- [Announcer] Live from your Public Media Studios, WVIA Presents "Keystone Edition Reports."

A public affairs program that goes beyond the headlines to address issues in Northeastern and Central Pennsylvania.

This is "Keystone Edition Reports."

And now moderator, Larry Vojtko - Hello, I'm Larry Vojtko.

The American Dream.

Attaining it seems more and more elusive, and one element of that dream, home ownership, appears out of reach.

Rent has skyrocketed.

So saving for a down payment on a house is more difficult.

House prices have also exploded and rising mortgage rates have made monthly payments nearly unaffordable even for households with above average incomes and solid credit scores.

Why has the search for affordable decent housing become so difficult?

Why are home prices so high and why hasn't the increase in mortgage rates pushed down those prices?

What is being done to address the issue?

We'll try to find the answers to these questions on this edition of "Keystone Edition Reports."

We begin as Sarah Scinto gives us a closer look.

(logo swooshing) (gentle music) - [Sarah] Finding a suitable home has become more and more difficult.

Between 2012 and 2022, the number of single family homes could not keep pace with the number of households formed.

America saw 6.5 million more households formed than homes built.

By one estimate, Pennsylvania has a shortage of almost 100,000 housing units or more than 200,000 for extremely low income renters.

According to the US Government Accountability Office, high interest rates and low inventory are contributing to this issue, as is the growing number of millennials who are looking for larger homes to raise families.

These issues also impact the rental market.

Individual and institutional investors continue to buy up many of the few homes on the market driving up housing costs.

Around 43% of renters in the Commonwealth now pay more than 30% of their monthly income on rent and utilities.

People looking to buy a home often struggle to save for a down payment as wages have not kept paced with increased costs.

Among other factors that contribute to this crisis are regulations regarding land use, such as zoning laws and building codes that can create hurdles for housing developers.

JP Morgan Private Bank says high prices, high mortgage rates, and a shortage of homes.

Combined, they've created today's crisis of affordability.

For "Keystone Edition Reports," I'm Sarah Scinto, WVIA News.

- Thank you so much, Sarah.

Well, let's welcome our guests who are here to share their expertise on the topic.

Joining us here in the studio is Charlie Kasko, chairman of the Institute for Public Policy and Economic Development.

Dana Hanchin, CEO, and president of HDC MidAtlantic.

And Michael Tukeva, president and CEO of the Pocono Mountains United Way.

Well, welcome to all of you.

Now, we all know that house prices have exploded.

One factor of that are the rising interest rates, and those are rising because the Federal Reserve wanted to raise interest rates to combat inflation.

So we just saw that the Fed had just decided to keep them flat for right now where they are, and we can't really know when they're going to come down.

It all depends on whether inflation meets their benchmark.

So let's concentrate on the more fundamental problem, that is supply.

So Charlie, I'll start with you.

Why is the supply of housing so low at this time?

- Well, it's almost a perfect storm.

You gotta go back to 2008 when the housing crashed.

I mean, we went from 1.8 million housing starts nationally a year down to below 800,000.

When you think of that just in that period.

By the time we come out of that and it started to build again, we hit COVID, slowed it down again.

So we really haven't seen the development and the supply.

Of course, as we heard on the news report, you know, the families are still growing.

And then all of a sudden, you take our world here in Northeast Pennsylvania where for the first time in 100 years, we're starting to see a population growth.

So we're starting to see movement into this area, but we haven't seen the building.

We've had the circle effect of people aren't selling their homes because where are they gonna go?

What house?

You know, if you're moving up and you can't find a house to move up to, you can't put your house on the market.

Same thing if you're downsizing.

So we have that problem, you know, and then with all these other things that have been going on between interest rate hikes, the cost of material to build new housing, the problems with trying to do new developments, you know, and all the things that we have to deal with on on a daily basis, it's just been a perfect storm.

- So you mentioned one of the aspects is that this idea of being stuck where you are.

You're kinda stuck renting because you can't find the house because it's not there.

You're already in a house, but you can't move up because that house isn't there and you can't downsize because if you downsize and you sell your house, you may end up getting something that, you know, still, you know, you've paid off that house.

