Households at all income levels are impacted by Pennsylvania’s housing crisis. For affordable housing — where the resident pays no more than 30% of their income on housing costs — the need is significant. The National Low Income Housing Coalition reports that Pennsylvania currently lacks more than 265,000 housing units to meet demand for renters earning less than 30% of their area median income — about $30,000 per year.
The Pennsylvania Housing Finance Agency’s recently issued Pennsylvania Comprehensive Housing Study shows that while housing costs are declining for homeowners, they are increasing for renters.
The study estimates that 48% of Pennsylvania renter households are cost-burdened, spending more than the benchmark 30% of their income on housing costs. Those households that are spending more than 50% of their income on housing are considered severely cost-burdened.
When a household is spending this much on housing, it is generally unable to pay for other critical needs such as food, utilities, transportation, health care and child care.
Overall, the median gross rent in Pennsylvania has increased by 8% since 2010.
The NeighborWorks Association of Pennsylvania, a statewide network of NeighborWorks America chartered organizations dedicated to creating equitable housing options, and the Housing Alliance of Pennsylvania, a statewide housing organization and membership network, understand this lack of housing supply across nearly all income levels in the state.
The Housing Alliance of Pennsylvania has found that decades of underbuilding have strangled Pennsylvania’s housing supply. This shortfall has serious economic, health and educational consequences. Affordable and accessible housing is the pathway to upward mobility for all households and the first source of stability for those experiencing housing insecurity.
This gap between affordable housing supply and demand will only grow, unless there is a significant and sustained investment of funding from the state, and unless policies are implemented to streamline land-use processes — including inconsistent and restrictive zoning laws — and alleviate bureaucratic hurdles such as lengthy review and building permit processes that delay progress and increase costs for developers at the local, state and federal levels.
Without such changes, households at all income levels will continue to be impacted.
State investment
Gov. Josh Shapiro’s proposed budget, which includes an $80 million investment in housing programs, is an encouraging start to combating this crisis.
The budget includes a proposal to increase the Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund to $100 million by 2027, through $10 million increases per year. The fund is currently capped at $60 million.
Administered through the Pennsylvania Housing Finance Agency, the program provides grants to local municipalities to build affordable housing, provide rental assistance, pay for home repair and support areas with the greatest need.
The fund is a significant source of funding for affordable housing in Pennsylvania. Among other things, it closes critical cost gaps for developers, allowing developments to move forward sooner.
Shapiro is proposing replacing the program’s funding formula, which is tied to the realty transfer tax, with a guaranteed amount that would increase over time.
For affordable housing developers, the Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund can be a strategic, flexible resource used to leverage other resources and solve unforeseen issues in the development process. These can include structural issues discovered during excavation and repairs that need to be completed quickly for small developments.
HDC MidAtlantic, an affordable housing developer, property manager and resident advocate that serves more than 5,200 residents in 72 communities across Pennsylvania, Delaware and Maryland, utilizes this state funding to fill the gap on many affordable housing developments. Its flexibility is crucial in a time when interest rates, inflation and construction costs are growing.
But while the Housing Affordability and Rehabilitation Enhancement Fund is useful for developers, it is incredibly oversubscribed because the need is so great. Shapiro’s proposal represents a start at making the necessary changes to incentivize and support additional investment in housing across Pennsylvania.
Shapiro’s budget also includes a $50 million investment in the state’s Whole-Home Repairs Program. The early success of Pennsylvania’s program led U.S. Sens. John Fetterman, D-Pa., and Cynthia Lummis, R-Wyo., to introduce the Whole-Home Repair Act in the U.S. Senate earlier this year. This national bill would expand upon Pennsylvania’s program and support homeowners across the country with critical home repairs.
Additionally, a $10 million investment in the Homeless Assistance Program, $5 million for legal representation in eviction proceedings and $5 million for local governments for rapid response to emergency housing situations are included in Shapiro’s proposed budget.
Shapiro’s proposed $80 million for these housing programs is an encouraging step in the right direction toward expanding housing access and supporting economic growth and prosperity for Pennsylvania.
This is just the beginning. NeighborWorks Association of Pennsylvania member organizations and the Housing Alliance of Pennsylvania are committed to working collaboratively with elected officials to meet this growing need for housing. Together, we can do more to support affordable housing access across the state.
Dana Hanchin is president and CEO of HDC MidAtlantic. Aaron Zappia is director of government affairs at the Housing Alliance of Pennsylvania.
