city staff will prepare a report for that review, he said.
An influx of new rental-units did not prevent rents from increasing, the Bowen survey found. But Bowen emphasized in a phone interview last week that this year’s large increase in median asking-rents in some categories occurred due to new upscale rental units that did not exist in 2014.
“So it is not an apples-to-apples comparison,” Bowen said.
Effective rental rates include any discounts or concessions landlords provide tenants. Asking-rental rates do not.
Median asking-rents in market-rate units, regardless of total number of bathrooms were, according to the Bowen report were:
- 2016: $875
- 2014: $667
- 2016: $930
- 2014: $830
- 2016: $1,061
- 2014: $916
- 2016: $1,127
- 2014: $1,021
Slowing the climb
“Market-rate rents have increased at an annual rate of 4.4 percent over the past year, while tax-credit rents have increased at 0.9 percent during this time,” Bowen wrote.
The national rate of increase during that period was 3 percent, he wrote.
Asheville’s higher rate of increase indicates that “demand for market-rate rental housing remains strong despite the large amount of new inventory added to the market during the past two years,” Bowen wrote.
The report also found that county renters “will likely live in lower quality product as long as rents are affordable.” Higher-quality units had higher vacancy rates than lower-quality units, according to Bowen.
Metro asking monthly rental-rate increases dipped to 0.5 percent during this year’s third quarter, from 2 percent during the second quarter, Reis reported.
The median asking-rent in Buncombe, Haywood, Henderson and Madison counties rose to $1,044 in the third quarter, from $1,016 in the previous quarter, Reis researchers found.
Reis surveyed the units — from studio to multi-bedroom apartments — in 58 multifamily developments to determine its figures.
Using a different methodology, Axiometrics researchers also found rent inflation dropped in this year’s third quarter from the previous quarter.
The effective monthly rent increase fell slightly to 3 percent, from 3.1 percent between the two quarters, Axiometrics found. The metro’s average effective monthly rent climbed to $1,097 during the third quarter, from $1,080 in the second quarter.
Axiometrics did not provide a median figure. Its conclusions are based on a survey of 26 multifamily developments in the metro area.
The Bowen report concludes that 1,563 new rental units were built between January 2015 and October 2016, Bowen said.
Multifamily rental units currently under construction total 2,265, according to the report. Another 2,507 are “planned or proposed.”
The large majority of those units – 3,924, or 82.2 percent – will be market-rate rentals.
Though community leaders have described the lack of affordable housing in the Asheville area as a “crisis” for more than two years, Bowen cautioned that could change, with the Buncombe market becoming “saturated” due to new rental units coming available.
“Such indicators of a saturated market would be an increase in vacancies, with the market occupancy rate dropping below 95 percent,” Bowen wrote in his concluding remarks.