If You Build It, They Might Come
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New affordable housing is coming to Orange County but may remain out of reach for low-income buyers facing stagnant wages and rising costs.
The recent policy focus for advocates of affordable housing in Orange County, as elsewhere, has been to increase the supply of below-market rate homes in our community.
Now, after many years of discussion, new housing options will soon be coming on the market. On January 21, Chapel Hill Town Council passed a long-debated rewrite of land use changes designed to make it easier to build affordable housing targeting the “missing middle.” These are homes that fill the gap between big apartment buildings and stand-alone single-family houses. The latter have become increasingly out of reach for first-time buyers.
In particular, the newly adopted rules may result in more cottages, duplexes and accessory dwelling units (ADUs) to meet the needs of young people who are just starting out, or those downsizing in retirement. Some of these homes likely will be built in neighborhoods that already have good infrastructure, including utilities, water and sewer service, as well as access to transportation and schools.
And there’s more to report: An additional 260 new homes and apartments in Chapel Hill and Carrboro will be available in the next 3 years through the efforts of a nonprofit, Community Home Trust (CHT), the state’s largest land trust. CHT manages an inventory of permanently affordable homes which typically sell or rent for 30-50 percent below market value.
Habitat for Humanity of Orange County also has stepped up its post-pandemic construction and repairs, with 102 affordable homes in Weavers Grove, off Weaver Dairy Road in Chapel Hill, slated for completion by 2028, and new townhome projects announced for Chapel Hill and Hillsborough.
It’s important to note that even with these recent developments, the number of affordable homes in Orange County remains well below the need for these units. However, with supply now inching upward, the policy discussion is shifting toward how best to help low- and moderate-income people who aspire to home ownership qualify for mortgages, while prices for affordable homes remain historically high.
In my 3 years as a board member of both Habitat for Humanity of Orange County and Community Home Trust, I have developed a deep appreciation for the work required to find a match between a prospective home buyer and an affordable home. First, there is the definition of “affordable,” which means that no buyers should pay more than 30 percent of their monthly income for housing. This cap acknowledges both the need for the home buyer to have enough money to pay for other living expenses and the need to preserve household and neighborhood stability by reducing the likelihood of loan defaults and foreclosures. But once closing costs, insurance, homeowners’ association fees and taxes are added in, even a reasonably priced home may become out of reach.
Then there are interest rates. Most affordable home purchases in Orange County are underwritten by third party lenders, usually a commercial bank or credit union. Just a few years back, some banks working with affordable housing providers were able to offer mortgages with discounted rates of zero to two percent to certain qualified buyers. Today’s mortgage rates reflect higher inflation, reducing buying power accordingly.
Finally, there are the financial pressures that impact us all, and low- to moderate-income families to an even greater degree. In Orange County, these are families of four with annual incomes of $53,000 to $85,000. Salaries have not kept up with the rising cost of housing, increasing the difference, for example, between what a teacher or hospital worker can afford, and what the market demands.
The equation is even more complicated for retail and restaurant staff, home health care aides and other service workers who fall in the extremely low-income category in Orange County – four-person families with annual incomes of $32,000 to $52,000. Credit scores can be negatively impacted by late payments, high balances on credit cards, or even unpaid parking tickets. This group also is likely to be paying a relatively high percentage of income for rent, making it harder to set money aside.
How can we close the gap so that workers doing essential jobs in our community can afford to live here?
Certainly, there are large-scale issues, such as advocating for higher wages and paid benefits. Helping people contest higher property taxes due to revaluation, funding long-term home repairs, and creating more downpayment assistance programs will both help people stay in their homes and allow others to buy homes and start building wealth.
Credit counseling programs for prospective buyers are increasingly important. The top reason that people at any income level are turned down for a mortgage is a high debt-to-income ratio. Reducing debt takes time and, frankly, can lead to some difficult discussions. Buyers and credit counselors need to build trust and work together as the lending market evolves.
But none of this can happen without strong public and philanthropic support. Beyond the discounted purchase price, the cost of supporting a homeowner in an affordable home continues for many years and can run into hundreds of thousands of dollars, mostly through below-market mortgages, property tax relief and subsidized repairs.
Current sources of public funding are in flux:
- As part of the budget deal passed earlier this month to end a partial shutdown, Congress approved funding for HUD, which pays for affordable housing, rent assistance and services for the homeless. The spending package represents a modest increase but holds many programs at FY 2025 levels.
- The Federal Housing Finance Agency, which oversees the organization that helps local banks make affordable housing loans, is under review as part of the discussion on the future of Fannie Mae and Freddie Mac. These institutions buy mortgages from banks, providing both stability and additional cash to lenders to make new home loans. The Trump administration has proposed privatizing or easing regulations on these agencies.
- The North Carolina Housing Trust Fund is part of the state budget, which has been in limbo for over a year and won’t be decided until April, at the earliest.
- The Town of Chapel Hill passed a bond referendum in 2024, allowing the Town to borrow up to $15 million for affordable housing. While this is a positive step, housing advocates had proposed $40 million for a more comprehensive solution.
Private philanthropy such as Triangle Community Foundation and several nonprofit foundations have prioritized affordable housing as an unmet need, and their support is deeply appreciated. Other individual donors and grantors may be persuaded to follow. However, it’s unrealistic to expect individual giving to replace public funds while also increasing resources for affordable housing overall.
We begin 2026 with a mix of optimism, concern and a higher than usual degree of uncertainty, much like the rest of the country. If you’d like to get involved, you can volunteer or contribute to Habitat for Humanity of Orange County, Community Home Trust, or the Orange County Affordable Housing Coalition, where you will find a wealth of resources on the current state of affordable housing policy and advocacy.
We need people with vision, creative solutions and great problem-solving skills to ensure that more of our fellow community members find homes where they can build successful lives. The welcome mat is out for everyone who wants to help.
Joan Siefert Rose serves as board member of Habitat for Humanity of Orange County and Community Home Trust.
