Housing Market Analysis - City of Allentown

34 Pages·2016·0.68 MB·English

Housing Market Analysis
MA-05 Overview
Housing Market Analysis Overview:
The rate of growth in Allentown's housing stock had been significantly slower than that of Lehigh County
and of Pennsylvania as a whole. In 1990, there were 45,636 total housing units, 56.6% of which were
owner-occupied. This number grew by only 324 units between 1990 and 2000, an increase of 0.7%. By
comparison, during this decade, the total housing stock in Lehigh County and Pennsylvania grew at 8.9%
and 6.3%, respectively.
The Census Bureau's American Community Survey estimates that the housing stock in Allentown
decreased to 44,664 units by 2008, with the decrease spread evenly across owner-occupied, renter-
occupied, and vacant properties. Between 2000 and 2008, the number of housing units in Allentown
decreased by 2.8%, compared to increases of 7.4% in Lehigh County and 4.7% across Pennsylvania.
By the 2010 Census, Allentown had seen a small rebound in housing stock numbers. According to figures
from that Census, Allentown had a total of 46,921 housing units, of which 42,804 (91%) were occupied.
This percentage was similar to those for Lehigh County (142,681 total units, with occupancy of 93.9%)
and the State of Pennsylvania (5,565,653 total units, with occupancy of 90.1%).
Among owner-occupied units, the largest segment (5,405 units, or 26.1% of the total owner-occupied
housing market) was that owned by those 65 years and older. The same was true for Lehigh County
(25.9% owned and occupied by those 65 years and older) and Pennsylvania (27.5% for the same
demographic).
Rental-occupied housing was greatest among those 25-34 years of age in Allentown, Lehigh County and
Pennsylvania (25.1%, 23.7% and 23.3%, respectively). With 41.1% of its stock built in 1939 and earlier,
the City of Allentown’s housing is significantly older than that of Lehigh County (25.7% built 1939 or
earlier) and Pennsylvania (27.2%).

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MA-10 Number of Housing Units – 91.210(a)&(b)(2)
Introduction
In 2010-2012, the City of Allentown, Pennsylvania had a total of 47,000 housing units, 11 percent of
which were vacant. Of the total housing units, 60 percent were in single-unit structures, 40 percent
were in multi-unit structures, and less than 0.5 percent were mobile homes. Nine percent of the housing
units were built since 1990.
While general occupancy is high, the City’s rental vacancy rate is about 8.8 percent. Housing policy
analysts often assume that the supply and demand for rental housing are in balance when the vacancy
rate is about 5.0 percent, whereas vacancy rates greater than 5.0 percent are indicative of an oversupply
of rental housing. Thusly, Allentown appears to have an oversupply of rental units.
The City’s housing stock is older with 91 percent of housing units having been constructed before
1990. The median age of the units in the City is approximately 1950. This means that half of the
housing units in the City are seventy or more years old. The implication of this is that rehabilitation and
upgrading of units is an on-going problem, especially as the census data shows that 40 percent of
residents had been in their unit for at least a decade. As a note, approximately 2,418 housing units
have been built in the City since 2000, with a significant amount (1,769) of those units being built
between 2000 and 2009.
Per the Realty Trac website http://www.realtytrac.com/statsandtrends/pa/lehigh-county/allentown ,
there are currently 526 properties in Allentown, PA that are in some stage of foreclosure (default,
auction or bank owned) while the number of homes listed for sale on RealtyTrac is 581.

In January 2015, the number of properties that received a foreclosure filing in Allentown, PA was 18%
lower than the previous month and 2% higher than the same time last year.
Home sales for December 2014 were down 100% compared with the previous month, and down 100%
compared with a year ago. The median sales price of a non-distressed home was $107,700. The median
sales price of a foreclosure home was $41,400, or 62% lower than non-distressed home sales.
All residential properties by number of units
Property Type Number %
1-unit detached structure 11,459 24%
1-unit, attached structure 17,504 37%
2-4 units 8,775 18%
5-19 units 6,068 13%
20 or more units 3,675 8%
Mobile Home, boat, RV, van, etc 112 0%
Total 47,593 100%
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Table 1 – Residential Properties by Unit Number
Data Source: 2007-2011 ACS

Unit Size by Tenure
Owners Renters
Number % Number %
No bedroom 39 0% 769 3%
1 bedroom 334 2% 7,541 34%
2 bedrooms 3,121 15% 7,311 33%
3 or more bedrooms 17,279 83% 6,695 30%
Total 20,773 100% 22,316 100%
Table 2 – Unit Size by Tenure
Data Source: 2007-2011 ACS