You might be getting a house where you have to pay a mortgage again.

So there's this kind of, we're kind of cement around our feet.

Michael, what other factors are affecting this shortage?

- Well, we bring up this point of folks wanting to move on, and all housing is good housing, in my opinion.

I'm always going to advocate for affordable housing.

And often, it is thought about those that are in the workforce.

We wanna make sure that our workforce is able to work and live in their own communities.

But as Charlie mentioned, if you do not have a place to go, that next generation that wants to buy the senior that is about to retire and move out of their home, if they don't have a place to go, that new family doesn't have a place to move into.

So all housing is good housing.

So we're excited about bringing any type of food development projects in.

Developments for our seniors will alleviate some of that problem and provide more housing stock for those younger families that want to move in.

I think that's just one of the things that we have to be mindful is that there is this need to really care well for the dignity of every person in our community, whether they're the first time home buyers or those that have been living in their home for 40 years and just want the next part of their housing story.

- Now Dana, you see this all the time about people who are, you know, you're working and they can't find decent housing.

The supply is not there.

How does HDC MidAtlantic attack that problem?

- So, HDC is a nonprofit affordable housing development organization.

We do development of new construction, preservation of existing affordable housing and acquire existing housing to continue affordability as well as provide supportive services to ensure housing stability once those families find affordable housing.

And I've been doing this work for nearly 30 years, and we're talking about a crisis right now.

But when I started out 30 years ago, there was still a crisis for our lower income families and individuals.

The individuals and families at HDC serves, on average, their income is $30,000 a year, which is roughly $15 an hour, which is twice the minimum wage in the state in the commonwealth of Pennsylvania.

So in my mind, we've always had a crisis in terms of being able to provide equitable housing options across all income levels.

And of course, the most disadvantaged and challenged are those who are at lower incomes, who are working hard, who are earning wages.

They're the folks that kept us safe during COVID and they're the folks that are struggling with housing.

And you're talking about the growth in the Northeast, and you're not actually gonna be able to see that prosperity until you're able to provide housing for the workers who want to move here so businesses can grow.

- Yes, Charlie.

- And she makes a great point.

And when you really look at it just in the past four years here, a house that was originally selling for $100,000 now, you know, four years later is about 150,000.

Then you take in the interest rates and you take all the other things that are happening in here.

And that person, the medium income household income here is right around 53,000.

You take that person and you break down the percentage of what they can afford towards housing.

And look at what the interest rates have done, what this increased cost in housing has done is really disenfranchise our workforce.

And we desperately need good workforce housing.

And there are solutions out there.

There's great public-private partnerships, there's organizations like the HDC that are doing great work, but we have to, you know, focus on the core issues of why aren't we building more, which frees up more housing, which controls the cost of housing, when you have more supply, why aren't our communities understanding that planning for every single use group across 76 municipalities in Luzerne County doesn't work?

We need more regional planning.

Years ago, we did a by county comprehensive plan.

And we said it when it was written.

If the municipalities aren't gonna buy into it, it's no good.

But that plan understood our current infrastructure, how to develop not just, you know, low income housing or workforce housing, but all levels of housing.

Like Michael said, that's so important that we understand that every aspect of our community needs to be housed.

These plans work.

It's not like we need to reinvent the wheel, but we gotta get out of our own way here in our area.

- So we need housing to help the workforce, which in indeed, helps the companies looking for labor.

We don't have that supply.

We heard about housing costs and COVID.

and things of that sort.

But as I was reading and preparing for this program, one aspect came to the fore in my mind that I didn't even consider.

And that's land use restrictions.

And I think this kinda connects into what you were saying about regionalization as opposed to this checkerboard of municipalities.

So can we talk about how, you know, zoning laws and lot size, minimum parking space, affect the supply?

Do you have any comments on that, Charlie?

- Just real quick.

I mean, right now, when you look, I think in Luzerne County, like I said, 76 municipalities, 20 of them are under the county.

Then 56 are planning for every use group.

