Rent increases slowing down; Asheville still high, top in the state: report

Although Asheville is the most expensive city for rent in North Carolina, price increases are beginning to slow down, according to a national report.

The median rent for an apartment in Asheville is estimated to be $1,591 a month, a 0.9% increase from August according to a rent report from Apartment List. This increase is down from August, when rent prices rose 1.3%, and from July, when they rose 1.8%, according to Apartment List data. Since this time last year, rent has risen 6.9% in Asheville, lower than the state's average of 10.5%, the national average of 7.5%, and Asheville's year-to-year change in January of 26.2%.

Even with slowing increases, the report shows rent in Asheville is still the most expensive among major cities in North Carolina with a median two-bedroom apartment rent of $1,698, compared to $1,520 in Raleigh and $1,490 in Charlotte. According to Apartment List's national report, national median rent has declined month-to-month for the first time this year, but Asheville's rent is still increasing and has not fallen since March.

"The timing of this slight dip in rents is consistent with a seasonal trend that was typical in pre-pandemic years," the national report said. "Assuming that trend continues, it is likely that rents will continue falling in the coming months as we enter the winter slow season for the rental market."

Asheville is more expensive than large metropolitan cities, too, including Atlanta, Dallas, and Minneapolis, the Apartment List report shows. Since the start of the COVID-19 pandemic in March 2020, rent prices in Asheville have risen 43.2%.

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Rent increase slowdown may not stick

Winston “Rusty” Pulliam, an Asheville-born and raised investor and developer who helped develop six apartment complexes in Asheville, said although he has seen the increasing slowdown reported by Apartment List, he does not expect prices to go down at all in the next 24 months.

"I see a bleak marketplace for renters because rents are just going to keep on climbing," he said. "It's a perfect storm."

With Buncombe County expecting 80,000 new residents by 2045, according to Citizen Times reporting, Pulliam said rents will only increase as more people move to the area due to the low supply of apartments. Rising inflation will also increase rent, he said, but because most leases are for 12 months or longer, the effects of current inflation on rent prices likely will not be known until the spring.

Fewer of the people moving to Asheville will be able to buy homes, Pulliam said, due to a combination of rising mortgage rates and fewer homes being constructed because of rising construction costs and the relatively small amount of land suitable for home construction. Rising mortgage rates mean fewer people will want to sell their homes, too, further limiting the housing market, Pulliam said.

If people cannot buy homes, he said, they will move to the rental market, tightening it further.

Rent prices are not rising faster right now because "smart" landlords do not increase rent too quickly, because if they do, tenants could leave, incurring a greater cost as the apartment sits empty for weeks or months, Pulliam said.

"You try to balance it out in what the market is bearing as well as wanting to retain good tenants," he said.

Rent increases hit low-income families hardest

Slowing rent increases have not stopped the need for rent assistance. According to Scott Rogers, executive director of the Asheville Buncombe Community Christian Ministry, the organization saw a 10% increase in the number of people seeking rent assistance from July to August. Last year, the organization helped 900 people with rent assistance; this year, he said, it expects to help around 1,400.

According to Rogers, those seeking rent assistance are reporting rent increases of 10%-15% since the rent moratorium ended last July.

"The rise in rents is a part of the whole inflationary picture impacting particularly low-income families in a disproportionate way," Rogers said.

While a 10% increase may seem small to some, Rogers said, an extra $100 a month in rent for a low-income family on top of the rising cost of other expenses can make it difficult to stay stable. While paying the increases in rent is often more cost effective in the short-term, Rogers said it is not always a good long-term solution nor one with which ABCCM can help.

"Helping a family stay in their home is much more cost-effective as the cost of moving ranges from $3,000 and higher," he told the Citizen Times. "But, families have to face some harsh realities, such as can they continue to pay higher prices, which can force them to consider moving. ABCCM cannot help those who cannot or do not have a clear plan to pay increased rents. If there is a plan to move, we have helped so as to not make folks homeless. More than ever, family and friends are stepping up to let families move in temporarily while they make transition plans."

Wage growth at the start of the year and the end of 2021 was extremely low compared to last year, according to National Association of Realtors' 2022 Quarter 1 Commercial Real Estate Metro Market Report. At the start of the year, Asheville wages rose just 0.4% over last year compared to the national average of 4.7%. Rogers said the ABCCM has been urging people to consider getting job training at local community colleges to snag higher-paying jobs.

"There's no charge for tuition this year. There are short-term continuing education certifications they can get. A lot of businesses are offering their own on-the-job training or in-house training so that somebody can take advantage of some of these higher paying jobs," he said.

To live modestly with no financial cushion against emergencies or illness, the NC Budget and Tax center estimates a Buncombe County family of two adults and two children needs to bring in at least $72,000 annually, or both of the adults working full-time for $17.50 an hour. The living income in Buncombe County, it says, is 2.6 times higher than the Federal Poverty Level. The center estimates the cost of basic housing in the county is around $1,150 a month.

Changes to past data

In January, Apartment List showed a median two-bedroom rent of $1,771 and a median one-bedroom rent of $1,336 in Asheville according to past Citizen-Times reporting, but new estimates from the company show the rents then were closer to $1,590 for a two-bedroom and $1,279 for a one-bedroom. These changes reflect Apartment List updating its databases with newly published historical data, according to Apartment List Senior Research Associate Rob Warnock.

Apartment List's rent estimates are based on census data from the American Community Survey, but this census data is often several years out of date, Warnock said. To estimate current rent trends, Apartment List projects ACS data into the present day using real-time lease signings and rent changes taking place on its platform then adjusts using the latest ACS data and other statistics.

"Each year, when the newest year of ACS data becomes available, we re-base our rent estimates by swapping out last year's ACS data with this year's," Warnock said. "Our rent growth adjustment factor remains unchanged, so if 2019-to-2020 rent change according to the ACS was lower than the 2019-2020 rent change we were estimating before 2020 data became available, then swapping in the new base year will have the effect of lowering the final rent estimates for all months in our database. Our most recent re-base was in March 2022, which is why the January 2022 estimate in January 2022 was different from the January 2022 estimate today."

The newest ACS data will be available in January 2023 and will cover 2021, Warnock said, so there will be another data adjustment at that time.

This article originally appeared on Asheville Citizen Times: Rent increases slowing; Asheville still high, even among big cities