Describe the number and targeting (income level/type of family served) of units assisted with
federal, state, and local programs.
The City of Allentown provides various federal, state, and local programs to help assist LMI individuals
and families. The Housing Authority serves low-income residents, including families, seniors and
disabled, of Allentown through two forms of housing subsidy: public housing units and housing choice
vouchers (formerly known as Section 8). The public housing program provides rental units for 1,223
households with rents generally set at 30% of the qualified tenant’s income. All tenant's must
document income at no more than 50% of the area median.
The housing choice voucher Program helps 1,453 eligible families, including families, seniors and
disabled, afford safe, sanitary and decent housing to live by paying a portion of the rent directly to the
property owners. Tenants generally pay 30% of their income for rent. Most vouchers are attached to the
tenant, not the unit, and can be retained by qualified tenants if they move to different unit. All tenant's
must document income at no more than 50% of the area median.
An additional 163 affordable units are available through the Low Income Tax Credit Program. These
units are are for families, seniors, and disabled and are affordable at varying affordability levels from
incomes no higher than 30% of the median to 60% of the area median.
Provide an assessment of units expected to be lost from the affordable housing inventory for
any reason, such as expiration of Section 8 contracts.
It is not anticipated that any units identified in the above section will be lost from the afforable housing
inventory in the next year..
Does the availability of housing units meet the needs of the population?
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Although sales and rent levels in Allentown are among the most affordably-priced in the Region, many
housing units available at these rates are in need of repair and are very old. Most low-income
homeowners and homebuyers do not have sufficient resources to finance the cost of repairs needed to
upgrade deteriorated sales housing. Most middle- and upper-income homebuyers with financial
capability to buy and improve older housing units are attracted to newly developed housing with
modern amenities and are not interested in older homes and/or living in neighborhoods where public
safety and quality of life problems are significant.
Despite the City's affordability, there are still shortages of rental and homeownership units in decent
condition that are affordable to extremely low and low income households. As discussed in the Needs
Assessment, there are renter and homeowner households with severe housing cost burden (paying over
50% of household income for housing) and households with a moderate housing cost burden (paying 30-
50% of their household income for housing).
The City’s strategy is to make provisions for upgrading the existing housing stock; the elimination of
obsolete housing and the introduction of new and substantially rehabilitated market rate housing into
the community.

Describe the need for specific types of housing:
Affordable Rental housing for low-income and extremely low-income households continues to be in high
demand due to the existing condition of the market rate units and the fact that market rents often
translate into high housing costs burden for low-income families. Special Needs handicapped accessible
housing assistance continues to be needed, especially for the frail elderly and physically disabled
population. Likewise, affordable housing for families with children remains a need throughout the
City as evidenced by the numbers of people experiencing overcrowding.
Affordable homeownership units are needed to increase the homeownership percentages in the City
and increase of the number of units in decent, safe, and sanitary condition.
Discussion

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MA-15 Housing Market Analysis: Cost of Housing - 91.210(a)
Introduction:
Per the 2010-2012 American Community Survey 3-Year Estimates, The median monthly housing costs
for mortgaged owners was $1,324, non-mortgaged owners $478, and renters $861. Forty-five percent of
owners with mortgages, 18 percent of owners without mortgages, and 64 percent of renters in the City
of Allentown, Pennsylvania spent 30 percent or more of household income on housing.
According to the 2010-2012 American Community Survey, Allentown had a total of 47,000, units; 5,170
of which were vacant (a vacancy rate of 11%). This represents a significant increase in vacancy from
1990, when the United States Census reported 2,861 vacant units and a vacancy rate of 6.3%. This
increase possibly can be attributed to changing demographics in the City of Allentown; although the
population rose slightly during the decade, this increase was mainly accommodated by the increased
average household size.
Compared to the state and county, Allentown's homeownership rate is very low. The 2010 Census
reported that 20,000 (46.0%) of the City's 42,000 occupied housing units were owner-occupied,
compared to a homeownership rate of 56.6% in 1990.
According to www.trulia.com, the median sales price for homes in Allentown for November 2014 to
February 2015 was $110,000 based on 299 home sales. Compared to the same period one year ago, the
median home sales price decreased 12%, or $15,000, and the number of home sales increased 6%.
There are currently 826 resale and new homes in Allentown on Trulia, as well as 491 homes in the pre-
foreclosure, auction, or bank-owned stages of the foreclosure process. The average listing price for
homes for sale in Allentown was $175,493 for the week ending February 18, 2015. A copy of the
www.trulia.com data is included in the Grantee Unique Appendices. According to www.trulia.com , the
median sales price in Allentown during the third quarter of 2009 was approximately $140,000.
On March 12, 2015, there were 94 units listed for rent on www.zillow.com. The rents started at $669
for one and two bedroom units. A copy of the units listed is included in the Grantee Unique Appendices
section of this plan. The National Low Income Housing Coalition provides annual information on the Fair
Market Rent (FMR) and affordability of rental housing in counties and certain municipalities in the
United States in 2014. In the Allentown-Bethlehem-Easton HMFA, the Fair Market Rent (FMR) for a two-
bedroom apartment is $974. In order to afford this level of rent and utilities, without paying more than
30% of income on housing, a household must earn $3,246 monthly or $38,952 annually. Assuming a 40-
hour work week, 52 weeks per year, this level of income translates into a Housing Wage of $18.73. A
copy of the National Low Income Housing Coalition data is included in the Grantee Unique Appendices
Cost of Housing
Base Year: 2000 Most Recent Year: 2011 % Change
Median Home Value 77,000 143,800 87%
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Base Year: 2000 Most Recent Year: 2011 % Change
Median Contract Rent 475 695 46%
Table 3 - Cost of Housing

