Asheville homes cost 6.5x area median income, highest ratio in NC: Harvard study

Asheville homes cost 6.5x area median income, highest ratio in NC: Harvard study

ASHEVILLE – With the city’s home prices having increased 53% between 2019 and 2023, the cost for a house in the Asheville area is now about 6.5 times the area’s median income, according to a new report compiled by the Joint Center for Housing Studies of Harvard University.

The report indicates that the price-to-income ratio for Asheville’s housing market, which reflects the prices in 2022, is higher than anywhere in North Carolina. In terms of national placement, the ratio tops other major metros like Boston and Atlanta, and it places the mountain city in the top 60 United States metros studied by Harvard.

“Especially in a market like Asheville to have a price-to-income ratio above 5, much less above 6 — it’s pretty astounding,” JCHS senior research associate Alex Hermann said.

Rising Concerns

The Joint Center for Housing Studies’ State of the Nation’s Housing 2024 report was released on June 20, with national housing experts raising concerns over the rapid increase in national home prices, the rise in the number of cost-burdened households, and the annual income required to purchase a house in America.

For the price-to-income ratio, there isn’t necessarily a “healthy” number, but the history of a region’s prices needs to be considered, Hermann said. Asheville historically sat around 3 times area median income in the ’90s, with prices eventually rising to around 4.5 times the AMI in the 2010s.

What the metric does suggest is a much more difficult home buying market, Hermann said, with a higher income being required to even qualify to buy a home, as median sale prices currently sit around $465,000 in Asheville.

Income Disparity

The report indicates that nearly half of all United States metros require homebuyers to have over $100,000 in annual income to buy a new home. In 2024, the qualifying income to purchase an Asheville home with a 20% down payment is $112,726, according to a May National Association of Realtors metropolitan median area prices and affordability report.

Asheville’s household area median income was reported to be $64,548 in the 2022 American Community Survey. The survey also reported an AMI of $109,979 for married couples, $82,645 for family households, and $43,614 for non-family households.

Growth Gap

Last year ended with a record median sales price of $485,000. With prices increasing 53% over four years, the AMI only increased around $12,000 — roughly 24% — between 2019 and 2022, according to the American Community Survey — lagging the rapid growth in the housing market.

“It’s a concern and has real long-term implications for affordability,” Hermann said of the possible growth gap between income and home prices.

Supply and Demand

Hermann pointed to the lack of supply attributing to the national rise in home prices, along with interest rates being low for the past 10 years before reaching 20-year highs earlier last year. Additionally, higher demand is coming from more millennials who had a late start on obtaining a home and Gen Zers — those born between 1997 and 2012 —are just entering the market, the report states.

Asheville Realtors and housing market specialists have pointed to supply as being a frequent problem for the area’s market as demand has grown and comes as national moving companies continue to report that more out-of-state residents are interested in moving to the area.

Lack of Affordable Housing

The number comes as advocates have continued to push for higher wages and as the Asheville-based Just Economics of WNC raised the regional living wage to $22.10 based on skyrocketing housing prices in the region. The wage sets a yearly income of about $45,968 before taxes.

Just Economics Executive Director Vicki Meath said the study indicates that a need for providing a living wage is “more important than ever,” especially as other metrics, like Fair Market Rent, remain at record highs.

Housing Crisis

“We need wages to go up and we need housing costs to come down or to stabilize at least,” Meath said, Asheville currently has the highest Fair Market Rent in North Carolina, with the U.S. Department of Housing and Urban Development estimating it costs over $1,500 for a one-bedroom apartment.

Fair Market Rent metrics are designed by HUD to indicate how much it costs to rent a moderately-priced dwelling unit and determine payment standards for the Housing Choice Voucher program.

The Harvard report also indicates that North Carolina is one of the hardest hit states when it comes to the loss of low-rent units over the past 14 years. In 2012, nearly 34% of North Carolina’s monthly rentals were under $600. By 2022, those units decreased to 21%. In the same time, the makeup of units that cost between $1,400-$1,999 grew from 5.8% of the states’ rental units to 20.7%.

Call for Action

One of the major reasons Just Economics increased the area living wage in 2024 was to match the fact that the “cost of housing has gotten out of control,” Meath said. “It really creates a more sustainable local economy when more people are making a living wage,” Meath said.

Conclusion

The disparity between home prices and median income in Asheville suggests a growing housing crisis that requires immediate attention from policymakers, advocates, and stakeholders. Solutions aimed at increasing affordable housing, raising wages, and addressing supply issues are essential to ensuring the long-term economic stability and livability of the region.