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Is Wilmington Paying A Beach Tax?

By Cece Nunn, posted Jul 27, 2018
Does the cost of living in Wilmington put a strain on residents’ bank accounts? Technically speaking, it’s hard to say. For one thing, it’s not an easy concept to measure, according to local experts.
 
“Many people and data companies try to roll cost of living up into a single number, but it’s really not that easy,” said Adam Jones, regional economist at the University of North Carolina Wilmington. “Take housing for example. We’re more expensive than many Southern cities but much cheaper than Northern cities such as Washington, D.C., that have largely built-out such that properties near ‘downtown’ are very expensive. But their downtown is also much larger and different – not an easy comparison.”
 
The best measure, Jones said, is likely the one used by the Wilmington Chamber of Commerce, which provides periodic cost of living reports for the city. That data comes from the Council for Community and Economic Research.
 
In the most recent chamber release, the cost of living (COL) in Wilmington was unchanged compared to other cities across the U.S. between the third quarter 2017 and the first quarter 2018, coming in at 96.2, a lower score than in recent years that suggests a decrease in the COL. A composite score of 100 is equal to the average cost of living in a city in the U.S., chamber officials explained. Any score below 100 is, therefore, below average, and a score of more than 100 is above average.
 
“We still have a very good comparable cost of living to other parts of the country,” said Natalie English, president and CEO of the Wilmington Chamber of Commerce. “Our cost of living ranks well versus other communities, and we’re below the national average.”
 
She said that doesn’t mean everything is cheaper here. The index takes an average of numerous factors – from the cost of toothpaste to apartment rents – into account.
 
“There are some things that are higher here, but there are other things that are significantly lower,” English said.
 
Overall, the cost of living is a selling point when it comes to economic development, she said.
 
The index is not a perfect measure, as explained by the Council for Community and Economic Research.
 
“Items on which the Index is based have been carefully chosen to reflect the different categories of consumer expenditures. Weights assigned to relative costs are based on government survey data on expenditure patterns for professional and executive households in the top income quintile. All items are priced in each place at a specified time and according to standardized specifications,” the CCER explains in its publication. “Because the number of items priced is limited, it is not valid to treat percentage differences between areas as exact measures. Since judgment sampling is used in this survey, no confidence interval can be determined. Small differences, however, should not be construed as significant, or even as indicating correctly which area is the more expensive.”
 

THE BEACH QUESTION

 
Is proximity to the beach a driving factor when it comes to how much the gamut of purchases cost in Wilmington? In other words, is there a “beach tax,” or extra price a resident or visitor might pay for things here just because the ocean is so close?
 
“I don’t have good data to support the idea, but I am sure the answer is ‘yes,’” Jones said. “It’s not an intentional thing, but real estate prices are [higher] close to the water, which increases rents and costs for businesses, driving up prices.
 
“Combine that with a constant flow of ‘new’ customers instead of locals, and the competition becomes about views, convenience, etc., not price,” he added. “Tourists in the area once or rarely are much less sensitive to price than regulars with the opportunity to shop around.”
 
In most cases, no matter where you go, living near the ocean in the U.S. is going to cost more, with housing as a big expense.
 
In New Hanover County, for example, the average price of a home in the zip codes that cover the beach towns is well over that of other zip codes. The average sales price of a single-family home in Wrightsville Beach in June was nearly $1.7 million, compared to about $308,000 in midtown Wilmington, according to Cape Fear Realtors data. But not all beach towns have that high of an average price point. In Carolina Beach’s zip code, the average sales price for a single-family house was $458,490 in June and $258,250 for a townhouse/condo property.
 
Housing tends to be a major part of the conversation when cost of living is discussed, and housing prices have been increasing in Wilmington, though they’re still not nearly as high as larger metropolitan areas in the U.S.
 
In Wrightsville Beach, though, the average sales price of a single-family home rose nearly 46 percent in June this year compared to the same month last year, with Carolina Beach showing a nearly 37 percent increase in the same comparison, CFR numbers show.
 
Setting the higher cost of beach homes in some local communities aside, affordable housing throughout the area has been an increasing concern among local officials. With Wn influx of new apartments and an ongoing low vacancy rate, even rents have been on the rise. It’s a complicated issue that communities across the nation are facing, English said.
 
“We’re not unique in the issue of affordable housing. There’s not a single growing community that has figured that out yet, and we certainly owe it to, especially those who serve us [such as police officers, firefighters, school teachers etc.] … to figure this out. We’re certainly talking about it here and watching what other ideas that they [other communities] have to address the issues.”
 

THE WAGE FACTOR
 

Jones said his main issue with cost of living is that cost is not the only side of the coin.
 
“Economists would suggest we are more interested in ‘purchasing power’ than cost of living, figuring in both income and costs. It’s the ratio of income to costs that is the important figure. Data on the cost side is a little tougher to find than data on the income side,” he said. “Annual wages in Wilmington tend to be less than for other metro areas around the state.”
 
For example, Jones said, retail wages in Mecklenburg County are 13.6 percent higher than in New Hanover County, while finance sector wages in Wake County are 8.5 percent higher.
 
Still, the population continues to grow in Wilmington and surrounding areas, despite the wage differences.
 
“People are coming here because of the lifestyle. They want to be at the beach,” said Brett Knowles, a Realtor with Coldwell Banker Sea Coast Advantage who was born and raised in the area and has sold 2,400 homes. “We don’t have large hiring industrial bases, so folks that come here are generally with satellite companies. They’re willing to take lower wages.
 
“They could make higher dollars in other metro cities, but they’re coming here because of the beach and the lifestyle,” he said.
 
Very few house hunters question the everyday living costs, Knowles said.
 
In the case of recruiting faculty to UNCW, job candidates aren’t scared off by the cost of living, finding it reasonable, Jones said, although employment opportunities for spouses can be a challenge, as it is with numerous other employers in the region.
 
Jones said, “We definitely have no trouble convincing candidates that they could enjoy life in Wilmington.”
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