Tuesday, April 23, 2024

Boone’s thorny housing squeeze

Too much demand, too little supply create a thorny housing squeeze in Boone. 

For Boone, one of North Carolina’s quintessential mountain towns, too much prosperity comes with a price. A thriving tourism industry, an expansive university, and a growing second-home community that draws affluent retirees, investors, and work-from-anywhere professionals has made the High Country unaffordable for many.

The historically tight housing market in many cities across North Carolina and the U.S. sparked a record acceleration of prices over the past few years. Boone was no exception with the median price of homes sold in the city soaring 22% to $427,500 during the year ended March 31, according to the High Country Association of Realtors. In mid-May, the Multiple Listing Service cited five homes available in the city with an average price of $975,000, says Bill Aceto, managing partner of Blue Ridge Realty and Investments.

“An already popular area became more popular for a variety of reasons, some pandemic-induced and some not, but that has put a strain on the housing options for people who live here year-round,” says David Jackson, CEO of the Boone Area Chamber of Commerce. “Both on the sale side and the rental side, it has drastically moved the prices up.”

Boone is the economic and employment center for the seven-county High Country region, according to a November study by an affiliate of UNC Chapel Hill’s Kenan-Flagler Business School. The city has long been a favorite for visitors who enjoy exceptional views across the Blue Ridge Mountains, abundant outdoor recreation and an authentic Appalachian heritage. Its economic base is Appalachian State University, where enrollment has grown by more than 3,000 students, or 17%, in the past decade to about 20,640 as of fall 2021. 

Like scenic mountain towns nationally, Boone also got more popular as the pandemic prompted many property owners to shift from leasing apartments and homes to locals for year-long rentals in favor of short-term contracts.

“We saw a flood of folks up here that were looking for different options for staying,” Jackson says. “People that traditionally held on to investment properties to use occasionally themselves or rent to somebody working at the hospital or university shifted and made their property a week-to-week Airbnb rental. That’s taken away a lot of our capacity.”

Appalachian Regional Healthcare System, which serves four counties with nearly 3,200 employees, feels that pain. “Forty percent of their [Boone] staff comes from outside the area to work. That tells you how little workforce housing there is in this community,” Jackson notes.

Single-family homes in Watauga County sold for a median $535,000 in the first four months this year, a 24% increase from a year earlier.

The same is true for Appalachian State University, the largest county employer with 3,200 staffers. About 30% commute from outside Watauga County, living in adjacent Ashe, Avery, Caldwell or Wilkes County, along with Johnson County in Tennessee. Only about 13% of the 12,000 people employed in Boone as of 2018 lived within the city limits.

Lack of affordable housing is more than an inconvenience. It’s the reason people are leaving jobs or declining offers. That was a finding in the recently released Housing Needs Assessment for the High Country prepared by Bowen National Research, a Columbus, Ohio-based business. Boone and other local municipalities paid for the study, which also covers Alleghany, Ashe and Avery counties. 

The Bowen study reported there were only 20 homes priced under $150,000 throughout the region in mid-October. The median listing price was $475,000, and 75% of the homes for sale were listed for more than $300,000. Based on 2021 estimated census figures, the report concluded that fewer than 7% of households could buy a median-priced home. 

“Availability of housing is the key to the area’s housing issues. This means the development of new housing units is paramount,” says Patrick Bowen, president of the Columbus, Ohio, firm that has conducted about 30 studies of North Carolina communities.

Who wants to grow?

But not everybody is ready to sign up for that obvious response to a housing shortage. Adding more housing requires expanding existing water and sewer lines, of course. But Boone has no plans for extending utilities within the town’s jurisdiction or in unregulated areas of Watauga County. 

“When you reach the capacity of the town, you have to expand utilities to accommodate growth,” says Todd Rice, managing partner and co-owner of Blue Ridge Realty and Investments, which has operated for more than 40 years. “If we could run water and sewer farther out, it would spawn neighborhoods.”

Boone private student housing includes The Finmore at 241, a $35 million project by Murfreesboro, Tenn.-based Front Street Partners.

