Last week I described the real estate market phenomenon known as “filtering,” and discussed a recent example in Carrboro where Abbey Court filtered from a lower rental submarket to a higher rental submarket and became Collins Crossing.
Displacement Without Development
Today I’m going to discuss another local example of where lower-rent units are disappearing and higher-rent units are taking their place. As you continue reading, keep in mind what is ultimately the most important part of this post – that new development is completely absent from the neighborhood real estate market, and yet rents are rising. When rents in existing buildings are rising, the socioeconomic status of the people living there is going to change. (as we saw last week)
Since properties filtering up and down is driven by the decisions of many individual landlords, a lot of filtering happens one property at a time, and thus can be hard to spot. However, Carrboro has one smaller-property hotspot for filtering up these days: North Greensboro Street, just north and south of Estes Drive Extension.
Let me show you what I mean, and also show you the best free software tool available to track filtering visually: Google Street View. If you look at the date of any Google Street View photo and see a clock to the left of it, that means there should be older views available as well. For neighborhoods currently seeing changes and investment, this is a great way of doing before and after comparisons. With that in mind, let’s explore North Greensboro Street in Carrboro in the pictures below.
Filtering On North Greensboro Street
Here’s 1103 North Greensboro St in 2007:
and “The Wilson” in 2012 (same property)
From a website attempting to sell The Wilson for $2.3 million for its 16 units- the smallest unit is a 2BD/1 BA renting for $905/month for 700 square feet:
The Wilson Apartments are located 1.5 miles from the UNC campus and the commercial hub of Franklin Street in Chapel Hill. The property has been completely renovated with condo quality finishes that include stainless steel appliances, updated baths, hardwood floors and a new metal roof.
Also from their website, here are the improvements the owners of The Wilson made to move to a higher-end rental submarket
- Removed baseboard heat & window a/c’s and installed central heat and air in all 16 units – new heat pumps
- Removed old shingles, replaced old plywood and installed a new energy efficient standing seam metal roof
- Removed all the original single pane windows and installed new Pella low-e vinyl windows
- Completely renovated every kitchen; new cabinets, counters, sinks, and appliances – stainless refrigerators with ice makers, ranges, built-in microwaves
- All new bathrooms including, tubs, showers, vanities, cabinets, lighting, mirrors and accessories
- Installed all new plumbing lines and fixtures inside every unit, sub-meters were installed on some of the units, but are not being utilized at this time
- Installed new main sewer line from buildings to the street
- Removed the laundry room and installed new, energy efficient stackable washers and dryers in every unit
- Painted the exterior brick and re-painted all the interiors
- Refinished the existing hardwood floors and “feathered in” new hardwoods in the living and bedroom areas – tile floors installed in the baths
- New interior and exterior doors with new hardware
- Completely demoed and re-wired all units and the common areas – replaced lighting fixtures with new
- Made alterations to floor plans which include, but are not limited to; adding bedrooms (converted 6 units from 2 BD’s to 3 BD’s), removing dividing walls
between kitchens and living areas, creating arched doorways, vaulting the 3rd floor ceilings and capturing common area space (previously un-used) to make
some units larger
- Upgraded the landscaping in the courtyard with new plantings and accents,removed overgrowth at the front of the property and planted new trees and shrubs, removed debris and thinned out the woods in the rear of the property to create and view and path to Wilson Park
- Added three new porches with standing seam metal roof, all new wood handrails with cedar trim accents and arched pergola in courtyard
- Tore down, graded and re-built the retaining wall on the left side of the property
- Graded and added gravel in the rear of the property to create more parking spots
- Built new property fence along the street and dumpster containment area
Remember that year you spent in grad school at the aging Todd St apartments?
It’s now known as “The Flats.”
Here’s a picture of the kitchen and laundry area in one of The Flats units that recently sold for $193,000 according to Zillow. Notice the stainless steel appliances, double-stack modern front-loading laundry equipment, and new counters. This building was built in 1962, but the inside screams 2010 or newer.
One of the more recent conversions is 605 North Greensboro. Here I have put the before and after shots side by side- one from Google Street View, and another photo I took last year.
Like many other buildings on the street, 605 N Greensboro now has a name- “Sagebrush,” to signal its upmarket transition.
What Filtering Means for Carrboro and Affordable Housing
In a world where not enough housing gets built to meet market demand, the demand for luxury and high-end-of-the-market housing in a growing metropolitan area will turn middle market units into upper market units via renovation. This is exactly what is happening on North Greensboro Street.
If new housing is built, and it is luxury housing, it will entice some residents seeking a luxury housing experience out of their current units, freeing up those units for renters with a little less income to take their place. This helps put downward pressure on prices through the basic law of supply and demand.
The flip side of this point is that if Carrboro produces a limited amount of new housing units, then the town has adopted a de facto policy to encourage filtering up in various submarkets of the existing housing stock. The landlords on North Greensboro Street have figured this out, and they are making rational capital investments in their rental businesses.
As the Board of Aldermen continue to discuss affordable housing strategies, it is important that they and town staff be aware of filtering occurring in town at large properties (like Abbey Ct/Collins Crossing) and smaller ones (like North Greensboro St), and they think about how to channel the reasonable and natural impulse of landlords to filter their properties up and down to support the town’s broader housing goals.