If there’s a single, overarching narrative of Charlotte, it’s the city’s quest to grow and reach for the next big thing — a major airline hub, an NBA team, an NFL team, the Democratic National Convention, the Republican National Convention. Roughly 17,000 new residents are coming to Charlotte each year.
And with the influx of new residents and businesses comes pressure to build billions of dollars worth of new roads and transit, fights over density in established neighborhoods and the dreaded specter of more traffic. Prices are shooting up as the supply of homes for sale keeps plummeting, making it harder and harder for prospective owners to buy into the market.
Developers are still building thousands of new apartments, giving Charlotte the dubious title of fastest-growing apartment market in the U.S.
Here are four of the biggest questions facing Charlotte as the city keeps getting bigger:
(1) How long will the apartment boom last?
Since the Great Recession ended, Charlotte’s apartment market has exploded, with new luxury buildings popping up across the city. Developers have added about 42,000 units to the region in the past eight years, for 31 percent growth, the fastest rate in the U.S., according to an analysis by RealPage. And though developers and renters have been wondering for years when rents might start coming down, so far, that hasn’t happened.
The average rent in Charlotte, $1,142 a month, is $300 a month higher than it was five years ago, according to Charlotte-based apartment-tracking firm Real Data. And there are still roughly 27,000 more apartments either under construction or planned.
There are a few warning signs that building apartments is getting tougher.
A planned luxury apartment development at Seventh Street and Caswell Road in Elizabeth has been put on hold because of rising construction costs, and in places like uptown that have seen the most new apartments, vacancy rates are higher than the city’s average.
A report last month from real estate analysts at Yardi Matrix found Charlotte is at risk of being one of the most “over-supplied” apartment markets, meaning demand from renters isn’t likely to keep up with the glut of new buildings. That means rent could stagnate, or even fall.
But for every analysis predicting a downturn, there’s an opposite take. For example, the RealPage report predicted Charlotte developers won’t have trouble filling new apartments, and will likely be able to keep increasing rents for the next few years.
The bottom line: As long as population growth continues and the economy doesn’t go into another recession, don’t expect apartments to stop popping up anytime soon.
(2) Will home prices keep going higher, or will supply and demand reach a balance?
Anyone who’s tried to buy a home in the past year in Charlotte has likely already seen that the market is crowded, competitive and expensive. Data compiled by the Carolina Multiple Listing Services show the average home sales price in the Charlotte region jumped almost 6 percent in June compared with a year ago, to $302,177.
But even more striking than how much houses cost is how few are on the market.
The number of homes for sale plunged more than 17 percent from June 2017, leaving just two months of supply on the market. Compared to 2012, the supply is less than half of what it was. That means homes are selling fast: In 2012, a house spent an average of almost four months, on the market. In June, houses sold in just 36 days on average, barely more than one month.
All of those factors — high prices, limited supply, fierce competition — are keeping more buyers out of the market. In June, the number of homes sold plunged 12 percent from the prior year.
Unfortunately, there’s little relief in sight for buyers. Listings through the first half of the year were down about 1 percent compared to 2017. Until homebuilders ramp up production, the supply squeeze probably isn’t going away — and they are quick to point out that high land prices, rising labor costs and even tariffs on Canadian lumber are only driving their costs higher and making it harder to build.
(3) Can Charlotte build roads and transit fast enough to outrun congestion?
Since 2010, Charlotte has added more than 120,000 new residents, pushing its population to 860,000. And with somewhere around 50 to 60 new residents a day, Charlotte is on pace to reach the 900,000 mark in a few years. Combined with continuing growth in most of the surrounding counties, that’s a recipe for more traffic.
In places like northern Mecklenburg County, traffic has become an explosive issue, with fury over the planned toll lanes on Interstate 77 fueling years of political fights. Other hotspots like Providence Road during rush hour, Fairview Road in SouthPark and Brookshire Boulevard headed out of Charlotte are growing more congested.
What’s less clear is whether Charlotte’s major transportation projects will be enough to get ahead of traffic, or whether the city will be left playing catch-up. The $1.2 billion Blue Line light rail extension to UNC Charlotte opened this year, and the Charlotte Area Transit System is planning another $7 billion worth of rail lines to finish its 2030 plan.
Plans for those could be finalized over the coming year, including rail to the airport and a $1 billion tunnel under uptown.
But there are still plenty of question marks, such as whether a rail line or bus rapid transit would be built to Lake Norman, where the money to build out the plan would come from and how much new revenue would be required from a tax increase.
On other major roads, Charlotte is planning to rely in part on toll lanes to help pay for expansion. So far, however, possible toll lanes on I-77 south of uptown, the southeast portion of Interstate 485 and U.S. 74 east of uptown haven’t aroused the fierce anger of the initial I-77 tolls.
(4) Who will win fights over density between neighborhood groups and developers?
As Charlotte grows into a more urban city, plans for dense developments are bumping up against opposition from established single-family neighborhoods that don’t want to see major changes.
That dynamic was on display in the Foxcroft neighborhood last year, where about 1,200 people signed a petition to block 38 townhouses that would have been built on five single-family lots. City Council ultimately voted down the development.
In Elizabeth, the neighborhood association is suing to block a 124-unit townhouse development by Pulte, which is denser than the surrounding single-family houses.
Nearby, residents in Myers Park and Cherry tried to convince City Council to stop a 20-story office tower and hotel complex planned by NAI Southern between Third and Fourth streets, which they claim would be too tall. Worse, they said, it could set off a rush to build similar buildings outside uptown, abutting what have long been quieter streets lined with houses.
“It’s also going to set a precedent for proliferation. It’s a slippery slope,” Cherry resident Sylvia Bittle-Patton warned City Council, which ultimately approved the plan.
But if some residents want to keep density out, market forces are pushing it in.
More people want to live and work close to areas like uptown, South End and SouthPark, driving up land prices. With prices high, developers have more incentive to pack as many residences or as much office space as they can onto a given site, to justify their investment.
And with close-in townhouses selling for $500,000 and up, luxury apartments renting at $1,200 or more for a studio and new office space leasing as fast as developers can build it, there’s clearly demand to keep the density boom going.
While each skirmish over a new project might seem isolated — an apartment building here, an office tower there, a few townhouses over here — they add up to a referendum on what direction Charlotte will continue to grow.
More density, or more sprawl? It’s an open question.
This story first ran at CharlotteObserver.com.