Report shows 100,000 more people in Lehigh Valley by 2050
The Lehigh Valley’s population is on the rise, and should continue to increase for decades, but where will those newcomers live and can developers keep up with the demand?
Those are some of the questions the Lehigh Valley Planning Commission presented during its annual Outlook presentation earlier this week.
The Lehigh Valley, which has a population of about 687,000, is expected to grow by about 100,000 people by 2050. In the next three decades, the region is expected to add 70,000 jobs.
“In the coming 30 years, the region will become more diverse as Hispanics become a larger segment of the total population with the Lehigh Valley expecting to add an average of roughly 3,300 more people a year,” said LVPC economist David Jan.
So how will those newcomers find a place to live?
The Valley already has a housing shortage, and many are finding steep prices for everything from rentals to single-family homes with the high demand.
And several thousand households are finding themselves struggling to deal with bills after paying the mortgage or rent.
“Housing attainability is an issue in every Lehigh Valley community,” said Jill Seitz, LVPC senior community planner. “Many think of renters and think of an urban setting, but in an analysis last year we found cost-burdened renters through suburban and even in rural areas of the region.”
LVPC’s data shows that developers are trying to keep up with demand. A total of 4,471 residential units have been reviewed by the commission through the first nine months of this year.
“That sets us on a pace for almost 6,000 this year, which would be 250 more than we reviewed in a record-breaking 2021,” said Steve Neratko, LVPC chief community and regional planner. “Compared to last year, the big difference has been a reduction in single-family detached units proposed, and a tremendous increase in apartment proposals.”
Most of the single-family homes, he said, are in smaller developments of fewer than 50 homes with about a quarter of them in Upper Macungie Township.
Apartment building construction
is also surging with about 3,600 units expected to be on the drawing board this year, mostly in Northampton County. Notable projects include the Neuweiler Brewery Mixed Use development in Allentown, along with The Marquis and The Confluence in Easton.
“If these trends continue,” Neratko said, “we will review nearly double the number of townhouses of a year ago.”
“This is encouraging,” he said, “as these developments help to provide additional types of housing, at differing price points, which is a priority of FutureLV (the LVPC’s plan for future growth). Assisted living units, which were down in 2020 and 2021, have also risen back to the high level we reviewed in 2019.”
While other regions could see a slowdown in building, the Lehigh Valley will likely see continued construction.
“We understand that changes are happening in the economy,” Neratko said, “and while we expect interest rates to cause the development market to plateau, we don’t expect reviews to slow down.”
Prices going up
Like other places around the country, the Lehigh Valley hasn’t been immune from rising home prices. The Valley’s median sales price was $272,400 as of July, a year-over-year rise of more than $22,000. Prices were as low as $173,000 in 2012 as the country recovered from the Great Recession.
Seitz said the price of many new construction homes is above $300,000.
“This continues a trend we’ve seen in housing prices since 2019,” Seitz said, “a substantial uptick as a market response to an extended period of time where prices were low following the housing downturn.”
She said the COVID pandemic accelerated price increases.
“Now, rising interest rates are going to slow that trajectory,” Seitz said. “In the past couple of months we’ve already heard that market prices have cooled and even lowered, a trend that’s been seen in other regions nationwide as well.”
That doesn’t necessarily mean that homebuyers will have an easier time.
For instance, Seitz said, the average interest rate in January 2021 — 2.65% — meant that a buyer could make a 20% down payment on a $272,000 home and pay $877 a month. At today’s 7.3% rate, that payment rises to $1,492 a month at the same price.
To stay at the $877 payment, the house would have to sell for $160,000.
All of this is having a profound impact on the rental market, Seitz said, as the number of rental households have increased by 1,000 a year over the past decade. That means renters make up nearly one-third of households in the Valley, up from a quarter 15 years ago.
Homeowners are up by 1,067 during that time period, but renters are up by 19,000.
“In that time, the cost of rent per month has steadily increased as well,” Seitz said.
In 2010 half of all rental units were priced at or below $850 per month. That price is now at $1,170.
“As more and more apartments are constructed and hit the market,” Seitz said, “new renters will continue to see rent prices above the median price point, and that median will continue to climb.”
Affordability
The latest numbers for housing cost burden in the Lehigh Valley found that 52% of renters and 48% of households were cost burdened in 2020, meaning that they are more likely to struggle paying for food, transportation, health care and child care after paying housing costs.
For a resident the ideal median is to spend 30% of a household income for housing costs.
That means more than 76,000 households in the Valley are cost-burdened, or about 192,000 people if you take in the average household size of 2½ people.
The LVPC has partnered with Lehigh County after the pandemic to see how much housing the Valley needs in three income ranges.
Seitz said, with the most recent data, that the number of households outpaced housing supply threefold.
“Adding the region’s needed housing isn’t going to be an issue solved in the three cities — all communities must prepare themselves to take an honest look at housing attainability within their jurisdictions, otherwise their most vulnerable populations — which include seniors, and young adults that grew up in the community will struggle to stay in the area,” Seitz said.
“When it comes to addressing housing attainability, there is a lot to consider, between homeownership and rentership prices, location, size, income.”
Seitz said the LVPC is partnering with the Urban Land Institute, Lehigh County and the local chapter of the Pennsylvania Planning Association to convene a housing supply and attainability strategy in 2023. This, she said, will help communities understand exactly “where, how much and what type of housing is needed and how this can be done equitably.”