Unraveling housing supply critical to the region’s success
There are few emotions that match the feeling of fulfilment of owning your first home. I struggle to find words strong enough to describe the sense of accomplishment my husband Josh and I felt as we moved literally a few feet over the Lynn Township line into Heidleberg in 2005. We could stay in the area where my husband grew up even if it was really more than we could afford at the time and needed family help to buy land where we could build.
My husband and his father built our home so we saved a lot of money by doing much of the work ourselves. It wouldn’t have been possible without the support of family and their homebuilding talent.
That was nearly 18 years ago, and things have only gotten harder for young adults and families. The region’s housing issues have morphed into problem, affecting all six generations alive today, including our babies and our seniors. Housing is a universal requirement at every stage of life, so where we know we have issues we need to unravel them and right now it’s critical to the success of our region.
I’m afraid that in the Lehigh Valley — and really in many regions across this nation — far too few people these days have a chance to experience that excitement, joy and pride that my husband and I did when we moved into our home. A combination of this being an attractive region for people from across the nation, a monumental housing shortage and rising interest rates have priced many people out of the home buying market. For many, the American dream has turned into a frustrating fantasy and what was once considered a starter home has all but disappeared. Consider that the median household income in the Lehigh Valley is $74,158. A family with that income can afford a home with the maximum price of $175,950, according to the federal benchmark defining that a family is cost-burdened if it pays more than 30% of its income on housing.
According to Justin Porembo, CEO of the Greater Lehigh Valley Realtors, of the roughly 500 homes on the market in December, just 58 were $176,000 or lower. That means that a typical Lehigh Valley household, with an income smack in the middle of the spectrum, can only afford a home in the bottom 12% of the market.
And Greater Lehigh Valley Realtors analysis backs this up.
Its affordability index, which matches median income with median sales price, last month hit its lowest point since the organization began tracking the index in 2004. So, if families with a median income can’t afford a home here, what does that say for the 50% of families and individuals who fall below that median level?
It’s no better for Lehigh Valley renters, who now pay a median rent of $1,170 a month — a nearly 40% increase since 2010. To be clear, that first apartment can also bring a sense of pride and accomplishment but, if you are starting a career, retired and on a fixed income or making less than the area median, paying rent can be one of the most difficult things you do each month.
It’s amazing to consider, even with those Lehigh Valley numbers and a median sales price of $296,500 in October, this region is still considered relatively more affordable than a national median of $384,900.
So, how did we get here? Well, one factor is our housing shortage. Developers were understandably gun shy for years following the housing-induced Great Recession that began in 2008. As a result, even when the economy began improving, they waited to start building homes again. Yet, as arguably Pennsylvania’s fastest-growing region, people kept moving here at a rate of about 4,000 new residents a year. Now, we’re thousands short of the number of homes we need.
Then the COVID-19 andemic hit, and as many fled urban environments for more space to socially distance while others took advantage of new workfrom-anywhere policies, even more people wanted to live here. More than 11,000 moved here from out of state in 2020 alone, according to the latest U.S. Census figures.
Then came inflation that’s driven even more people out of the market. The same prospective homebuyer who could afford a $272,000 home with interest rates at 2.65% in January of 2021, could only afford a $170,000 home in December of 2022, with interest rates at 6.7%. And I mentioned earlier there are very few homes in this price range.
It’s not all bad news. Developers the past three years have been racing to close the housing shortage. In 2022, they proposed more than 6,400 new units — the most we’ve reviewed since 2006. And what they’re building is far more diverse than the giant homes on acre-sized lots built during the last housing boom in the first half of the 2000s. Last year, nearly 1,400 townhomes and twins were among the proposals. Those will provide more options for price points lower than single-family homes, but of course, all those homes proposed in 2022 probably won’t hit the market before 2024 or 2025.
There’s just no easy fix, but we know we can move the needle on this. This year, the Lehigh
Valley Planning Commission, supported by Lehigh County on behalf of the region, will be teaming up with the Urban Land Institute, American Planning Association, municipal
partners, developers, lenders and other stakeholders across the region to convene a multi-event housing summit where we intend to develop a housing supply and attainability strategy. Our intention is to analyze just how many new
homes are needed, at what price points and where they should be built. The really important part is understanding the economics, and developing a plan with the building and financing communities to ensure the plan is realistic and can be
accomplished.
The region has never had this type of strategy. In fact, I could not find a regional one that begins the planning, land use regulation and economics together anywhere in the nation.
But if we are serious about
maintaining the region’s edge, which includes retaining and supporting the talent our businesses need, we have to have the housing that supports it. The process will not be easy, but practical and necessary.
The problem is complex, but the goal is simple. Everyone should be able to find housing that fits their income.