The Lehigh Valley’s median renter qualifies as cost burdened when it comes to housing these days, as affordability plummets. Households are considered cost burdened when they spend more than 30% of their income on rent, mortgage and other housing needs.
In Northampton County, the median housing cost ratio for renters was 30.1% (an estimated 32,729 occupied rental units) while it was 30.7% in Lehigh County (an estimated 48,003 occupied rental units).
Over 19 million U.S. renter households spent more than 30% of their income on housing costs in 2021, according to data from the 2017-2021 American Community Survey (ACS) 5-year estimates.
The burden was especially high in some of the nation’s largest counties where housing is pricier or in areas where incomes are low.
The ACS collects a variety of housing cost information for renters (monthly rent and utility bills) and for homeowners (mortgage principal and interest, real estate taxes, homeowner’s insurance, utilities, mobile home costs, second mortgage payments and condominium fees if applicable).
Homeowners in most of the country had a lower median cost burden than renters.
High housing costs can impact the amount of money households are able to save or use for other expenses. The ACS data show that renters were particularly vulnerable to cost burdens.
Part of the reason that rental housing cost is so high, as a percentage of income, is the lack of homes to purchase, combined with higher interest rates.
Loren Keim, president/broker of Century 21 Keim Realtors, wrote in an email: “There’s an old adage that says you are always buying a house, whether you’re buying one for yourself or you’re buying one for your landlord. And rental rates are a function of supply and demand. The current demand is very high, leading to upward pressure on rental rates. These increasing housing costs directly impact how much money households can save and how much disposable income each household has.”
Consumers have to make a decision whether to buy or rent, he said, and the lack of affordability is affecting home sales, too.
“Housing affordability in the Lehigh Valley dropped to the lowest level since I started tracking it in 2005, at only 79,” Keim said.
An index of 100 means median household income is 100% of what is necessary to qualify for a median-priced home under current interest rates. “A higher number means greater affordability. At a level of 79, that means the median household income won’t qualify with current interest rates for the median-priced home. This index has been at or above 100 since we started tracking in January of 2005, and in fact was above 200 at several points between 2011 and 2015.”
“I expect rental rates to continue to rise, although slower than the last 18 months, for several reasons,” Heim said. “In the Lehigh Valley, although there are several multifamily projects in development or under construction, there is still a low vacancy rate, leading to competition for those rental units. Additionally, developers and investment property buyers are paying more for construction and borrowing at higher interest rates to build projects, which drives their costs higher, which is passed onto the tenant.”
Rising rents can be explained by several factors, he said. The costs to maintain apartments, including lawn care, snow removal, landscaping, repairs and renovations, has also jumped. “The cost of utilities, for those landlords paying for utilities, has risen. All this leads to increased landlord cost, which is being passed along to the tenants in the form of higher rental rates.”
Anecdotally, Keim said, this has led some tenants to move farther from the Lehigh Valley into areas like Carbon and Schuylkill counties in order to find lower rents.
Paula Wolf is a freelance writer
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