But beyond that, each one has their own zoning guidelines and even the way they term either a B2, an R1 or an R2 is different in every municipality.

So it's convoluted all over the place.

One thing I always said, we don't have to reinvent the wheel.

There are some great programs out there all over this country that worked where they really focused on infill housing.

Changed height restrictions to allow For more density within, not just our cities, but our first burbs as well, which desperately need to see good growth.

So there's all these opportunities out there, but we have to plan as a region.

It's too difficult to try to do this town by town and then expect developers to come in and put their resources in there.

You know, and have to play by 10 different rules all within a few mile radius.

- Well, let's meet a brand new homeowner.

When it's time to enter the housing market for the first time, prospective buyers with average incomes end up having to a lot to learn.

WVIA Sarah Scinto met Elizabeth Cote of Luzerne who tells us about her experience in purchasing a house for the first time.

(logo swooshing) - I expected it to be difficult.

I did not expect it to be this difficult.

- [Sarah] After making five offers on houses, Elizabeth Cote finally had one accepted.

She'll be moving into her first home in Nanticoke this summer, but her journey to home ownership has been a long one.

It started when one of her roommates at her current rental in Luzerne decided to move out.

- Within a week after that, we got an email that out rent was being raised.

So we needed to move somewhere.

And I have a lot of things, I have a lot of stuff.

You see this house.

I don't wanna just move and then move and then move and go from lease to lease.

And I had enough of a, or what I thought was enough of a little nest egg saved that I went to my coworker at the time who does real estate on the side.

And I said, "Could I feasibly do this?"

And she said, "Of course."

And I was like, "Then let's do it."

So we've been looking at houses around the area and I thought I knew about the housing market and about the process into buying a house and I was out of my depth.

It was very much a learning experience the entire way.

And we put in a couple offers.

I think the one that we got outbid by the most was about $50,000.

- [Sarah] The house she finally found had only been on the market for a week, which is a long time right now.

Cote says the housing market is more competitive than she imagined, especially if you're using a federal housing authority loan for first time home buyers.

- FHA loans are not popular.

A lot of houses, I was scrolling through Zillow myself, a lot of houses, when you see them, they say you're either straight cash or a conventional loan.

They don't even look at FHA loans - [Sarah] For "Keystone Edition Reports."

I'm Sarah Scinto, WVIA News.

- Well, we can see from that report that becoming a homeowner presents a share of hurdles moving from renter to owner can appear to be nearly impossible.

In the report that opened this program, we learned that just over 43% of renters in Pennsylvania pay over 30% of their income on rent and utilities.

That's described as rent burden.

However, Pennsylvania fair is better than the nation where that figure is 50%.

Well, you know, Michael, as rents are escalating, I'm guessing that's many forced as well as like self evictions have escalated as well.

And a profusion of evictions is not a place where we wanna be.

Correct?

- Absolutely not.

My goodness.

Evictions are costing our state and the systems that are at large, meaning our academics, healthcare, criminal justice, a quarter of a billion dollars a year.

Which is just startling to think about, that that much money is being spent on all of these other systems because we can't get housing right.

And when evictions happen, entire communities are suffering.

Kids are having a difficult time in schools.

The employers are going to lose out on productivity because those individuals are not going to show up.

There's greater occurrence at the ER.

These are burdens that are happening to our entire community and not just single issues for single families that are being evicted.

- And so it's a community-wide problem and we should all be aware of this.

That, you know, if we're not in the housing market right now, we think it's not our problem.

But in a bigger sense, it is 'cause the community has to work together and link together and in order to be vital.

- Well it's costing all of us.

Our tax dollars go to all those system issues that, that are being affected by this.

So every time someone's being evicted, our state dollars and our federal dollars that we are paying taxes towards are going to solve those issues but it's costing us so much more on the back end.

- And it's a lifetime impact on the family once they go through eviction.

So everything that we can do to prevent that eviction is super important in order to maintain housing stability.

And just sharing a little bit about that, there is evidence-based research that shows it takes nearly 600 to $1,000 to assist a family that's in crisis and maybe losing their housing.