Data Source: 2000 Census (Base Year), 2007-2011 ACS (Most Recent Year)

Rent Paid Number %
Less than $500 4,966 22.3%
$500-999 15,046 67.4%
$1,000-1,499 1,950 8.7%
$1,500-1,999 296 1.3%
$2,000 or more 58 0.3%
Total 22,316 100.0%
Table 4 - Rent Paid
Data Source: 2007-2011 ACS

Housing Affordability
% Units affordable to Households Renter Owner
earning
30% HAMFI 2,325 No Data
50% HAMFI 6,770 2,475
80% HAMFI 18,170 7,190
100% HAMFI No Data 11,030
Total 27,265 20,695
Table 5 - Housing Affordability
Data Source: 2007-2011 CHAS

Monthly Rent
Monthly Rent ($) Efficiency (no 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom
bedroom)
Fair Market Rent 631 724 915 1,145 1,299
High HOME Rent 672 771 974 1,205 1,325
Low HOME Rent 642 688 825 953 1,063
Table 6 – Monthly Rent
Data Source: HUD FMR and HOME Rents

Is there sufficient housing for households at all income levels?
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The Census Bureau's 2010-2013 American Community Survey showed that median household income
was $36,655 for the City of Allentown ($66,522 for the State of Pennsylvania). The per capita income for
the City was $16,233 ($28,052 for the State of Pennsylvania). In 2010-2012, 27 percent of people were
in poverty. Forty- percent of related children under 18 were below the poverty level, compared with 11
percent of people 65 years old and over. Twenty-two percent of all families and 42 percent of families
with a female householder and no husband present had incomes below the poverty level.
The homeownership rate for Pennsylvania was 46%. A household earning the median at $36,655 and
who spends 30% of their income on rent/mortgage payments would pay $916 per month. These
averages illustrate the continuing demand and need for affordable housing for low- and moderate-
income households.
Demographics in NA-10 indicate that Housing Problems, Cost Burdens, and Crowding, renters earning
less than 30% of the median and between 30% and 50% of the median are affected by these problems
more than those of renters earning more than 50% of the median and owners on a consistent basis.
Without some type of rental assistance, this portion of the population is in danger of homelessness
How is affordability of housing likely to change considering changes to home values and/or
rents?
The median home value in Allentown decreased by 15% between November 2014 and November 2013
according to www.trulia.com, while the median contract rent increased from $684 in 2005 to $881 in
2013 (ACS data). While this may appear to make For Sale units more affordable, the age of the housing
stock and the increased scrutiny for mortgages make the home buying option more difficult.
The cost of housing increase for rental units does not correlate with earnings increases or inflation.
During this time period the median household income increased from $35,964 to $36,655. If this trend
continues, the gap between rental housing and income will continue to increase, resulting in shortfalls
of housing that is affordable.
How do HOME rents / Fair Market Rent compare to Area Median Rent? How might this
impact your strategy to produce or preserve affordable housing?
The gaps between the high and low HOME rents and the Fair Market Rents is very low for the High
HOME rents, but greater for the Low HOME rents in the Bethlehem/Allentown/Easton HUD area. The
difference between the Fair Market Rent and both the high and low HOME rents are slightly less for the
smaller units such as the efficiencies and one bedrooms, but greater for the units in the highest demand
such as the two and three bedroom units. The gap between the Low HOME rents and the Fair Market
rents for a two bedroom unit is $149. Meanwhile the gap between the Low HOME rents and Fair Market
Rents for a 4 bedroom unit is $319.
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The gap between the Low HOME rents and the fair market rents is greatest for the units in the greatest
demand making in challenging to provide affordable housing options for household that require more
than one bedroom. This fact coupled with increased demand for housing in the area, as well as
increasing prices make it difficult to provide enough affordable housing.
Producing new affordable housing options is also difficult because the incentive to produce market rate
housing and the profits associated with these types of developments outpace the incentives for
affordable housing construction.
Discussion:

