Valley housing boom

By Jeanne Bonner

The Morning Call

April 04, 2008

The Lehigh Valley needs to accept that increasing the amount of affordable housing is everyone's problem because without it, the region's economic expansion and the social mobility of residents are threatened.

So says Jeremy Nowak, an urban redevelopment official who was the keynote speaker Thursday at the Lehigh Valley's first-ever affordable housing summit. The day-long conference at the Hotel Bethlehem attracted 200 attendees.

''At an affordable housing summit, the most important message is that this is a mainstream problem,'' Nowak said. ''It is not just a social justice conversation.''

Nowak, president of The Reinvestment Fund in Philadelphia, which helps to finance neighborhood revitalization, said the need for affordable housing will become even more acute when the Sands BethWorks casino in south Bethlehem opens. That's because its workers will need a place to live.

For the players of the Valley's brand-new minor-league baseball team, that problem is already a reality. IronPigs' players, whose team is an affiliate of the Philadelphia Phillies , have said they were caught off-guard by the Valley's unexpectedly high cost of living and are struggling to find decent housing.

This decade's real-estate boom has left many professionals in the Lehigh Valley struggling to find a decent home they can afford. In the past five years, home prices have risen more than 50 percent, according to local and federal statistics.

Median incomes in the Valley, meanwhile, have risen at less than a third of that rate in the same period, according to the U.S. Census. Rents have also been on the rise.

Even the slowing housing market has not had a real effect on affordability because average home prices have not fallen much.

The dearth of affordable housing threatens to affect employers -- particularly hospitals and schools that might not be able to attract essential employees. Indeed, St. Luke's Hospital in Fountain Hill has begun to provide assistance to employees who want to buy homes.

Organized by Lehigh and Northampton counties, the conference, called ''Creating Partnerships for Expanding Housing Choices,'' was one of the main goals of a bi-county advisory group. A study, commissioned by the counties, found nearly half of the households in the Valley cannot afford a house that costs the median price of about $190,000.

Nowak, who capped off a day of panel discussions and talks, said the number of Valley residents who are ''cost-burdened,'' which means housing expenses exceed 30 percent of household income, is rising more quickly than in the rest of Pennsylvania. In 2006, for example, 47 percent of Pennsylvania renters were cost-burdened, up from 39 percent in 2000.

In Lehigh and Northampton counties, by contrast, more than 50 percent of renters are spending more than 30 percent of their income on housing costs, up from about 37 percent in 2000. The ratio for homeowners with mortgages is similar.

Any unforeseen financial pitfall poses a danger to people who have exceeded this key ratio.

County officials wanted to gather developers, bankers, real estate agents and representatives from nonprofit organizations -- all the people who can address the problem.

The next step will be to hire an affordable housing coordinator, who will be paid by both counties. A job advertisement for the position will begin running this weekend in area newspapers, and organizers hope to fill it by June, said Lehigh County Director of Community and Economic Development Cindy Feinberg, who took the lead in organizing the conference.

''The counties don't have a tremendous amount of money to dedicate to this problem,'' said Lehigh County Executive Don Cunningham in an interview before the event. ''The question is how can we pool our resources. It might be a cliche but the journey of 1,000 miles begins with one step.''

The most important feat, however, will be to persuade for-profit developers to build affordable housing units. And even developers already building lower-cost units say that won't happen overnight.

''To jump from market rate to the affordable sector is not easy,'' said Mark Dambly of Pennrose Properties, a developer of affordable housing. ''It's a niche business. It's a complicated business.''

Dambly said for-profit developers go to the bank for a loan and then start building. It's not so easy for developers of housing units for lower-income residents, who need to cobble together financing from a variety of sources.

Nonprofit agencies have plans to build additional affordable units in the Valley. For example, the Housing Association and Development Corp. announced a plan last year to build and repair 26 homes in Allentown, many of which will be sold for less than $100,000. In Bethlehem, Habitat for Humanity of the Lehigh Valley plans to build 26 affordable homes near the top of South Mountain.

The pipeline, however, appears empty compared with the demand, said Michael J.

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