And so if you can step in there before and address that issue, help them with cash assistance and get them on a plan to get corrective action and get them as a tenant in good standing, you can help prevent that eviction.

And later on down the road, additional cost to the state and to taxpayers.

- Larry, that comparison though, Dana just said, up to $1,000 that we have to invest now or nine to $10,000 on the backend.

That's what we are dealing with.

It's simple, you know, dollars and cents.

You know, the math is not math by allowing evictions to continue.

- Now, Dana, HDC recently completed $23 million project.

Can you just tell us briefly the course of events?

And I think it illustrates how difficult it is, you know, to get housing, new housing.

We saw the new homeowner existing housing.

This is new housing, tell us about that.

- Yes, so it's new construction affordable rental housing, which is a different animal than market rate rental housing and a different animal than home ownership.

So the program that we utilize to build affordable housing is a low income housing tax credit program.

And the best way to explain that is a indirect federal subsidy that incentivizes the private market to participate in providing affordable housing.

So we talked a lot about the market supply of housing and at the end of the day, if affordable housing, if developers can make a profit from it, we wouldn't be in this problem, in this situation.

So what the federal government did was incentivize private investors to participate to create that opportunity.

That's the vehicle that we use.

It is the only national program available to create affordable rental housing.

And there's nothing equivalent on the home ownership side.

So it's a complicated financing structure.

$23 million to build 64 apartments.

This is in Lancaster, Pennsylvania, and it's for families general occupancy with a set aside to serve individuals with physical disabilities.

So a portion of the low income housing tax credit program provides equity for the project and then we have to fundraise for the rest because with affordable rental housing, your revenue is capped because you can only charge so much in rent, and that's based upon the area immediate income and the percentage towards the area immediate income in terms of the families that live there.

So typically, in addition to getting these tax credits that roughly make up $16 million of that 23 million, we have to raise soft money to make up the rest because there's very little debt service in terms of permanent financing we can support because the incomes are capped so low and the revenue doesn't actually come in to cover that expense.

And expenses on the operating side is even going up with insurance, staffing, utilities, and taxes, the uncontrollable costs that we actually can't control and we can't raise our rents in order to accommodate that.

So they operate on very tight margins and very complicated structure.

- Right.

So what interested me, you had something like almost a dozen and a half other funders for this project.

- [Dana] 17 different funding sources.

- So we have the federal government, we have all these other funding sources.

You have to find a way to get that to go.

You have to get a contractor on board.

How many years did this take?

- So in a good sort of run, it's about four years.

And we actually did achieve that through COVID and I would say that initially, when we were looking at this project and received tax credits for it, it was a $16 million project that ended up being 23 million because at the end of the day, with the escalation of construction costs, the interest rate environment inflation staffing issues, it just escalated it.

So we were running around looking to fill that gap even after we got the credits.

- Charlie, this just seems like we've made this whole issue so complicated.

- We have.

And again, you know, the regulation are so burdensome.

There's developers that, you know, give up developing because the amount of time and energy it takes.

And you know, I talked to an individual the other day, he was just trying to do a 35 all lot subdivision.

He's been tied up with DEP for five years.

And sooner or later it's like, how long do you want to type up your money?

I do believe some of these programs are exceptional.

They've worked well in a lot of other areas.

A dear friend in Delaware that's set them for years.

Tax credit housing.

I mean, those public-private partnerships can work.

But again, we gotta figure out a way to cut some of the red tape to get them to move along quicker.

There has been models across the country where one community actually purchased land and then did all the pre-development work so that then the builders can come in and get the shovel in the ground immediately and get houses, you know, we didn't today.

- Michael, do you have any examples of these kinds of partnerships initiatives or, you know, what's a way forward for us?

- We certainly do have an example, before I get there though, I think it's a cultural issue first.

We often hear of, "Not in my backyard."

We need to start promoting "Yes in my backyard" where we are attracting developers and making it easier.

As Charlie said, and as Dana mentioned, we want to incentivize folks to come into our communities, to be excited about economic development, to be excited about, you know, land development, to see communities thriving.

That type of social cohesion I think is so important to just the wellbeing of people in general.

