It has been stated that one person’s gain is another person’s pain.
This appears to be the situation with the housing market in NEPA, particularly in regard to shelter for the poor.
Mike Hanley, executive director of the United Neighborhood Centers (UNC) of Lackawanna County, explains that Money magazine is predicting that Scranton will soon become one of the fastest growing metro areas in the United States. This growth is currently creating some side effects that Hanley’s organization must deal with.
“Yes, economic growth like this is good for the business community,” says Hanley. “But, what about the poor caught in the squeeze as prices for regional housing escalate? This growth has not been good for the poor and working poor.”
Hanley says this situation is not limited to the Lackawanna and Wyoming Valleys. In Monroe County, rising housing costs also have forced many lower-income residents out of their communities, and increasing numbers of people with lower-paying service-sector jobs can’t afford to live within the communities where they work.
“The challenge is how to develop programs to help these types of people in the future,” says Hanley.
Low-income renters are now finding themselves in a difficult situation, according to Hanley. Federal funding cutbacks for housing are now the norm, and he says the Scranton Housing Authority may have an eight to 12 month waiting list.
On an upbeat note, Hanley says that first-home buyers are still common throughout Scranton and Wilkes-Barre. However, the overall number of mortgage foreclosures is increasing in Lackawanna and Luzerne counties.
“Many of the lenders who have written these mortgages don’t have any local presence,” says Hanley.
John Cognetti, owner of Hinerfeld Commercial Real Estate Services, comments that key changes have occurred in the way the federal government approaches urban housing for the needy and working poor.
He says Washington has moved away from gigantic housing approaches like “cellblocks” to more humane neighborhood approaches
Other changes are still forthcoming.
“The move by the federal government now is to get out of housing entirely,” says Cognetti. “But, there is a push on for lenders such as Freddie Mac to provide low-cost loans, making housing purchases more affordable.”
Cognetti says the real issue regarding housing for low-income individuals is the need for family-sustaining employment. He says that when an individual or family overstresses their meager budget for housing, they may wind up destroying their credit rating, creating a vicious cycle of unfortunate economic developments.
“As a society, we haven’t yet figured out how to deal with this social issue of low-paying jobs,” says Cognetti. “The new minimum wage helps, but prices for fuel, taxes and utilities are also up. This really hurts the working poor, and a chasm has developed for them. The business community must recognize that many working poor are not freeloaders like the common stereotype.”
Cheryl Ann Houseman, government affairs director with the Pocono Mountains Association of Realtors (PMAR), also says that her region has experienced explosive economic growth that has been profitable for many businesses. The situation has also given rise to some peculiar market conditions.
According to Houseman, there are approximately 4,000 home listings for sale in her market area at any given time. Despite this surplus, sellers are unwilling to lower their prices.
“This would appear to be a buyer’s market, but the sellers will not negotiate,” says Houseman. “Opinions vary as to why.”
Houseman says that, during the last seven years, Pocono home prices have risen 42 percent. During 2000, the average home price was $114,000, while during 2007 the average price had risen to $195,000.
In the rental arena, it is common for a two-bedroom Pocono apartment to be priced at $850 to $900 a month. Because of these steep prices, Houseman says very few housing options now exist for the lower middle class and working poor.
“One option is for people to leave the region, and that is definitely occurring,” says Houseman. “They can go west or back to the urban area. Our school district has become one of many transients because of families leaving due to financial pressure.”
To try and help with these market-driven housing problems, the PMAR is offering an Employer Assisted Housing Program. The program, which functions in partnership with various state development agencies, is working to draw awareness by employers to the worsening housing situation, and to help people afford to work and live in the same locale.
“As an example of this problem with housing costs, in Stroudsburg, East Stroudsburg and Stroud Township only nine of the 60 total police officers reside there,” says Houseman. “We hope that we can develop a program of employer down-payment assistance and low-interest loans from agencies. However, as we work on all this, the situation overall is worsening.”
Steve Nocilla, executive director with Catholic Social Services (CSS) of Lackawanna County, also says that changing market conditions are hurting low-income families in need of affordable housing.
Nocilla reports that his agency is recording double the number of inquiries for financial housing assistance as compared to the previous year. The situation is evolving so fast that CSS has not been able to develop any permanent answers to the growing numbers of people who need help.
He says because of this growth in requests for housing assistance, his agency must become more selective in the client screening process.
“The working poor, those at the top end of the scales for assistance eligibility, have been exceptionally hurt by recent prices increases for housing,” says Nocilla. “There are a shrinking number of low and moderate priced rental units that are acceptable, and this supply versus demand favors the landlords of lower priced properties.”
Nocilla says that $500 per month rentals in Lackawanna County for one person are now common. For a family of three to four people prices of $575 to $1000 are the norm, with higher rates a distinct possibility.
A dropping number of smaller rental units on the market, plus that fact that fewer people desire to be landlords, is amplifying the urban NEPA housing market. Nocilla also says that there has been a rise in the number of properties being bought by out-of-town landlords who want to make quick profits, resulting in immediate price increases.
“It’s increasingly tougher to find lower cost housing here,” says Nocilla. “Lower priced homes are being bought as investment properties and flipped. Plus, many of these homes have big trouble structurally.”
Margaret Suarez, director of case work at the Salvation Army in Scranton, identifies several market-driven changes in the rental market that are hurting the poor in NEPA.
“These cost increases have been a killer, and rents of $600 plus utilities are now common,” says Suarez. “Many families are incapable of paying this, and must choose between rent, food, or utilities. The number of absentee landlords is also growing as properties are bought up by investors from outside the area, and a move is also gaining momentum to put utility costs into the hands of the renters.”
Gary Drapek, president of the United Way of Lackawanna County, adds that some regional assistance agencies are trying to provide transitional housing. This may be in the form of an apartment for six months to a year when an individual is trying to get their feet back on the ground financially.
“As a society we must provide not a hand out, but a hand-up,” says Drapek.
– Courtesy of the Northeastern Pennsylvania Business Journal
