- Teacher housing is being developed by counties and municipalities as a way to recruit and retain teachers.
- Rents across North Carolina as well as in specific counties suggest teachers earning a starting salary can afford average rents.
- High housing prices are the result of government policy such as rent control, restrictive land use, zoning or administrative regulations. A better alternative is to create incentives for builders or developers to increase the stock of housing.
Two lawmakers have introduced bills to grant local government the authority to provide local housing to teachers and other government employees. The legislation introduced by Senator Erica Smith (D-Bertie County)(SB-804) and Mary Ann Black (D-Durham)(HB -936) is meant to provide struggling teachers with affordable housing options and help local communities recruit and retain teachers.
Helping struggling teachers may sound like a laudable goal, until you realize the bills make for bad policy, for a variety of reasons.
For starters, such programs divert attention away from the fact that high housing prices are often the result of government policy. Rent control, land use policy, historic preservation programs, an array of zoning and administrative regulations, these all add to the costs of housing. Such costs serve as disincentives to the developer. For an overview of how government policy increases housing costs see here.
Is there a Housing Crisis for Teachers?
SB 804 and HB 936 are put forward as a way to respond to a growing housing crisis and to help struggling teachers. Let’s first answer the question: Is there a housing crisis for teachers in North Carolina?
One way to help answer this question is to determine if North Carolina teachers can afford average rents in North Carolina. To help answer that question, we utilized average fair market rent in North Carolina and selected counties in North Carolina. According to Rentdata.org in 2018 the average fair market monthly rent for a one-bedroom apartment in North Carolina is $628. An average two-bedroom apartment rents for $773. According to the Department of Public Instruction, the average annual teacher salary in North Carolina in 2018 was $51,214.[i] Teachers are paid on either a 10 or 12-month basis. Since we are trying to determine if teachers have trouble affording local housing, for our analysis, we’ll assume teachers are paid on a twelve-month basis. If our teacher is paid on a twelve-month basis, monthly income is $4,267.83. Financial consultants say renters should spend no more than 30 percent of their monthly income on rent. Thirty percent of the average monthly teacher salary in North Carolina is $1,198.27. As you can see, the thirty percent figure is above the average monthly rent for a studio ($603), 1-bedroom ($628), 2-bedroom ($773) and 3-bedroom ($1,038) apartment and just below the average figure for a 4-bedroom apartment ($1,239).
Of course, critics say, not all teachers make the average salary, and that’s true. So, let’s look at the salaries for starting teachers, traditionally the lowest paid teachers and those most likely to be impacted by high rents. In 2017 starting teachers in North Carolina earned a minimum of $35,000. They also earned – on an average – a local salary supplement of $4,337. Thus, starting teachers in most places earned a salary of $39,337. For the sake of argument, let’s spread out the salary over twelve months. Doing so creates a monthly income of $3,278.08. If we apply the 30 percent rule mentioned above, we find teachers could spend upwards of approximately $983 a month on rent. With these numbers, starting teachers should easily be able to afford a 2-bedroom apartment and nearly a 3 -bedroom apartment ($1,038) in most North Carolina communities.
Since the legislation mentioned above applies to specifically to Durham and Bertie Counties let’s look more closely at teacher salaries and average rents in those specific communities.
According to Rentdata.org an average fair market rent for 1-bedroom apartment in Durham County is $847. An average 2-bedroom apartment rents for $990. Since starting teachers are those most likely to be impacted by housing prices, let’s again use the salary of a starting teacher, $35,000. If we also include the average local supplement in Durham County in 2017-18, $6,931, the starting salary for new teachers in Durham County is $41,931. Dividing the salary by 12 monthly payments provides a monthly income of $3,494. Again, applying the rule that says renters can spend up to 30 percent of monthly income for rent, means starting teachers in Durham can spend up to $1,048 per month on rental costs.
At those rates, starting teachers in Durham should be able to afford the costs of a 1 or 2-bedroom apartment in Durham County.
In Bertie County, Sen. Erica Smith is calling for the creation of special housing not only for teachers but other government employees.
Again, let’s determine if teachers are able to afford rental housing. According to Rentdata.org, the average fair market price of a one-bedroom apartment in Bertie County is $595. The average price of two-bedroom apartment is $683, and the average 3- bedroom apartment lists for $856 per month.
The lowest paid teachers in Bertie County would be new teachers. Like new teachers in other parts of North Carolina, New teachers have a starting salary of $35,000. In 2017-18 Bertie County provided no salary supplement for teachers. Over twelve months, starting teachers receive a monthly income of $2,916. Again, applying the 30 percent rule for rent, means starting teachers can spend up to $875 a month for rent. According to Rentdata.org figures, starting teachers in Bertie County should be able to afford the cost of a one, two or three-bedroom apartment.
We should note that none of the analyses took into consideration whether the teacher had a second income in their household. All analyses are based on just a single earner in the household, even though actual household income patterns might look far different.
In short, according to the data, the subsidized teacher housing bills are a solution in search of a problem.
Research is Lacking
Durham is hoping that housing incentives for teachers would help to reduce the turnover rate for teachers. There are more districts using housing incentives as a way to recruit and retain teachers. Housing is built for teachers and rent is offered at below market rates. In addition, some districts include living stipends or discounts on home rentals or puchases.
While all these are offered as a way to improve K-12 education, there is little evidence to suggest that housing incentives actually improve recruiting and retention of teachers. Earlier this year, Education Week referenced a 2012-13 study done by the US Department of Education that found nearly 55 percent of former teachers who said they would consider returning to the classroom said housing incentives would be “not at all important” in influencing that decision.
A solution
The data suggests that new housing programs for teachers in Durham and Bertie Counties are not needed.
If housing prices are truly a problem, the best way to redress the problem is to increase the supply of housing. Too often government policies (e.g. rent control, zoning, land use, affordable housing etc..) and regulations (developer fees, historic preservation etc.) work to constrict housing supply and drive up housing prices. Officials in Durham and Bertie Counties would do well to review their housing markets and address the factors that are causing developers to not build in their areas.
Providing incentives to build additional housing in specific areas can do far more for alleviating a perceived housing crisis than another government program. Teachers and taxpayers will both thank local government officials for doing so.
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[i] Page 17, Highlights of the North Carolina Public School Budget February 2018, published by the North Carolina Department of Public Instruction. Available online at http://www.ncpublicschools.org/docs/fbs/resources/data/highlights/2018highlights.pdf
