Housing Supply Report reveals robust future for local real estate

During the November Mebane Planning Board meeting, City Planners Ashley Ownbey and Audrey Vogel provided the Planning Board with a detailed Housing Supply Report. The concept of putting together such a report arose during the August Planning board meeting, in which the appointed advisory board considered a multi-family development and raised questions about the ratio of multi-family rental apartment units in Mebane in comparison to single-family houses. The aim of the report was to provide a foundation for discussion and direction by the Planning Board, City Council, public, and staff on how the best serve the City’s goals and objectives, as well as address concerns of maintaining the City’s “Positively Charming” character as it grows by examining the composition of Mebane’s housing stock using local data and projections, and by comparing trends in Mebane to eight peer communities in North Carolina using 2010, 2014, and 2018 ACS data from the towns of Belmont, Fuquay-Varina, Graham, Hillsborough, Holly Springs, Kernersville, Knightdale, and Waxhaw. Another aim was assessing measures of housing affordability in Mebane per the City’s Growth Management Goal 1.5 in its Comprehensive Land Development Plan, which is to establish municipal affordable housing goals that enable both residents and developers to provide more housing options.

During the November Mebane Planning Board meeting, City Planners Ashley Ownbey and Audrey Vogel provided the Planning Board with a detailed Housing Supply Report. The concept of putting together such a report arose during the August Planning board meeting, in which the appointed advisory board considered a multi-family development and raised questions about the ratio of multi-family rental apartment units in Mebane in comparison to single-family houses.

The aim of the report was to provide a foundation for discussion and direction by the Planning Board, City Council, public, and staff on how the best serve the City’s goals and objectives, as well as address concerns of maintaining the City’s “Positively Charming” character as it grows by examining the composition of Mebane’s housing stock using local data and projections, and by comparing trends in Mebane to eight peer communities in North Carolina using 2010, 2014, and 2018 ACS data from the towns of Belmont, Fuquay-Varina, Graham, Hillsborough, Holly Springs, Kernersville, Knightdale, and Waxhaw.

Another aim was assessing measures of housing affordability in Mebane per the City’s Growth Management Goal 1.5 in its Comprehensive Land Development Plan, which is to establish municipal affordable housing goals that enable both residents and developers to provide more housing options.

As of 2020, the share of single-family to multi-family units in Mebane stands at 61 percent single-family, and 37 percent multi-family. The share of single-family homes, which has been increasing since 2018, is projected to be growing steadily over the next 15 years, to 2035. The 350 apartments at the Mebane Towne Center are the remainder of approved multi-family units that are not yet constructed.

The average composition of the nine communities - including Mebane and the eight peer communities - is 77 percent single-family units, 20 percent multi-family units, and 3 percent other.

“Mebane falls below the average proportion of the single-family homes, with an above-average share of multi-family units,” said Vogel. “According to this ACS data, Mebane has the second-highest proportion of multi-family units among its peers. The City data for 2020 indicates an even higher share of multi-family units, although it will continue to decrease as less apartments are in the pipeline of approved units.”

“We’ve looked at data that shows that between 2000 and 2014, the share of multi-family units has increased by only 3 percent. Since 2014, that share of multi-family units has been decreasing in Mebane,” Vogel continued.

The high ratio of multi-family units to single-family units in Mebane, while projected to drop in the coming years, was still cause for concern for multiple members of the Planning Board.

“I think it’s just high,” Planning Board member Kurt Pearson said of the multi You look at Graham with 26 percent, and Hillsborough at 20 percent. So if you look at the cities that are really close to us, we’re still way above those numbers. It’s just worrisome, a little bit, that’s just personally. I just feel like it’s good to know it’s going to go down, but we really need to keep an eye on it. 30 percent is really high, especially when you’ve got these other cities nearby that are much lower.”

“I agree with Kurt,” added fellow Planning Board member Larry Teague. “That is a real concern, especially with all the issues with traffic and schools. We need to be very careful here.”

According to the ACS data, the average share of single-family detached homes to townhomes in Mebane’s eight peer communities is 93 percent single-family, and 7 percent attached. With a 95 percent rate of single-family homes to a 5 percent rate of townhomes, Mebane is slightly below the average of townhomes compared to the peer towns. In an effort to bring more balance to that equation, numerous attached units are on the horizon over the next few years. According to local data, townhomes make up approximately 30.5 percent of the single-family housing units that have to date been approved for construction by Mebane town leaders.

The number of townhome units in Mebane including 488 that have been constructed, 552 that are approved or currently under construction, and another 332 units that have not yet been approved, with site plans under the review of Mebane’s Technical Review Committee. The number and share of townhomes is increasing in Mebane and its peer communities, reflecting a market demand driven by newly-retired Baby Boomers, born between 1946 and 1964, and younger Milliennial families (children born in the 1980s and early 1990s).

“As you can see, there are more townhomes or under construction than what currently exists,” said Ownbey.

Compared to the peer communities, Mebane’s share of cost-burdened households was near the average in 2018 for both renters and owners. The estimated share of renters paying more than 30 percent in annual income for housing costs was double - approximately 40 percent of all renters - the share of cost-burdened property owners in town, which stands at approximately 20 percent of all homeowners.

Mebane’s location in two counties is important to consider when evaluating housing affordability. Analysis of income data begins to reveal regional influences in the calculation and discussion of affordable housing in Mebane.

The U.S. Department of Housing and Urban Development (HUD) annually calculates median area income. This is used to fund affordable housing projects, and to determine which households should be considered “low income”.

There is considerable disparity between Orange and Alamance Counties in terms of median family income and overall housing affordability. For example, the median family income in Durham/Chapel Hill (Orange County) is $90,900 annually per family, while the median family income in Burlington (Alamance County) stands at approximately $64,200. As a result, the low-income limit of 80 percent of the area median income is significantly lower in Alamance County.

Mebane is interesting, given its location in two counties, Alamance and Orange. The area median income is quite different for the two counties. This leads to a family of four with an annual income of just over $72,000 being considered “low income” if living in Orange County, but being above the median area income if living in Alamance County.

Rental rates advertised around Mebane in early October by mult-family apartment developments constructed over the last ten years revealed average monthly rental rates between $950 and $1,450 per year.

The average monthly rent for a one-bedroom apartment in Mebane in October was approximately $953, meaning that an individual living in such a unit would need to make at least $40,843 a year, or $19.64 per hour, to come under the 30 percent threshold of income to housing cost. For a two bedroom the average rent in October was $1,175, requiring an annual income of $50,357 ($24.21 per hour) to come in under the 30 percent threshold. For a three bedroom unit, the average rent stood at $1,424, requiring an annual income of over $61,000 ($29.34 per hour) to remain at under 30 percent in housing costs.

Home values are skyrocketing across Mebane. In August 2015, the average home value is Mebane was $170,000. Fast-forward five years, and the average home value stands at $215,000 - a dramatic increase of over 26 percent in just half a decade.

“We concluded in the report there were many data sources that could be examined, and are forthcoming, that would help in this type of analysis. Particularly the 2020 US Census Data, and also data related to commuting patterns. We hope this report provides an opportunity for the City to consider how decisions reflect, and also impact, progress towards the goals and objectives described in Mebane by Design.”