What does the hot Lehigh Valley housing market need to cool down? Regional planners share some numbers.
To the question of what the blazing-hot Lehigh Valley housing market needs in order to cool down, the obvious answer is more housing.
But how much, and what kind?
At a Friday morning webinar, the Lehigh Valley Planning Commission shared an estimate that the region needs about 7,000 more units — including rentals and homes for sale — to bring the market to a healthy level. What the region has now is demand outpacing supply so extremely that bidding wars are pushing prices out of reach.
The regional planning commission approved 1,900 housing units in 2020. At that pace, and without accounting for population growth, it will take nearly four years to meet today’s needs.
But planners shared some hopeful signs that the region is speeding up this pace, while cautioning that these housing needs are complicated.
Since the Great Recession, housing in the Lehigh Valley has only become more and more unattainable compared to residents’ income levels. The pandemic exacerbated these trends: median home sales over the last year ballooned by $25,000, the same amount they increased over the previous four-year period. Meanwhile, the number of units sold has not significantly changed.
Within these trends is a complicated picture for people at various income levels — there is a mismatch between the needs of households versus what housing is available at certain price points. For example, the LVPC estimates there is a shortage of 14,480 housing units for low-income households earning below $25,000, but there’s also a shortage of 32,127 units theoretically suited for high-income households earning more than $100,000.
This means high earners are buying down, and low earners are forced to buy up or be squeezed out of the market, creating fierce competition and bidding wars for middle-priced housing.
“The housing market is kind of like a big game of musical chairs,” chief planner Samantha Smith said.
Plus the region has had its slowest homebuilding decade in 80 years, she said. Only 4% of the region’s housing was built after 2010.
Planners are seeing indications that the number of housing proposals may grow. Halfway through 2021, the LVPC has approved 1,306 housing units and received proposals for another 1,414 — nearly half are apartments, a third are single-family detached homes and a couple hundred are townhomes.
This is despite the growing cost of homebuilding materials, which can add between $40,000 and $100,000 to the cost of building a home, Smith said.
However, the region can’t rely on new housing to solve the housing shortage, planners warned.
Take Tatamy, as an example. Until a few years ago, when the half-square-mile borough consisted almost entirely of older homes, the median home price was in the low $200,000s. After a new housing development was completed in 2019, the median home price landed at $404,000 last year.
To afford that current median sales price, a household would need to earn $140,000 a year. Tatamy’s median household income is $61,000, or $91,000 for married couples.
“We need to build housing that people already living in communities can afford,” said senior community planner Jill Seitz.
That means the region needs to build smarter, planners say: building mixed-use development, making places like Hanover Avenue and MacArthur Road walkable communities and corridors, implementing rapid bus transit system to connect population and job centers.
“I think there’s a lot of opportunities for the Lehigh Valley to be a real leader in design,” said Executive Director Becky Bradley.
Innovative housing design will require cooperation from municipalities, nonprofits and businesses, which the LVPC has been recruiting through a series of workshops over the last year called WorkshopLV Housing.
This fall, the LVPC will partner with the Urban Land Institute to help stakeholders develop a housing strategy for the region.
