Lehigh Valley’s population is growing and is expected to continue to grow for decades, but where will these newcomers live and will the developers be able to keep up with the demand?
These are some of the questions the Lehigh Valley Planning Commission presented during its annual outlook presentation earlier this week.
The Lehigh Valley, home to about 687,000 people, is expected to grow by about 100,000 people by 2050. Over the next three decades, the area is expected to create 70,000 jobs.
“Over the next 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 approximately 3,300 more people per year,” said LVPC economist David Jan.
So how will these newcomers find accommodation?
The Valley already has a housing shortage, and many are finding high prices for everything from rentals to single-family homes with high demand.
And many thousands of households are struggling to pay their bills after paying the mortgage or the rent.
“Housing affordability is an issue in all Lehigh Valley communities,” said Jill Seitz, LVPC’s senior community planner. “Many think of tenants and think of an urban setting, but in an analysis last year, we found cost-overloaded tenants in the suburbs and even in rural parts of the region.”
Data from LVPC shows that developers are trying to keep up with demand. A total of 4,471 residential units were reviewed by the commission in the first nine months of this year.
“That puts us on a pace of almost 6,000 this year, which would be 250 more than what we looked at in 2021, a record high,” said Steve Neratko, community leader and regional planner for LVPC. “Compared to last year, the big difference has been a reduction in single-family detached units offered and a considerable increase in apartment offers.”
Most single-family homes, he said, are in smaller subdivisions of fewer than 50 homes, about a quarter of which are in Upper Macungie Township.
Apartment building construction is also booming with around 3,600 units expected to be on the drawing board this year, mostly in Northampton County. Notable projects include the mixed-use development of the Neuweiler Brewery in Allentown, as well as The Marquis and The Confluence in Easton.
“If these trends continue,” Neratko said, “we’ll be looking at nearly double the number of townhouses from a year ago.”
“It’s encouraging,” he said, “as these developments help provide additional types of housing, at different price points, which is a priority of FutureLV (the future growth plan for LVPC). Assisted living units, which were down in 2020 and 2021, have also recovered to the high level we looked at in 2019.”
While other areas may see a slowdown in construction, the Lehigh Valley will likely see construction continue.
“We understand that changes are happening in the economy,” Neratko said, “and while we expect interest rates to cause a plateau in the development market, we don’t expect the revisions are slowing down.”
Like other places across the country, the Lehigh Valley has not been immune to rising real estate prices. The Valley’s median sale price was $272,400 in July, a year-over-year increase of more than $22,000. Prices were as low as $173,000 in 2012 as the country recovered from the Great Recession.
Seitz said many new homes under construction are priced above $300,000.
“This continues a trend we’ve seen in house prices since 2019,” Seitz said, “a substantial rise in market response to an extended period of low prices after the housing downturn.”
She said the COVID pandemic had accelerated price increases.
“Now rising interest rates will slow that trajectory,” Seitz said. “Over the past two months, we have already heard that market prices have cooled and even fallen, a trend that has also been seen in other parts of the country.”
That doesn’t necessarily mean homebuyers will have it any easier.
For example, Seitz said, the average interest rate in January 2021 — 2.65% — meant a buyer could put down a 20% down payment on a $272,000 home and pay $877 a month. At the current rate of 7.3%, that payment increases to $1,492 per month at the same price.
To stay at the $877 payment, the house would need to sell for $160,000.
All of this is having a profound impact on the rental market, Seitz said, as the number of renter households has grown by 1,000 a year over the past decade. This means that renters make up almost a third of households in the Valley, up from a quarter 15 years ago.
Owners increased by 1,067 during this period, but renters increased by 19,000.
“During this period, the cost of rent per month also steadily increased,” 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 apartments are built and come on the market,” Seitz said, “new tenants will continue to see rental prices above the median price, and that median will continue to climb.”
The latest housing cost burden figures in the Lehigh Valley found that 52% of renters and 48% of households were cost burdened in 2020, meaning they are more likely to struggle to pay food, transportation, health care and childcare after paying for accommodation. costs.
For a resident, the ideal median is to spend 30% of household income on housing costs.
The daily update for the Lehigh Valley businessman.
This means that more than 76,000 households in the valley are burdened with the costs, or around 192,000 people when taking into account the average household size of 2½ people.
LVPC partnered with Lehigh County post-pandemic to see how much housing the Valley needs in three income brackets.
Seitz said, with the most recent data, the number of households has tripled the housing supply.
“Adding needed housing in the region will not be a solved problem in the Tri-Cities – all communities should be prepared to take an honest look at housing affordability in their jurisdictions, if not their most vulnerable populations – which include older people and young adults who grew up in the community will have a hard time staying in the area,” Seitz said.
“When it comes to addressing housing affordability, there’s a lot to consider, from home and rental 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 develop a 2023 housing supply and affordability strategy. she says, will help communities understand exactly “where, how much, and what type of housing is needed and how it can be done equitably.
Morning Call reporter Evan Jones can be reached at [email protected].