Asheville cost of living still tops in the state, while wages lag

By now, pretty much everyone who’s been in Asheville any amount of time – or who’s even considered moving here – knows this much about the local cost of living:

“It’s pretty astronomical in comparison to other places,” said Rose Gullett, a barista at downtown Asheville’s famous double-decker coffee bus, Double D's Coffee & Desserts.

The facts back her up: With a cost of living index rating of 106, with 100 being average, Asheville is the most expensive place in the state to live among metro areas participating in the most recent C2ER Cost of Living survey, as provided by the Asheville Area Chamber of Commerce. The index considers basic living costs, including housing, food, utilities, transportation, health care, and daily items.

Contributing to the affordability dilemma, the average pay around here lags behind other large metro areas.

"In 2021, the Asheville metro had the fifth-highest average hourly wage among the state metros, at $26.67," Heidi Reiber, senior research director at the chamber, said via email. "We followed our state’s larger Charlotte, Raleigh, Durham, and Winston-Salem metros. We lagged the state’s overall average by 5%, and the national average by 13%."

Gullett, 23, considers herself fortunate overall, as the coffee bus is a "living wage" certified workplace, meaning it pays at least $17.70 an hour, which the Asheville nonprofit Just Economics has calculated is the living wage in 2022 for Buncombe County. Gullett works for tips and an hourly wage, but it's guaranteed to meet at least that $17.70 threshold, she said.

Working 2 jobs

But like a lot of younger people trying to make it here, Gullett has had a taste of working two jobs. A lot of apartment owners or management companies want potential renters to prove their income comes to at least three times the monthly rent.

"I had to work two jobs at the same time, while living in my fiance's dorm room," Gullett said. "I was working here six hours and then six hours at Trader Joe's, so 12-hour shifts."

And, again, Gullett feels lucky. She and her fiancé live in an apartment in South Asheville that Gullett considers an absolute steal.

“It’s actually the cheapest place we could find, and it’s $1,250 a month,” Gullett said, noting it's a two-bedroom. “A lot of my friends had a hard time believing it. It’s one in a million.”

She says they have a friend who rents a one bedroom, one bath apartment for $1,300 a month.

Overhearing her comment, Stephanie Motley, an assistant manager at the coffee bus, shook her head.

"It's sad to raise your kids in a place they won't be able to buy a home or be able to stay," she said. Motley and her husband have four kids ? a 15-year-old, a 9-year-old and 6-year-old twins.

Motley has been here since 1999 and says when she first moved to town she rented a four-bedroom home in West Asheville for $600 a month. She and her spouse planned to buy, but the Great Recession of 2008-09 sidelined that idea.

"And now we're priced out of the market and don't know what to do," Motley said, noting that they rent a house in Enka, as it's a little cheaper out there.

Both Motley and Gullett also pointed out that everything else also has gotten more expensive, ranging from gas to groceries, thanks to inflation that came in at 8.2% for September.

Local economy 'an extreme challenge'

Vicki Meath, executive director of Just Economics, said the local economy is "an extreme challenge right now, and it’s getting worse.

"We're in a situation where a lot of employers are saying, 'How can I give raises and still keep up with the cost of inflation?'" Meath said. "On the other side of that, workers are saying, "We cannot continue like this. We’re at a breaking point, or past that breaking point. We've seen as a result of that, a lot of people are moving out of the area."

That $17.70 living wage rate is "based on the idea someone could afford a one-bedroom apartment (with wages) at three times the rent, which is what most landlords ask you to do," Meath said, noting that Just Economics uses a four-year average of fair market rent in its calculations.

As the Citizen Times reported in September 2021, real estate agents had noticed a significant number of locals opting to buy homes in surrounding counties outside of Buncombe, or even in Tennessee or South Carolina, because the area in and around Asheville has gotten so expensive.

Taking a different path for housing

Charles Fletcher, another recent transplant to the mountains, moved here last summer from Sedona, Arizona, another town known for bringing in throngs of tourists and having high housing costs.

"It's even tougher to find a place to live here, bro," Fletcher said with a laugh as he stood by his jewelry stall outside the Grove Arcade in downtown Asheville.

He heard about rents in the $1,200-$1,300 range here, so he opted for a less orthodox living arrangement ? a friend parks a 40-foot motor home on his property in Maggie Valley in Haywood County and agreed to rent it to Fletcher for about $300 a month.

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Fletcher drives to downtown Asheville to sell his handcrafted stone jewelry through his business, Gem Alchemy Creations, and he's fine with the commute.

"In Asheville, you'd be lucky to get a studio apartment for under $1,000 a month, in a decent neighborhood," Fletcher said.

Asheville, he said, strikes him as "kind of an East Coast version of Sedona." Fletcher makes enough to pay his bills and then some, and he's glad to be his own boss.

More businesses upping wages, but hourly rates still lag

Meath said more local businesses are upping their wages. In fact, 475 local businesses are now paying the Just Economics living wage, with 329 of those in Buncombe County. It's a number that "has gone up significantly" in recent years, she said.

Still, wages here typically lag larger North Carolina metro areas, as well as the national average. As of September 2022, the average hourly earnings of all employees in the Asheville Metropolitan Statistical Area (Buncombe, Madison, Haywood and Henderson counties), was $27.52 per hour, compared to $32.46 nationally and $30.32 in North Carolina, according to Federal Reserve Economic Data.

Lower wages have a long history here.

