PA Faces Record High Housing Costs Without Building Boom

Member Group : Center Square

(The Center Square) – Pennsylvania’s struggle to build more housing, be it affordable or market-rate, will continue unless dramatic change happens within city, county, and state governments.

Such was the takeaway from a House Urban Affairs Committee hearing focused on northeastern Pennsylvania on Wednesday.

From bureaucratic red tape to construction costs to how long it takes to build housing, rural and urban parts of the commonwealth have not been able to deliver housing.

“Since 1965 after counting for inflation, home prices jumped 118% – that’s after accounting for inflation – vs. a 15% increase in income,” Aaron Zappia of the Housing Alliance of Pennsylvania said. “It could take a decade or more of record-level building to meaningfully increase affordability.”

When housing does get built, it tends to be market-rate housing, as opposed to affordable housing, which generally has restrictions on how high rents can be.

Affordable housing “is unattainable due to the costs and challenges of finding land and buildings that we can develop into affordable housing versus market-rate housing,” Andrew Haines, chair of the Pennsylvania Developers’ Council, said.

Haines noted that costs such as impact fees and title insurance can make affordable housing projects more expensive. Other panelists noted restrictions due to zoning and bureaucratic requirements that add months or years to a project.

In rural areas, blighted properties tend to be a bigger problem, Haines said. Looking at other states, he noted state programs that help finance affordable housing, which Pennsylvania could copy.

“We need a permanent source of soft financing gap for affordable housing, both for sale and rental, to help us promote and develop more affordable housing,” Haines said.

The discussion of housing prices often focuses on urban areas, where they might be more visible, but a lack of available housing is felt across the state. Local governments also have more power to deal with housing costs. A law passed in July allows localities to grant tax incentives for affordable housing, as The Center Square previously reported.

However, zoning and other restrictions on how land can be used, as The Center Square previously reported, is a roadblock for new housing in small towns and big cities alike. The high market demand for housing means that prices will continue to rise until the supply of housing catches up.