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MA-20 Housing Market Analysis: Condition of Housing – 91.210(a)
Introduction
Using indicators of housing deficiency available from HUD’s data included below, the following narrative
describes the condition of the housing stock in Allentown. A structure's age is used to demonstrate the
amount of time a unit has been in the housing inventory and the duration of time over which substantial
maintenance is necessary. In the absence of routine maintenance, older housing usually becomes
substandard. The age threshold used to signal a potential deficiency is 50 years or more. Per HUD’s data
included below, there were 19,960 units built before 1950. This represents a total percentage of 46%
The data identifies a total of 19,960 units, both Owner Occupied and Rental that have at least One
Selected Condition. This represents a total percentage of 46%. Overcrowding is directly related to the
wear and tear sustained by a housing unit. More than one person per room (1.01 persons or more) is
used as a threshold for defining living conditions as overcrowded. The HUD data included in section NA-
10 of this plan identifies 985 Renter households and 179 Owner Occupied Households affected by
overcrowding in their living environment
As a result of these statistics, the City’s goals include reducing overcrowding in housing units as defined
in the City's Property Maintenance Code, in addition to physical improvements for properties. The
deteriorated condition of some existing housing units can be attributed to speculators sitting on land,
not making substantial improvements, and waiting for developers or the City to make substantial offers
on these properties.

Definitions
In Allentown, a housing unit is considered “standard” if it is in compliance with municipal housing and
property maintenance codes. Because these codes “grandfather” certain pre-existing conditions
associated with factors such as minimum room sizes and stairway widths, the precise number of housing
units that can be categorized as standard based on a consistent application of municipal codes cannot
be determined.
For the purposes of the Consolidated Plan, a housing unit is termed “substandard” if it requires major
repair or replacement of one or more major systems or it requires rehabilitation costing $25,000 or
more in order to achieve compliance with municipal codes.
Census data and other statistics are not sufficient guides for determining whether a substandard
property is suitable for rehabilitation. Since a high percentage of houses in the city were built before
1980, age of housing, by itself, is not a useful indicator. However, the City has experienced substantial
issues with lead abatement, which presents strong correlation to the age of the housing stock. In
addition, lead abatement activities are expensive. Because major systems repair and replacement
needs vary widely in scope and cost, the existence of major systems deficiencies, by itself, is not a useful
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indicator either. Some vacant houses may be suitable for rehabilitation, but the determination of
whether or not a particular house is to be rehabilitated should be based on a variety of factors including
house and block conditions, real estate market characteristics, and the level of subsidy required to
complete rehabilitation. With regard to the latter factor, the City will not provide development subsidy
funding for housing ventures that exceed Section 211(D)(3) limits.
Condition of Units
Condition of Units Owner-Occupied Renter-Occupied
Number % Number %
With one selected Condition 7,141 34% 12,519 56%
With two selected Conditions 81 0% 722 3%
With three selected Conditions 8 0% 62 0%
With four selected Conditions 0 0% 0 0%
No selected Conditions 13,543 65% 9,013 40%
Total 20,773 99% 22,316 99%
Table 7 - Condition of Units
Data Source: 2007-2011 ACS

Year Unit Built
Year Unit Built Owner-Occupied Renter-Occupied
Number % Number %
2000 or later 587 3% 1,082 5%
1980-1999 1,731 8% 3,042 14%
1950-1979 7,625 37% 9,089 41%
Before 1950 10,830 52% 9,103 41%
Total 20,773 100% 22,316 101%
Table 8 – Year Unit Built
Data Source: 2007-2011 CHAS

Risk of Lead-Based Paint Hazard
Risk of Lead-Based Paint Hazard Owner-Occupied Renter-Occupied
Number % Number %
Total Number of Units Built Before 1980 18,455 89% 18,192 82%
Housing Units build before 1980 with children present 635 3% 980 4%
Table 9 – Risk of Lead-Based Paint
Data Source: 2007-2011 ACS (Total Units) 2007-2011 CHAS (Units with Children present)

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