Study Highlights Marcellus Shale Development’s Impact on PA Housing

November 2011Newsletters In the Zone

The Pennsylvania Housing Finance Agency (PHFA) and the Center for the Study of Community and the Economy (CSCE) at Lycoming College have published research highlighting the effects that the Marcellus Shale natural gas industry is having on housing prices and availability across the Commonwealth of Pennsylvania. CSCE conducted interviews with local elected officials, county and municipal planners, housing authority officials, social service agency representatives, landlords, developers, realtors, gas company representatives and new residents on four broad issues: (1) rental housing, (2) owner-occupied housing, (3) housing affordability and availability, and (4) the capacity of the development community to meet demand for housing.

Several broad themes emerged from the interviews. First, the severity of the housing problem attributable to Marcellus Shale development is localized. It depends on the nature and scale of the growth of the natural gas industry in a given county or community and on the existing pre-Marcellus capacity of that county or community to absorb the increased demand for housing. Generally, communities experiencing the highest Marcellus activity relative to their size are experiencing the most difficult housing problems. In addition, counties where gas producers and service companies are establishing regional headquarters see more and longer term housing impacts than communities where there is only drilling and pipeline activity.

According to the report, counties that have previously experienced population growth due to other industries in the area or an influx of commuters from neighboring larger cities have existing development capacity. In these areas, there are local and regional builders who are familiar with the area’s housing needs and are experienced in working with the area’s zoning regulations and county and city officials. These builders appear ready to respond to any increase in housing needs.
The natural gas industry has a wide variety of housing needs with varying time frames. Two waves of gas industry employment correspond to the evolving housing needs of industry employees. For the first transitory wave of gas workers, housing needs are being met with hotels, gas-company sponsored temporary residential facilities (so-called “man camps”), campgrounds and a community’s rental housing stock.

The second, more permanent, wave of gas employees are more diverse in background and have a more diverse set of housing needs. They will take advantage of a full range of long-term housing options, including rentals and owner-occupied housing. With a diverse set of job titles and experience levels, these second wave employees can expect to be located in an area for their entire careers, or their replacements will be if they were to move on. Included in this group are gas employees native to Pennsylvania with newly found financial stability who will increase demand for owner-occupied housing as they look to translate their new financial status into more desirable living conditions.

As these new residents move into the Marcellus region, a disconnect may exist between the housing expectations of this second wave of employees and the availability of owner-occupied housing. Most residents moving into the region are looking to buy new homes in move-in condition with all the modern conveniences. But in some of these areas experiencing Marcellus growth, they are finding an aging housing stock in poor condition and lacking modern touches.

Finally, the capacity of the development community varies considerably from county to county in its ability to meet the need for additional housing. Counties with little pre-Marcellus development are struggling to attract development to meet the new circumstances. Barriers to development include the lack of local developers, a tight financing market, inadequate utility-served land available for development, regulatory hurdles and some concerns about the long-term horizon for the Marcellus Shale gas industry. Market- rate housing development, especially in select counties, is further along in meeting the increased need for housing than is the case for subsidized housing development in the most problematic counties.

The authors of the study lay out several broad recommendations that decision makers might consider as they begin to develop a response to the housing shortages created by Marcellus development. While the body of the report can stand alone as a description of the changing housing circumstances since the arrival of Marcellus development, the authors added their personal recommendations on the issues identified in the report. Topics covered the timing of market-based responses and likely impediments or shortcomings to market-driven responses, zoning board and planning commission capacity, infrastructure capacity, senior housing solutions, aging housing stocks and gas industry engagement.

For more information, please contact M. Joel Bolstein at 215.918.3555 or [email protected].

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