"The South has historically been a low-wage region," Nathan Ramsey, director of the Mountain Area Workforce Development Board, said via email, noting that many locals in the first half of the 20th Century left this area for Detroit and other northern manufacturing hubs with better pay. "Many of the industries which located in the South in the last half of the 20th Century were attracted in part by our lower wage scales. As globalization increased, we lost jobs to places with much lower wages."

Wages remain lower in the South than in the Northeast and Midwest, although the gap has closed in recent years. Ramsey points out that the wage disparities are greatest in the highest-paying sectors and occupations.

The BLS statistics from 2021 bear that out ? for business and financial operations, for example, the average hourly wage in the Asheville metro is $33.96, compared to $39.72 nationally. Architecture and engineering tells a similar story, with local wages coming in at $35.06, compared to $44.10 nationally.

And it's more expensive to live here.

"While we have made progress on wages, we certainly are more challenged with cost of living, especially housing," Ramsey said.

Home sales slow, but prices remain high

For the third quarter of 2022, the median sales price for a home in Buncombe County was $450,000, up from $400,000 a year earlier, according to the most recent real estate report from Allen Tate/Beverly-Hanks Realtors. For its nine-county mountain region, Allen Tate/Beverly-Hanks notes the median home sale price was $410,000, up from $361,743 a year earlier.

Overall home sales in the region slowed in the third quarter, dropping 13.8% compared to the same period a year ago, according to Allen Tate/Beverly-Hanks. But the prices remain stubbornly high, and real estate experts don't expect significant drops any time soon.

Despite a building boom in apartments over the past decade, local rents are also sky high. As the Citizen Times reported in late September, Asheville remains the most expensive city in the state for rents, although price increases are beginning to slow down, according to a national report from Apartment List.

Still, the median rent for an apartment in Asheville was estimated to be $1,591 a month, a .9% increase from August, according to Apartment List. Since this time last year, rent has risen 6.9% in Asheville, lower than the state average of 10.5%, the national average of 7.5%, and Asheville's year-to-year change in January of 26.2%.

The report found rent in Asheville is still the most expensive among major cities in North Carolina, with a median two-bedroom apartment rent of $1,698, compared to $1,520 in Raleigh and $1,490 in Charlotte.

Area to grow by 150,000 people

Ramsey points out that the dearth of housing is a nationwide problem, and with that comes increasing home prices and rents.

"This is a tough nut to crack, considering every community in the nation is facing housing challenges, and our region is projected to add about 150,000 people in the next 25 years," Ramsey said. "We have more demand than supply. Either demand must decline or supply increase or some combination thereof."

Ramsey also touched on a subject that's bound to make every renter or potential homebuyer nervous: a looming recession. As USA Today reported, economists surveyed in September by Wolters Kluwer Blue Chip Economic Indicators say there’s a 54% chance of recession next year, according to their average estimate, up from 39% in a June survey.

"The impending recession probably won’t provide much relief for housing, since less housing will be built and lower-priced homes most likely will not decline much in value as interest rates increase," Ramsey said.

Some bright spots

The economic picture is not all doom and gloom, as Ramsey and Reiber point out. Reiber notes that the Asheville MSA saw average hourly earnings increase 40% between 2011 and 2021, the third-highest growth rate of the state’s metros, and that rate "outpaced both the state’s overall 34% and the national 33%."

In 2020, the Asheville MSA had an $18.5 billion economy, the seventh-highest of the state’s 15 metros

"We had the third fastest-growing economy at 20% growth between 2010 and 2020," Reiber said, noting that 2020 data is the most recent. "While eight of the state metros’ Gross Domestic Product contracted, Asheville was one of seven that expanded in this 10-year snapshot, outpacing the state’s overall 16% and the nation’s 18%."

Another positive is that our area continues to grow, and that means more jobs. In fact, we have more jobs than people to fill them. June data from the North Carolina Department of Commerce showed the four-county region of Buncombe, Henderson, Madison and Transylvania had 12,856 job openings, and 7,591 people who were unemployed. That's 5,265 more openings that unemployed folks.

As the Citizen Times reported in July, 10 mountain area counties will need 22,000-45,000 new employees by 2025.

"If you want more high-paying jobs, your region generally must grow," Ramsey said. "With the rise of teleworking we are a prime beneficiary of that trend because you can live here and work for a company that pays big city wages."

Small business is a strength of the mountain area, but that also contributes to the wage disparity, as large firms pay more than small firms, on average, Ramsey said. Improving workforce development locally, and increasing job training and education will also help people access higher-paying jobs.

"Education and training generally is the path to a better paying job," Ramsey said.

Asheville often has the lowest unemployment rate in the state, and we have no shortage of jobs. In August, Buncombe's unemployment rate was 3.1%.

Reiber notes that for April, May and June of this year, "employment met or exceeded the 200,000 employment threshold, a record for the area that was first seen in the last quarter of 2019. In May 2022, employment reached 201,400, the highest on record for the Asheville Metro."

Unlikely to stay here

For their part, Gullett and her fiancé, Maxwell Teffeteller, hope to stay in Asheville for a couple of years, she said. They moved here from Morganton in March, after he graduated from college in Asheville.

He’s working as a teaching assistant and hopes to go back to school, possibly to become a teacher. Gullett, who has completed some college, has thought about going back, too, but she also doesn’t want to accrue a mountain of debt in the process.

For the long-term, Asheville might not be home, in part because buying a house seems so far out of reach on what they make.

"We have family in other places, and we'd eventually like to get closer to them," Gullett said.

She and her fiance would like to one day buy a house after they're married, but probably not in this market.

"I don't think that can happen here," she said.

This article originally appeared on Asheville Citizen Times: Asheville cost of living highest in North Carolina, while wages lag