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- 1. Addition by Subtraction Housing in Venango County, Pennsylvania
- 2. Housing Assessment • czbLLC was retained in September 2008 to analyze the housing markets across Venango County • Initially conceived as a project to “assess housing needs”, by agreement the project was transformed into • An effort “understand the housing situation across the county” and • Recommend “suitable strategies the county might take” to address a range of housing challenges including but not limited to blight and abandonment, plus • Suggest to the Affordable Housing Trust Board how best to utilize its resources. This final point is what shaped all of our work.
- 3. Process • Mined a variety of quantitative data sources • Census (no ACS 2005 for Venango County) • ESRI 2007 and 2008 Estimates • Bureau of Labor Statistics • Multiple Listing Services (Allegheny Board) • Local Data and Studies • Comprehensive Plan • Permits, Information from Housing Authorities
- 4. Process • Mined a variety of qualitative data sources • Informal on-line survey of Venango County “leaders” • czb-Cornell University phone survey of residents • Meetings • code enforcement, housing authorities • small landlords • 4 visits • 100% coverage of all city + borough property at least once
- 9. Spectacular
- 10. Idle
- 11. Tired
- 12. Proud
- 13. Strong
- 14. Standard
- 15. We concluded that on balance, Venango County is a weak market with brights spots, not a healthy market with pocket weakness Rouseville - Fall 2008 - czb
- 16. Meta Issue • County is a weak market; but it is NOT a singular market; there are submarkets • Townships are in good shape • Boroughs are struggling • Cities are in distress
- 17. Meta Issue • The submarkets have submarkets • Townships are in good shape, but • Rural enclaves through show distress • Boroughs are struggling, but • There are nice sections of the boroughs • Cities are in distress, but • Sections of the cities are doing quite well
- 18. Implication • As neither the county nor the submarkets are monochromatic, no policy should be sweeping • Fair share is an issue • Cities are overburdened with poor HHs • Millage has to be part of the dialogue • Townships provide less services, and charge less • Streamlined government has to be addressed • Too many agencies
- 19. Recommendation • Housing policies should be countywide but market specific in awareness • All municipalities should have fair share of poor HHs • Millages should be evened out; there should be revenue sharing • Fewer agencies would trigger strategic use of resources
- 20. Findings • Triple Whammy • Declining population (56,126 from 57,565) • Aging Population (projected median age in 2013 of 44) (now 42.7) • Old and frequently obsolete housing stocks (41% built before 1939) • Limited actualized demand (1.6-2.1 permits/mo in your strongest market (Cranberry) 1996-2007 •
- 21. Implications • Triple Whammy • Declining population (56,126 from 57,565) • Low demand means falling values • Average home value ($66,300) lost $3,877 against inflation 2002-2008 • Aging Population (projected median age in 2013 of 44) (now 42.7) • Maintenance and upkeep present serious and growing challenges • Succession becomes perhaps the single greatest problem • Old and frequently obsolete housing stocks (41% built before 1939) • Too costly to justify gut rehabs, properties transition into slum rentals Falling values undermine the logic used to substantiate reinvesting in property Falling levels of upkeep contribute to the cycle of falling values Older residents have less capacity (financial and physical) to do routine maintenance Older residents aspiring to sell obtain less profit, have less mobility Properties transfer to rentals; value is extracted until little left
- 22. Recommendation • Accelerate removal of problem properties • Assist elderly owners to improve their properties • Enable strong renters to buy and upgrade existing properties • Engage residents throughout the county as agents of change
- 23. Why Not Addition by Addition? • Look at your strong areas • Cranberry, Cherrytree in the townships; Evergreen in Franklin; Oliver Manor in Oil City • All built since 1960, YET • County population in decline since 1950 • More of such addition without concurrent subtraction will push Boroughs and Cities into outright fiscal emergency • The underlying challenge to solve is a combination of too much housing that is too old (resulting in extreme affordability), in combination with a large number of hard-to-house residents (resulting in “need” for very inexpensive housing solutions, without further degrading the many soft neighborhoods and weak submarkets you already have.
