ALLENTOWN, Pa. - The Lehigh Valley will need 95,000 more homes in the next 25 years.
It needs more affordable homes and apartments for low-income and modest-income households.
It needs more homes for high-income households as well.
And it needs more homes closer to where many people work.
But it probably will not need many more single-family dwelling units on suburban lots aimed at the middle-class market.
Those were just a few of the many key findings in a study of the Lehigh Valley's housing market that was introduced to nearly 100 people by the Lehigh Valley Planning Commission late Thursday afternoon in Allentown.
The results are being incorporated into a Lehigh Valley Regional Housing Plan, which LVPC promises will be the most significant assessment ever done on the housing market in Lehigh and Northampton counties.
When completed before the end of August, the plan – complete with recommendations -- will serve as a guide for future residential development in both counties.
It will show what kinds of homes are most needed and who needs them.
Many local elected officials, municipal planners and at least two school district superintendents attended the two-hour presentation on the plan in the Rodale Room in Miller Symphony Hall, as did plus representatives of developers and lending institutions.
Becky Bradley, LVPC's executive director, said the plan will help her agency assist the 62 municipalities and 17 school districts in the two counties, as well as "developers, bankers, Realtors and the non-profit housing sector."
She said questions asked by some people in the audience during the second half of the meeting will be used to help develop the plan's goals.
Without such a planning tool, municipalities could approve housing developments for markets that don't exist, explained Kyle Talente of RKG Associates, LVPC's consultant on the plan.
Saying successful regional housing planning will require coordination and cooperation, Talente urged those in the audience: "Let's work together to identify ways to address the needs that are here in the Valley."
"There are certain income bands, and certain parts of the Valley, where people don't have a very good housing choice," said Talente. "One of the goals is how we can make that better."
He said another goal is to diversify the types of available housing.
A third is more focus on rehabilitation and revitalization of existing neighborhoods. He said doing that is just as important in providing high quality housing as building new homes.
A fourth objective is to enable developers "to diversify the supply at different income bands."
Said Talente: "It is not all about the low end. It also is about the high end. That's why this is a regional housing study, not just an affordable housing study.
"There is need at different ends of the market. How do you provide for both of them?
"And hopefully, from a sustainability standpoint, how do you provide for both of them in the same development -- trying to build integrated communities rather than continuing to isolate by income."
He said now there's an imbalance between people's ability to pay and housing that is available.
A housing shift
Between 1980 and 2007, developers were proposing far more single-family dwelling units than any other type of housing in the Lehigh Valley, said David Berryman, LVPC's chief community planner. He said that trend stopped in 2008, during the national recession.
Since 2008, said Berryman, developers are proposing more apartments than single-family dwellings. "The amount is picking up. In the last two years, it's almost two-to-one."
Today, he said, developers primarily are proposing apartments, followed by age-restricted housing.
Berryman said some of those planned apartment developments are for what he would consider very expensive units – "$1,300 to $1,400 rents for one or two bedrooms. We aren't seeing anything lower. Right now builders think the apartment demand is that higher end stuff."
Berryman said single-family homes and townhouse projects still are out there but "orbiting. They were proposed many, many years ago but have yet to be built or fully constructed."
With a growing number of empty-nest baby boomers and well as a growing number of younger, smaller and non-traditional households, Talente
said: "Not everybody wants a five-bedroom house on three acres."
Housing market must grow
Talente raced through a Power Point presentation loaded with statistics about the local housing market.
He said the two counties will see a substantial increase in population during the next 25 years, but the average household size will decline.
"When you have population growth and average household size decline, that translates into a growth in the total number of households, which means the demand for housing units."
He said that means the Valley will need about 95,000 more housing units in the next 25 years.
The Lehigh Valley now has 256,362 housing units, he reported.
Low vacancy rate puts pressure on market
Talente said the vacancy rate for housing in the Valley is just under six percent. He called that "an extremely healthy market -- actually bordering on unhealthy, because is restricts mobility."
He explained: "If you're in a house and you want to move, there may not be the type of house you want. You may be stuck where you are because you can't find something else you want to move into."
He said home buyers are competing in a very small market, which has an impact on prices.
Own vs. rent
Talente said 70 percent of Valley residents own homes and 30 percent rent.
He said it's about a 50/50 split between owners and renters in boroughs and in the three cities.
"As you move farther away from your urban areas, it becomes almost exclusively single-family detached," he said, adding most of those homes are owned by the people living in them.
More than 50 percent of the homes in the Lehigh Valley are single-family detached. Almost one quarter of the housing stock is single-family attached, concentrated in a handful of areas, including Allentown and Bethlehem.
Talente said there is not enough housing in the Lehigh Valley for low-income and modest-income households. "It's very challenging to provide housing at the lowest end."
He said there is a "tremendous correlation between education and ownership because there is a correlation between education and income. The lesser the education, the greater the proclivity to rent. Same thing for income. The less you earn, the less you can afford.
"Twenty-five percent of the households in your community earn less than $30,000 annually. That's a substantial finding when you start talking about moving forward with housing for the Valley."
He said people earning less than $47,000 are challenged to find suitable housing close to where they work. The folks that can least afford paying $3.80 a gallon for gas have to pay substantially more than they can afford for housing or commute the farthest distances.
Allentown and Bethlehem only have about 36 percent of all the households in the Valley, but also have 54 percent of the households that earn less than $17,600.
Talente explained anyone who is paying more than 30 percent of their gross income for housing costs is "considered to be cost burdened."
Between 2000 and 2010, he reported, the percentage of cost-burdened households jumped from 60 percent to more than 70 percent.
"Incomes didn't keep pace with housing price. Once the economy turns around, you're going to see that number start to grow again. Seventy percent is a substantially high number."
Talente noted there also is not enough housing for high-income households.
"This has an impact on your market. If I'm making over 70 grand and I want to get a house here, I have to move down the next group and consume their housing," said the consultant.
Talente said about 187,000 people live and work in the Lehigh Valley.
Almost 89,000 come from outside the two counties to work here and more than 103,000 leave the Valley to work.
"You're a net exporter of labor." He said that's not surprising, considering the Valley's proximity to two very large employment centers: New York City and Philadelphia.
Between 2006 and 2010, about 5,000 more people moved into the Valley than moved out. Talente said many more people are moving in from the Philadelphia and New York City areas than are moving out of the Valley to those areas.
"It's a place that people want to be, both from a jobs perspective and quality of life perspective," said Talente. "It's more affordable."
He indicated median-priced homes comparable to those that sell for $400,000 in New Jersey counties near New York City can be purchased for about $200,000 in the Lehigh Valley. "I can literally get twice the amount of house here."
He added rent also is substantially lower.
Almost 65,000 people who live here don't work – "either they're retirees or they're unemployed."
Allentown, PA 18102