Not so fast, says Jane Shook, a town employee for 22 years including six in her current role as director of planning and inspections. Over the past 20 years, the town’s population has grown by about 5,500 people, or about 40%, to about 19,500.

 “Any extension of services has to be done in a thoughtful way. We wouldn’t want to just extend services to encourage sprawl,” she says.

Still, she says the town views housing as a top priority as it starts updating its formal land-use plan. The Boone 2030 Land Use Plan was completed in 2009, while the next version is expected to be unveiled next February after lots of analysis and community input.

Studying where different housing types can be located and whether short-term rentals are having a negative effect are important parts of the planning process, she says. “We’ll carefully look at where the biggest benefit to our community would be in [doing] future extensions.”

Rice wants a reasonable path forward for developers, noting that the town has many ways to support cost-effective development that could lead to more moderately priced rental and for-sale properties.

“The town charges impact fees to developers that get rolled into the price of the housing and make it less affordable,” he says. He cites the $500,000 impact fee levied at The Peak of Boone, a 113-unit housing development for App State students.  “That fee has nothing to do with labor or hook-up to water and sewer; it’s just a fee for the right to hook up. The town likes to talk about affordable housing, but you need to reduce regulation and reduce fees to developers so they can make it more affordable.”

Talk about affordable housing in Boone dates to at least 2009, when the chamber had a two-day meeting on the topic and authorized a housing trust, says Economic Development Director Joe Furman, who has worked for the county since 1984. “We tried quite a few things but had no money and no staff so we didn’t accomplish a lot. The trust went into inactive status in 2018,” says Furman, who is retiring at the end of the year. 

Conversations escalated over the past year as the lack of affordable housing progressed from a concern to a crisis. “Even people who make 80% up to about 120% [of the area median income] can’t afford a house here,” Furman says.

After four community meetings of the Watauga Housing Forum in March and April, officials agreed to revive the housing trust with a temporary board to be appointed. There’s been no commitment of money, however.

“The town likes to talk about
affordable housing, but you need
to reduce regulation and reduce
fees to developers so they can
make it more affordable.”

Todd Rice, Blue Ridge Realty and Investments 

“Hopefully the revised and reimagined housing trust will be a vehicle to get something done,” Furman says. “I’m encouraged by the renewed interest and the fact that many more people are participating in the discussions; the local government seems more inclined [to be supportive], and I like the direction things are headed.”

Like everywhere, Boone is impacted by supply chain disruptions, labor shortages and higher costs for construction materials. Some townhome projects aimed to deliver more affordable homes, he says, “but those prices are inflated now and may not be hitting that target.”

Recruiting businesses to the area has always been a challenge because Boone lacks an airport and is about 50 miles from the closest interstate. Mountainous terrain also limits the potential for development. 

“The two biggest limitations to our housing development are infrastructure and topography. We can’t do much about the latter, but getting infrastructure to underserved areas would provide that higher-density development,” says Aceto, who is Rice’s business partner.

Furman supports extending utilities to expand housing options, including multifamily projects outside the town’s limits. “It is an issue, how much we can promote and recruit, knowing that people moving here will have a difficult time finding a place to live.” 

Boone has modified two zoning rules in the past year to encourage denser housing, Shook notes. It adopted a district that allows smaller homes and smaller lots and it established a zone to allow construction of housing targeting adults 55 and older. While zoning changes have been approved, she’s not clear if projects are underway.

“We’re not going to get the developments of 60 or 75 [single-family] housing units that you see in larger jurisdictions because we just don’t have the land area for that,” Shook says. Rather, the town’s fundamental goal is maintaining neighborhood integrity.

The Housing Forum united the community and the university with a realization that it’s time for developers and the community to look beyond student housing. Between 2009 and 2021, the Town of Boone added 119 multifamily buildings including 2,031 housing units. 

The lion’s share of development involved off-campus student housing, but multifamily housing construction barely kept pace with the university’s growth. The Bowen housing report found a 99.9 % occupancy rate among 38 off-campus housing projects surveyed, encompassing 2,350 units.

Housing needs extend beyond the student population. The Bowen report projects Boone’s under-25 demographic will remain grow by about 2% from 2021 to 2026. But the 35-44 age group, representative of the workforce population, is projected to grow almost 25% in that five-year span.  

