Will housing slump save open space?

By Matt Assad

The Morning Call

March 27, 2008

Not long ago, alarmed planners in the Lehigh Valley scurried to figure out how to stop developers from chewing up more than 4 square miles of open space each year. They pondered more farmland preservation, stronger zoning and spending tens of millions of public dollars to preserve open space.

It turns out all they really needed was a good old housing slump.

The number of building permits issued in 2007 dropped 45 percent over just two years earlier, while land approved for development decreased by more than 800 acres, or 1.3 square miles, in the same period, according to a Lehigh Valley Planning Commission report to be released today.

The Subdivision and Building Activity report shows Valley development that was humming strong in 2005 has been in freefall the past two years. Building permits and acres approved for development returned to mid-1990 levels, before a surge of people from New Jersey and New York flowed into the Lehigh Valley.

While the report is bad news for developers sitting on land they can't develop, at least it means the Valley's dwindling open space is now relatively safe, right?

''Not exactly,'' said Planning Commission Executive Director Michael Kaiser. ''New Jersey ain't going away, and recessions don't last forever. This is temporary.''

The housing slump has been a national story for more than a year, as millions of homeowners face foreclosure and a backlog of unsold homes has brought new development to a near standstill in several major markets.

The Planning Commission's annual report shows how that has hit the Valley. According to the 34-page document to be reviewed by the commission tonight, the number of acres approved for development in 2007 was 2,660. That's the second consecutive year it has dropped, and the lowest number of acres developed since 1997.

Building permits issued Valley-wide dipped to 2,060. That's a drop of more than 900 in one year, and a drop of nearly 1,700 -- or 46 percent -- since 2005, according to the report.

That all translates to 823 fewer acres approved for development in 2007 than in 2005, a piece of land the size of Catasauqua .

''We're not seeing developers come in with large projects of hundreds or even dozens of homes right now,'' said Dave Berryman, the commission's senior planner, who wrote the report. ''If they come in at all, it's usually infill projects of one to three homes,'' he said, referring to construction in already built-up areas.

Bethlehem Township farmer-turned-developer Mark Wagner said he believes some local developers who were riding the housing wave only two years ago won't make it out of this drought.

''Guys who built on speculation are in trouble,'' Wagner said. ''I know guys sitting on 30 or 40 homes they can't sell. It's tough to carry that kind of inventory and ride though a drought this long.''

Wagner said his own near-death business experience during the last drought prepared him for this one. Like many, he rode a development boom in the late 1980s and began building homes on speculation.

But when the so-called ''New Jersey invasion'' market went sour in 1990, he was stuck with rows of homes he couldn't sell. The three-year lull nearly ended his burgeoning development career.

Today, though he has large lots of former farmland ready for development, he doesn't build a home until he knows he has a buyer. So even though he'll keep preparing his massive Field of Dreams project in Bethlehem Township, Wagner won't build any of the proposed 832 homes until people start buying again.

That may not come soon. While 17,348 homes were listed for sale last year in the Valley, only 7,231 sold, according to the Lehigh Valley Association of Realtors.

The Planning Commission's report does show some positive signs, said Olev Taremae, the commission's chief community planner. The number of nonresidential acres developed has remained relatively flat, partly on the strength of several massive warehouse developments in Lower Macungie and Lower Nazareth townships and the Sands BethWorks casino project in Bethlehem.

And much of the residential development that has been happening is in the Valley's urban cores in Allentown and Bethlehem. More than 1,300 of the 5,800 housing units approved Valley-wide in 2007 were in those two cities, much of it apartments and condominiums, the report shows.

If there is a silver lining to the drastic downturn, it's that local planners can catch their breath and take care of the problem Kaiser warned them about two years ago: preserving open space.

Back then, he warned that if planners didn't do something quickly, suburban sprawl and other development would chew up more than 100 square miles of farms, woodlands and open space by 2030.

He sounded that alarm after the Valley's population jumped by more than 40,000 in the first half of the decade, fueling a housing boom in which developers raced to build thousands of new homes with an average cost of

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