The Land Use Management Ordinance (LUMO) is now in effect???

Chapel Hill will be negatively impacted if this text amendment stands. It is in Chapel Hill’s best interest to reverse this admendment or we will have more of the same policies that have led to too little affordable housing for low-income or missing middle-income families.

First, what is LUMO?

It is a zoning ordinance that encourages many types of multi-family housing to be built on lots previously zoned as single-family residences. You can read the details on the town’s Website.

https://www.townofchapelhill.org/government/departments-services/planning/plans-and-ordinances/current-initiatives/housing-access-text-amendments

You will read about:

• Single-family home + cottage
• Two-family, attached or detached
• Three family
• Four Family

Those housing types can now go on lots with single-family zoning—I think duplexes can, but there is some confusion around the three others, as seen on the above page. In any case, it is a slippery slope.

This is called infill-housing.

Think about that!

Really think about that.

Chapel Hill land is expensive, very expensive.

Imagine that a lot in a single-family zoned residence has an older home that gets bought to be torn down. Developers will be vying for this expensive new lot. What will they build? Because of the cost of the lot, they must build an expensive housing unit—likely a duplex, triplex, or quadplex. They could even build an expensive new house with a cottage.

Why would they build anything else? Does Jess Anderson believe they will build something affordable for the missing-middle or low-income earners? If so, and she is elected, we will all find her wrong. With increased demand for retirees who want to live in Chapel Hill, those lots will be at a premium, and developers must build expensive housing units.

Jess’s goal of increasing the housing supply and land-use efficiency may have increased, but LUMO will certainly not increase the supply of affordable- or low-income housing.

What do the studies show?

Several studies have delved into the impacts of in-fill housing. A study from the Urban Land Institute suggests that while in-fill developments can cater to the missing middle segment, the outcome largely depends on local housing demands, development costs, and municipal policies. Chapel Hills’s land is too expensive, and demand is too high to see anything but more costly housing being built.

Similarly, UC Berkeley’s Terner Center for Housing Innovation report emphasizes that for in-fill to serve the missing middle genuinely, cities must provide incentives and regulate to avoid luxury-oriented developments. Chapel Hill’s LUMO does not do that in any way.

Another report by Sightline Institute analyzed housing in Portland, Oregon, a city known for its progressive land-use policies. The study revealed that while the cost per unit of in-fill homes was generally lower than new single-family homes, they were often out of reach for the city’s average wage earner.

Finally, consider all the luxury apartments being built all over Chapel Hill. Why are more affordable apartments not being built? The answer: The demand for luxury apartments, which give the developers a better return on investment, is so high. Otherwise, we would see more affordable apartments and houses being built.

The national trend of building to rent (BTR market)

If we look beyond Chapel Hill, we will see a disturbing trend for young families hoping to own their own homes, whether a home, condo, or townhouse.  

National builders and investors have geared up to build for the Build To Rent (BTR) market. The concept refers to developing residential properties specifically for the rental market rather than for sale. These are often owned and managed by institutional investors or small local investors.

The largest home builders like Tool Brothers, PulteGroup, Lennar, and D.R. Horton (the single largest US home builder) are rapidly shifting to the BTR market.

American Homes 4 Rent ($12B worth of rental homes), Invitation Homes ($18B), and Tricon American Homes ($1.8B) dominate the companies that only build and manage BTR homes.

This is the part that genuinely scares me. I have two nearly 40-year-old children who cannot buy a home. Yes, they live in cities with high demand for housing and low supply. Hence, they live in the growing rental market. Will they be able to retire and live on their home investments? No.

Eleven metros saw increases between 100% and 700% in the construction of BTR homes in the past five years, led by Charlotte (+621%) and Atlanta (+380%).

Builder’s Online has an excellent article on the rapidly growing BTR market.

https://www.builderonline.com/builder-100/strategy/who-will-succeed-in-the-build-to-rent-sector-remains-to-be-seen_o

Potential Negative Impacts for Young Families:

“Homeownership just got punched in the gut,” says Mark Wolf, CEO of San Antonio–based AHV Communities, a developer, builder, and operator of single-family BTR homes. “We’re seeing another resurgence of the demographic shift toward renting houses versus buying them.” This means the rich get richer, and the rest—well, they don’t get rich.

If the demand for affordable housing is so high and supply is so low that investors and developers are focusing all of their efforts on building, then young families will face the following:

Reduced Homeownership Opportunities: As more properties are built for the rental market, there may be fewer opportunities for young families to purchase homes, perpetuating the cycle of renting.

Rising Rents: Large institutional landlords might have more pricing power, potentially leading to higher rents. Young families might find it more challenging to save for a down payment.

Lack of Stability: Unless bound by longer-term leases, rental properties can offer less stability than homeownership. This might concern families looking to settle in specific school districts or communities.

Standardized Living: BTR homes often come with a standardized design and layout, which might not suit the unique needs of different families.

Economic Displacement: In areas with significant BTR developments, local residents might be priced out of their communities if rental prices rise substantially. This gentrification effect can be detrimental to long-standing communities and young families alike.

Less Customization: Renting a home often means there’s less freedom to customize or renovate the space to a family’s liking. This can be a limitation for young families that want to personalize their homes or make them more child-friendly.

Dependency on Corporate Landlords: There’s a difference between renting from an individual landlord and a large corporation. Corporate landlords might be less flexible on specific issues, from rent negotiations to handling maintenance requests.

Oh, yes, The Slippery Slope

Candidates who have voted for the LUMO say, “Don’t worry if you live in a Neighborhood Conservation District (NCD). Here is the text confirming that from the same web page noted above.

This ordinance does not change uses permitted in the NCDs.  Most NCDs already prohibit accessory apartments, duplexes, and multi-family housing.  Only the NCDs that already allow these types of housing will continue to permit accessory apartments, duplexes, and multi-family housing will continue to permit these uses.

But, if you look at other cities that have gone down a similar path, you will find this a slippery slope! In other words, over time, the slipperiness of that slope brings on more zoning changes that can affect single-family neighborhoods with NCDs in place.

Likewise, if Chapel Hill’s text amendment only allows duplexes now, the slippery slope effect will soon allow triplexes, quadplexes, and single-family houses with a cottage.

Conclusion

Will Chapel Hill’s LUMO create more affordable- and lower-income housing, or will it cater more toward the higher end of the spectrum? It seems pretty apparent to me. What do you think? Let us know—email all@chapelhillgreenconnect.com.