Similarly, the senior population is growing in Boone: The 65- to 74-year-old demographic is projected to increase by 17.2% from 2021 to 2026 and, most notably, the 75+ cohort is expected to expand by 32.7%. Workforce housing and housing for seniors on fixed incomes will become an increasing concern. 

The Kenan-Flagler report noted making progress on affordable housing in Boone has long faced challenges because of tensions between town and county officials and the perception “among some locals, leaders, and development community that the Town of Boone is ‘anti-development.’” 

But Kellie Ashcraft, an emeritus professor at App State who organized the Watauga Housing Forum meetings and now leads the newly formed Housing Council, is optimistic that progress is being made because more people are engaged. 

“Affordable housing is a crisis across the country, so we’re at this opportune moment: A crisis is when people are most likely to try alternative ways of doing things,” she says.

Jackson sees big opportunities for developers.  “We need stock in every category and we need awareness that — while student housing has been the primary focus the last five or six years — there are other categories that might not be as lucrative as student housing development but that would be rented just as quickly as it is built.”

 If someone built housing for the medical center community, he says, “it would go in a second. You wouldn’t be hedging bets on leases, this would be a sure thing.” 

The question he raises: Can developers who see beyond student housing or $1 million-plus retirement properties be found? 

“For the last decade, when we’ve talked about [senior] housing it has been around that transplant group, people who are retiring and moving here. We haven’t paid enough attention to the aging population within our own community,” Jackson says. “We have a renewed partnership between our town and our county, so the [local] governments have gotten back to the table. If we’re going to get the housing stock and the development we need, while maintaining the integrity of why people want to be here in the first place, we have to have some willing partners.” 

Ashcraft expects some tough decisions ahead as Boone manages inevitable growth. “As I listened to folks, it occurred to me that there are a lot of people who have a lot of reasons why we can’t do certain things. It’s going to take the commitment and the will of a lot of people who are willing to give up political power and economic power.”

Growth gains and pains

While Appalachian State University is about a lot more than football, gridiron success has clearly had a profound effect in raising awareness and popularity of the Mountaineers.

From 1986 to 2012, the team won 12 Southern Conference championships. Since stepping up to the Sun Belt Conference in 2014, it has won four more titles and ranked several times in the AP’s top 25 best football teams in the nation.

But bigger conferences aren’t pursuing the school because of Boone’s small population and distance from a major city.  

It’s an amazing growth story: Since 2003, student enrollment has surged 44% to about 20,640, while the number of on-campus beds increased 26%. The expansion has been a bonanza for Boone apartment owners. Between 2009 and past December, the town added 119 multifamily buildings including 2,031 housing units. A survey of 38 off-campus projects showed virtually all — 99.9% — of units were leased,, according to a study this year by Bowen National Research.

App State has replaced its aging dorms. A 2005 report shows the campus had 18 residence halls and nearly 4,900 beds. Now, completion of New River Hall slated for July 30 will give App State 20 residence halls with about 6,150 units. Four buildings totaling 2,300 beds have opened in the last two years, spokeswoman Megan Hayes says. 

While on-campus housing provides only for about 30% of App State’s total enrollment, more students are taking online classes and don’t necessarily need to live in Boone. App State’s Chancellor Sheri Everts has indicated future enrollment growth will be focused online or at on-site locations outside of the Boone area. The university bought a 225,800-square-foot building in Hickory from optical-fiber maker Corning earlier this year. So far, there are no plans for university housing in the Catawba County city, which is 40 miles southeast of Boone.

Watauga County’s relatively high-cost housing market makes it challenging to attract faculty members, Hayes says. Earlier this year, the university said it might build as many as 140 housing units for faculty and staff at a campus site. Hayes declined to discuss those plans. 

“The university told us they needed as many as 40 houses right away for faculty and staff,” says Todd Rice, managing partner of Blue Ridge Realty in Boone. “If they were built today, the university would consider leasing all of them.”

Meanwhile, the Mountaineers open the football season on Sept. 3 by hosting UNC. The Heels are 3-point favorites.

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