Consultant, site maintained by Lehigh Valley Planning Commission
As development continues to spread outward from the cities and along Route 22, Route 100 and Route 309, population projections indicate housing needs will continue to grow at a significant rate. Identifying how much housing will be needed over the next 20 years, and creating a plan to accommodate it, will provide relief to development pressures throughout Northern Lehigh communities. In order to achieve preservation goals while meeting housing needs, it is important to consider current and future residential development trends.
The following housing analysis examines current housing stock and market trends in Northern Lehigh. The analysis focuses on recent construction and renovation, attainability and recent home sales based on publicly available data regarding building type, age, occupancy, value and sales from the U. S. Census, Lehigh County and the Lehigh Valley Planning Commission. The results were compared to local perceptions about history, attainability and market conditions to form a cohesive understanding of the housing market in Northern Lehigh.
Supply and Demand
Current Housing Supply
The housing stock in Northern Lehigh is predominantly made up of single-family homes. The vast majority of these houses are detached, with a small number of twins, rowhomes, duplexes, apartment buildings and mobile homes. The area has a high percentage of homeowners, approximately 17% more than the Lehigh County ownership rates. Overall, the Northern Lehigh townships have very similar homeownership rates. Although, Slatington Borough has a significantly lower homeownership rate, with more than 40% of the Borough’s residents renting.
Overall, Northern Lehigh’s vacancy rate is similar to Lehigh County and the Lehigh Valley. The vacancy rates of individual communities are similarly low for most of the townships, but significantly higher for Heidelberg Township and Slatington Borough, although Slatington’s rate has greatly decreased since 2010. The overall vacancy rate for Northern Lehigh has decreased since 2010, but the rates of Heidelberg and Lowhill townships have increased. These rates point to different conditions in individual community housing markets and may be reflective of how many properties were for sale at the time, rather than long-term trends that need to be addressed.
Nearly 60% of Northern Lehigh’s housing stock was built between 1970 and 2009, with just over a quarter of the existing housing stock built prior to 1939. Because the majority of housing units are relatively new, it is likely that these units are in good condition. The momentum of housing construction per decade drops off in 2010, although this may be due to limitations of available data. Northern Lehigh has seen a total of 126 residential units approved in the last ten years, of which 97% are single-family detached homes.
Building permit data shows a number of renovation projects in 2018, indicating that people are making significant investments in existing homes rather than constructing new dwellings.
The rental market in Northern Lehigh is weighted towards homes with three or more bedrooms, which make up 43.5% of occupied units. Nearly half of Northern Lehigh renters are paying over $1,000 per month in rent (46.5%), about one-fifth of renters are paying between $750 and $999, and one-fifth are paying between $300 and $749. Just over 10% of renters pay less than $300 per month, which may be indicative of living arrangements between farmhands and farm owners. The majority of two- or three-bedroom units that are available cost more than $1,000 a month, meaning that living conditions may be strained for low-income households with multiple people.
Current Housing Demand
Northern Lehigh income data shows a diverse range of household incomes that are generally evenly distributed into thirds. Just over one-third of households earn less than $50,000 per year (35.3%), just over one-third are moderate income earners between $50,000 and $100,000 (34.4%), and just under one-third of households earn over $100,000 per year (30.3%). This data indicates a wide range of housing attainability needs for Northern Lehigh residents.
A significant portion of the population is in low-income households that may be under financial strain in their housing situations. The federal livable wage in the Allentown-Bethlehem-Easton Metropolitan Statistical Area is considered to be $50,000 per year for a single adult with no children. Nearly 15% of households earn less than half that. A lack of housing for people below these thresholds means that many low- and moderate-income households may have to reach into the higher, more costly housing market levels to be able to live in the area.
Nearly one-third of the Northern Lehigh population is housing cost-burdened, meaning that those households spend greater than 30% of their income on housing. However, the rate of cost-burdened households is not evenly distributed across all income levels. More than half of households earning below $50,000 are cost-burdened. This shows how a limited supply of lower-cost housing is making housing attainability difficult for lower-income households in the Northern Lehigh area.
Note that the 30% threshold is a widely accepted standard for measuring cost burden and attainability. Many households choose to spend well below 30% of their income on housing, and many view spending anywhere near 30% of their income as being unaffordable. The 30% threshold is treated as the maximum households should spend on housing.
Housing Attainability Analysis
The attainability analysis brings housing supply and demand together in a side-by-side comparison to determine whether there is a surplus or shortage of attainable housing units within each income level. The assessed value of all properties was converted to a market value price to determine their realistic selling price.
Note: Finding Market Value – To approximate current market value, a multiplier was calculated to find the conversion rate between the assessed property value and market price. Using all properties that have sold in the last five years (2014-2018), the multiplier was calculated to be 1.05. The assessed value of all properties was multiplied by this factor to find an estimated current market value.
