Out in the cold

Foreclosures, job instability and a recession have created significant pressures for the housing industry over the past few years, causing an overabundance of housing stock in many areas across the country.

That’s not the case in areas of northeastern and central Pennsylvania where the burgeoning gas industry has produced a housing and rental shortage.

"The drilling industry hit hard and hit fast and, in particular, the counties in the Northern Tier, where there is aggressive drilling. There was nothing they could do," says Teri Ooms, executive director of the Institute for Public Policy and Economic Development, Scranton. "I wouldn’t say that the drilling necessarily caused it, but they certainly exacerbated a situation that has been brewing."

The institute studied 12 counties in Pennsylvania in various stages of drilling ranging from those in the industry’s infancy to those with extremely aggressive activity, such as Bradford and Tioga counties.

"What we noted before is the cost of housing in all of the counties we studied was increasing at a faster rate than income was increasing," says Ooms. "What we noted, in particular with rental housing, is that the cost of rental housing was increasing by 100, 200 and 300 percent in those counties that we will call ‘very aggressive drilling’ counties, where there are a significant amount of wells."

As costs and demand for housing grew with high demand, a growing number of local residents could no longer afford the average rent. Combined with the influx of gas-related employees, local residents could not find housing. That problem has only worsened.

According to Bonita M. Kolb, Ph.D., co-director of the Center for the Study of Community and the Economy (CSCE) at Lycoming College, Williamsport, a new development in Williamsport offers apartments for $2,500 to $3,000 per month while another on the edge of town offers two bedroom apartments for $1,800 per month. (To demonstrate the rate at which rent has increased in Williamsport, the Kolb, in her report, states, "For example when a house in Lycoming County became available at $2,500 per month it was rented immediately. Two years ago the very same house rented for $900 a month. A small older house that rented for $600 three years ago, now rents for $2,000."

Kolb co-authored a report, "Marcellus Natural Gas Development’s Effect on Housing in Pennsylvania," resulting from a study commissioned by the Pennsylvania Housing Finance Agency (PHFA) to research the housing effects created by a growing gas industry.

"There are two big findings," she says. "One of them is that the effect on the community depends on the state of the development. It’s an incredibly diverse industry and the employees tend to come in waves."

At the outset, the need for temporary housing grew as employees came into the area to research, set up infrastructure, and secure permits and leases. Now that drilling has begun, the second wave of employees, those with more permanent housing needs, have saturated the already-tight housing and rental market.

"The second (finding) is that the housing need is really interrelated," says Kolb. "There simply aren’t enough housing or apartment complexes. In areas such as Bradford, Sullivan and Lycoming — and it’s also true for Tioga — there has not been new housing built for at least a generation. That was because young people left the community because there were no job opportunities."

Job opportunities are not a problem now as companies are now locating headquarters and satellite offices in Pennsylvania in addition to the drilling, trucking and related jobs inherent with the industry.

"There has been lots of increased demand for housing," says Bryce Maretzki, director of business development of the Pennsylvania Housing Finance Agency, Harrisburg. "For many of these counties there has not been much of a market turnover for some period of time, for decades in some communities. They are seeing rapid increases in rental costs and every time a unit turns over the price is escalating. The landlord is increasing the rent and on the homeownership side, the housing stock is relatively small and relatively aged." According to Bryce, this increased demand resulted in a need to provide affordable housing and find and foster capacity.

"Now it’s up to state policymakers and our board of directors to figure out how do we help address this housing need with the resources and the programs that we have available," says Maretzki. "We are trying to discuss the work to have it inform public policy, public programs and resource delivery. We’re in the process of doing that."

Maretzki believes entrepreneurial developers will take care of market demand over time but stresses the need to create housing for those displaced due to the housing dynamics created by the industry.

"The gas development and Marcellus Shale development is a huge economic boon for the commonwealth and there’s a lot of jobs and wealth being created," says Maretzki. "But there are also challenges to be faced and housing is one of them, and affordable housing and not having homelessness are all issues. Now we really need to move quickly to have the supply match the demand and especially to the low- to moderate-income side so that we don’t have homelessness and families torn apart and communities hurt."

The studies conducted show that while demand for housing brings opportunities, it also inflicts negative consequences on those with lower incomes.

"The main concern that we have is housing opportunities for people of modest means — senior citizens living on Social Security alone, people with disabilities, low-wage workers, people who maybe haven’t been able to find a job," says Liz Hersh, executive director of the Housing Alliance of Pennsylvania, Glenside. "The boon that others have experienced has forced up prices, which if you are an owner, is great. But if you don’t have a lot of money that has meant people have become priced out of the market and in some cases, those are people who are long-term residents.”

Hersh sees trends over the past two or three years with emerging homelessness, difficulty finding apartments that will accept the housing choice vouchers and a shortage of available and affordable rentals.

The alliance continues to push for funding for the Housing Trust established in December 2010.

“I think that the market over time will provide supply for people who can afford a market rental or purchase, but the market will not, on its own without incentives, provide units that are affordable to people who perhaps are limited to $3-, $4-, $500 a month by their income,” says Hersh. “They don’t have the money to compete on the private market. So we have been working with the legislature to ensure that whatever kind of impact fees get instituted from the Marcellus Shale, that it includes some new investment and incentives for housing for people with moderate and low incomes.”

The Housing Trust Fund, if funded, would allow communities to apply for funds and begin building immediately. Even if that happens, new housing would still be nearly a year away at best.

Additional avenues to ease the housing situation on a local level could include rent stabilization programs to protect renters while encouraging developers to invest in housing.

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