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Two Lycoming College professors have completed the first comprehensive study on the effects of the Marcellus Shale natural gas industry boom on housing markets across the Commonwealth of Pennsylvania. Dr. Bonita Kolb, associate professor of business, and Dr. Jonathan Williamson, chair of the political science department, worked through the College's Center for the Study of Community and the Economy to co-author the study, which received funding from the Pennsylvania Housing Finance Agency. Anne Landon, assistant director of Lycoming's Institute for Management Studies, assisted with the project.
CSCE conducted interviews with more than 70 stakeholders across six counties: Bradford, Greene, Lycoming, Sullivan, Washington and Westmoreland. Participants included elected officials, planners, housing officials, social service agency representatives, landlords, developers, realtors, gas company representatives and new residents. They were questioned on four broad issues: rental housing, owner-occupied housing, housing affordability and availability, and the capacity of the development community to meet demand for housing.
According to the study, several themes emerged from the interviews. First, the severity of the housing problem attributable to Marcellus Shale development depends on the nature and scale of the growth of the natural gas industry in a given county or community and on the existing pre-Marcellus capacity of that county or community to absorb the increased demand for housing.
Second, the effects of increased housing demand are broad-based, but the negative impacts are felt heaviest by those living at the economic margins. While rents and home prices are increasing at nearly all price points, the impacts of the housing shortage are falling heaviest on those whose housing situation was most at risk prior to the Marcellus industry growth, namely the non-working poor, seniors, the disabled and the working poor. The study shows that there is interconnectedness to the housing market.
"If there is relief in any sector of the housing market, that will have a spill down effect," said Williamson. "For example, seniors are staying in their homes longer because there is not enough senior housing available when they want to downsize. That means there are no houses coming on the market for people to buy, which means they are staying in the rental market longer, causing even more of a shortage of rental housing. So people at the low end of the market are being forced into substandard housing. If you provide senior housing, or housing along any of those lines of thought, it provides relief."
Additionally, the natural gas industry has a wide variety of housing needs with varying time frames. Two waves of gas industry employment correspond to the evolving housing needs of industry employees. For the first transitory wave of gas workers, housing needs are being met with hotels, gas-company sponsored temporary residential facilities, campgrounds and a community's rental housing stock. The second, more permanent, wave of gas employees are more diverse in background and have a more diverse set of housing needs. They will take advantage of a full-range of long-term housing options including rentals and owner-occupied housing.
"Even if the long-term gas employees leave their job, someone else will be hired in their place," said Kolb. "Right now, drilling is backed up 15 to 20 years. Industries that rely on cheap energy are looking to come into this area. The growth of the gas industry won't always continue at the same level. The rate of growth may slow down, but it will continue to grow."
Finally, the capacity of the development community varies considerably from county to county in its ability to meet the need for additional housing. Counties with little pre-Marcellus development are struggling to attract new development to meet the changing circumstances. Barriers to development include the lack of local developers, a tight financing market, inadequate utility-served land availability, regulatory hurdles and lingering doubts about the Marcellus Shale gas industry.
"In some counties, they don't have available land, especially level land," said Williamson. "They don't have the infrastructure, such as enough water and sewer lines, to be able to absorb the new capacity of additional housing. Many developers don't have the experience in developing whole residential communities. In Lycoming County, we are seeing development beginning to occur, but it takes a two to three year set of steps, which includes identifying the land, developing the plans, coming up with the financing, getting everything approved, and then completing the project."
Founded in 1812 and celebrating its bicentennial during the 2011-12 academic year, Lycoming College is a national liberal arts and sciences school dedicated to the undergraduate education of 1,400 students. It offers 35 academic majors and is recognized as a Tier 1 institution by U.S. News and World Report. Located near the banks of the Susquehanna River in Williamsport, Pa., Lycoming is one of the 50 oldest colleges in the nation.