The calculated market values of these existing homes were used to determine the maximum purchase price (not exceeding 30% of pre-tax income) of houses and condominiums, as well as the maximum rent price, for each income level. For house and condominium units, a Federal Housing Administration (FHA) mortgage was assumed as a 30-year loan at a rate of 4.6% interest. The factors of the mortgage calculation included a down payment, insurance, real estate taxes, and for condominiums, an annual maintenance fee. Calculations were performed for income ranges expressed as a percentage of $63,379 the median household income for Northern Lehigh, referred to as the Area Median Income (AMI).
Based on the Housing Attainability Analysis, there is an overall surplus of 647 housing units in Northern Lehigh, all contained at the price point for households earning between $25,000 and $100,000 gross annual income. This leaves a 480-unit deficit at the far lower end and a 1,606-unit deficit in the upper-end of the income spectrum. This indicates that limited housing options in the higher market is causing high-income households to “buy down” into the middle market for housing, increasing the competition for middle-market units. The unit deficit at the lower end results in many low-income households having to “buy up” into the middle market and thus becoming cost-burdened.
While there appears to be plenty of available housing in the middle market, this price point may not contain desirable housing types for all people. A majority of the rental housing units are in the lower price ranges, indicating the potential for the market to add middle- and higher-end rental units to meet higher-income demands.
Note that the apparent overall surplus of 647 housing units would correspond with a 6.1% housing vacancy rate—about double the census vacancy rate. This is likely the result of comparing demand from census data and supply from the Lehigh County assessment data.
Note that the demand is based on number of households within each income bracket. Supply is based on the number of housing units that are attainable using 30% of the maximum income of each bracket.
Housing Market Trends
Single-family detached housing dominated home sales in Northern Lehigh in 2017-2018. The median price of $224,500 for these homes is suitable for the greatest demand in the area. This median sales price aligns with the median household income and would be considered attainable to 65% of the population.
Home sales have steadily climbed since 2008, even through the economic recession, showing an overall growing demand within Northern Lehigh. Despite this increasing demand, the median sales price has stayed relatively stable.
The consistency of median sale prices is reflected at the municipal level as well, although the median sale price in Lowhill Township has erratically declined since 2008. The data clearly indicates a separation of sales prices between the municipalities, where Slatington Borough consistently has the lowest prices, Heidelberg, Lynn, and Washington townships have similar middle-market prices, and Lowhill and Weisenberg townships generally have upper-end prices. All Northern Lehigh communities have experienced consistent growth in unit sales per year, although the growth rate has become less consistent between the municipalities.
The median sales prices for specific home types vary significantly between individual municipalities. The median price of a single-family detached home in Weisenberg Township is more than double the price for Slatington Borough. The median price for multi-family units in Washington Township is likely an anomaly, due to limited sales of that home type.
Future Housing Growth
Northern Lehigh's population will grow significantly over the next 20 years. This increase is due to overall growth within the Lehigh Valley and less potentially developable land in areas that have accommodated growth over the last several decades. This new population will require significant amounts of new housing. Using the current household formation rates (how many people per household on average) for each municipality, Northern Lehigh is estimated to need to accommodate 4,080 new households by 2040. To meet that need, the area would require about 172 new homes per year for the next 20 years—more than eight times the current rate.
Slatington Borough is the densest community in Northern Lehigh, and is projected to experience significantly less growth compared to the townships. This forecast may be due to the borough having less available developable land than the townships. The Northern Lehigh goals and policy should consider development options for inclusion of density where applicable, with viable options for greater downtown revitalization available within the Borough.
Northern Lehigh, along with the rest of the Lehigh Valley, has experienced significant development pressures over the past ten years. While the housing attainability analysis reveals a surplus of 647 housing units, the existing housing stock may not be appropriate for some Northern Lehigh residents.
The analysis results suggests that developers are over-producing units priced from around $116,000 to $334,000 for houses, and rental units priced between $900 and $2,500 per month. At the same time, a shortage of lower-priced units is causing households to “buy up” into the middle market. The majority of units priced at a lower cost are rentals, indicating the potential to increase the availability of lower-priced homes for sale.
Despite the current surplus of middle-market housing units, this is not enough to meet the demand of the projected population increase in Northern Lehigh, which is expected to grow at nearly double the rate of Lehigh County. As Northern Lehigh considers its future population and development growth, it will be necessary to examine how best to accommodate the diversity of needs of the people that currently reside in the area, as well as those that are still to come.
The multi-municipal comprehensive plan will need to examine how best to balance growth to accommodate new residents without losing the area’s character and quality of life.
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