So I think we have to be taking this approach more from a marketing standpoint sometimes and say, how do we make our communities thrive?

And then we start working together.

But an example of that is we are working in Monroe County on a senior housing project to bring in 70 plus units and that will again, alleviate some of that burden.

But it's working with a private developer, it's working with a local institution that has land and saying, let's get creative.

Let's do something that has never been done before.

Or let's do something that challenges the status quo so that we can make a difference in our community.

- Yes "Yes in my backyard."

And it brings me to you, Dana and HDC has a belief that housing is a human right.

And I don't think that we usually think of it that way, but I would think that, you know, that what Michael is saying and the belief in the housing is a human right kinda go hand in hand.

- Yes, and I would say that for us, without addressing the housing issue, all the goals that we wanna achieve around competitiveness as a commonwealth, our educational goals, healthy outcomes for families are all sort of conditioned upon having stable and affordable safe housing.

And without dealing with that foundational issue, we're gonna be hard pressed to achieve those goals.

Stressing again, streamlining the land development process and permitting processes.

Those can create wrenches in a project.

In my mind, it may not matter if an entire community collectively agrees to support housing at whatever sort of income levels you're serving, but one individual or group of individuals can appeal a decision from a zoning board, from a planning commission, from historical commission on the creation or what was being proposed.

And that could lock up for years.

I mean we face that in the city of Lancaster with a project that we were talking about.

And it just took five individuals to say, we have concerns about this, we wanna appeal that decision.

And it took us 14 months to get through the land development process and resolve that issue.

I mean, a lot of times, time is money and if you don't have I would say, the intestinal fortitude and the commitment like HDC does in terms of being a mission-based housing developer, we're not gonna let go of that fight and we're gonna persevere to meet that need in the community because we think that everybody deserves that opportunity.

- So, you know, is there a place, it sounds to me like, if you know just a few people could hold up a project or things of that sort.

Is there a bigger place for the state to have a say in what's going on?

- Absolutely.

You know, it's funny 'cause years ago when we passed the Statewide Building Code, you know, there was a lot of pushback about that.

But I mean, one of the things that was discussed was what if there's a disagreement and there has to be an appeal process, but it has to be expedited.

This seems to be the same thing.

We don't wanna stop anybody from saying, "Hey look, I'm worried about this.

I need questions."

Everybody has the right to do that, but it can't tie it up for the next two years.

There has to be a process in place that allows that person to be heard and have the issue adjudicated in a quick manner.

Because again, if the public interest is at play here, it's not just one person or you know, one developer that, you know, profits.

It's about the betterment of the community itself.

And housing is extremely important to everything in our lives.

It's not just, you know, we think of housing, we put it over here in this section.

I think Michael, you and I were talking about this earlier.

You know, it affects our jobs.

It affects what businesses are moving to our area.

It affects, you know, the quality of life in our area.

So there's so many things that are impacted by housing that it should be a community priority.

- We're just about out of time and just a a couple of practical, do you have any practical advice for if somebody looking for a house right now?

- Well, I'll tell you.

I mean, first is patience.

Understand your budget, come up with a game plan, work with a good realtor that you know, is gonna help you find your needs.

And I understand the plate that you face.

I have clients like that every day.

But there's a house.

When it's meant to be, it'll be, and you'll find the right place.

You just have to have patience and don't jump at the first one 'cause you don't think you're gonna find one 'cause you don't wanna be house poor.

- Yes, house poor, that's for sure.

Well, you know, we're quickly running outta time here.

I wanna take opportunity to thank all the panelists for being here.

This is such a big issue that we barely even scratched the surface.

And HDC MidAtlantic is concerned with a lower income people who are working and yet, can't get ahead or people with disabilities.

But we have this whole other area where we have people of moderate income that just can't find houses.

So we have to keep the conversation going.

Well, I wanna thank you for participating again and thank you for joining us.

For more information, go to wvia.org/keystonereports.

And remember, you can rewatch this episode anytime on demand at wvia.org.

For "Keystone Edition Reports," I'm Larry Vojtko.

Thank you so much for watching.

(bright music)