- 24. Key Points • MLS 02-08 • High value properties $104,025 lost $6,791 against inflation during the period • Average value properties $66,300 lost $3,877 against inflation during the period • Low value properties $44,458 lost $15,558 against inflation during the period
- 25. Key Points • Ownership is extremely affordable • 77% of listings at any one time affordable to HHs @ 100% AMI ($48,500) • 44% of listings at any one time affordable to HHs @ 50% AMI ($24,250) • 21% of listings at any one time affordable to HHs @ 30% AMI ($14,550) Conclusions: 1. Those who own have low housing payments as a percentage of income 2. Those who don!t own have other non housing challenges that are the real problem - down payment/savings challenges - inconsistent wages/income - job readiness/skill - drug/alcohol - disability/mental health $24.77/hr $11.90/hr $7.13/hr
- 26. Key Points • Ownership is extremely affordable • Today there are 5,312 more units of housing (10,470) affordable to HHs earning less than 50 percent of the area median income, than there are households at that income level (5,158). With lower demand, prices fall. Conclusions: 1. When ownership is so affordable, it can doom a rental market 2. A rental market will not be able to command top dollar for all but newest housing stocks - Property will cater to weak tenants/HHs - Maintenance will lag - Properties will soon be in even worse condition - Tenants will look for better options; in Venango these are Housing Authority or LIHTC properties
- 27. Key Points • Rental is extremely affordable, BUT • We concluded 2,626 HHs are rent burdened (would pay more than 30% of their monthly income to rent), despite rents as low as $250/month • With 1,189 subsidized units in the market, an additional 1,437 HHs need assistance • These 1,437 HHs are most likely having a range of difficulties require attention Conclusions: • The tendency will be to “site” these units in areas that are already saturated with low-income and hard-to- house populations because • acquisition costs are low • resistance in townships is high • supportive services already there • This is “good” for these households, but “bad” for these markets
- 28. How It Fits Together figure 1 - czb Repo Older Homes Smaller Homes Undermaintained Homes Fewer Households Older Households Poorer Households Housing Supply Housing Demand Housing Market Inputs Shaping the Venango County Housing Market
- 29. How It Fits Together figure 2 - czb Report to VenangoOlder Homes Reduced Demand Smaller Homes Reduced Demand Reduced Maintenance Fewer HouseholdsReduced Demand Older HouseholdsUndermaintained Homes Poorer Households Lower Values; Lower Rents Lower Quality Owners and Landlords
- 30. Venango County low wage economy older housing stocks older population housing requires most investments, more maintenance but low wages limit HH capacity to make such investments consequently, maintenance is deferred, building quality declines, demand drops off, values fall A low wage economy provides little incentive for young families to stay in Western Pa, so they leave for better employment opportunities consequently, the remaining HHs are older, generating increased demand for services (and increased costs) Elderly HHs pass their homes onto heirs who lack the ability to maintain them, rent them out to marginal families, and manage the property down to zero value How It Fits Together
- 31. How It Fits TogetherInterconnected Cycle of Consequences Value-Less Property Low Quality Landlords Low Quality Tenants Disinvestment accelerant that makes this possible is low wage HHs and the landlords who see opportunity in marrying their housing needs to the kinds of stocks that prevail Further Reduced Quality Housing Abandonment quality homes near properties managed by low quality landlords renting to high risk tenants suffer from reduced property values, have a disincentive to invest, and soon disinvest or leave opportunity/pre-emption line
- 32. Questions Raised Declining Housing Starts Declining Sales Activity of All Homes Lengthy and Lengthening Duration on Market Prices Fall Confidence Declines Disinvestment OccursPopulation Loss Doesn't Make Sense to Buy Doesn't Make Sense to Upgrade, Maintain, Reinvest Doesn't Make Sense to Stay Venango County - 2008 | czbLLC Input Issue(s) Policy Question Facing Venango Older Homes • Expensive to maintain • Develop a flow of resources to help owners upgrade? Smaller Homes • Unappealing to young families • Develop a commitment to fund enlargement? Undermaintained • Years of deferred maintenance • Fund catch up maintenance Fewer HHs • Lower levels of demand • Begin downsizing the stocks (aggressive demolition) Older HHs • Aging require different housing • Infill development of homes for older HHs
- 33. Typical Situation House above around the corner Source: Allegheny Board of Realtors 2008 27,038 69,142 Average Sale Sale Near Distress
- 34. Question Is? House above around the corner Source: Allegheny Board of Realtors 2008 27,038 69,142 Average Sale Sale Near Distress WHO IS YOUR CLIENT? THE TENANTS IN THE GREEN HOUSE UNWILLING TO MAINTAIN THEIR HOME, THE LANDLORD/ OWNER OF THE GREEN HOUSE UNWILLING TO MAINTAIN IT, THE HOUSE AROUND THE CORNER DOING ALL THEY CAN BUT WHO ARE LOSING VALUE, OR THE MARKET THAT IS DECLINING IN THE PROCESS?
- 35. Concluding Recommendations House above around the • Venango must build from strength • If you can’t sell a good house on a good block, marketing a weak property on a troubled block isn’t going to work • Market assets and de-emphasize deficits • Focus on stronger portions of market • Be honest • If abandoned houses are defining some of your market, fix or remove them now • Mow the weeds, paint the trim, promote a positive image • Set high standards, on all property • Engage neighbors as agents of change • Above all, decide • What problem you are trying to solve • Economic Development Challenge • Anti-Poverty Work • Affordable Housing Work • Neighborhood Revitalization
- 36. Concluding Recommendations • What NOT to do • Add at-risk HHs to struggling neighborhoods • Add more units to all but the strongest submarkets • Create any more projects that are exclusively low-income • Delay on removing problem properties • Delay on consolidating your housing authorities to one • Delay on consolidating your code enforcement efforts • Delay on generating a revenue sharing agreement in the county • What TO DO • Immediately install a rigorous rental property ownership registration and inspection requirement • Install an office in the Planning Department to Working with quality private landlords to offer them special financing for upgrades for registering with the county, submitting to inspections, and sharing data with county • Invest in creating a new office in a newly consolidated housing authority to start • working with property owners who agree to upgrade their homes, using CDBG and HOME dollars • working with renters to qualify as buyers, in partnership with local lenders • Focus on increasing financial and resident literacy in county through classes, in partnership with local lenders • Understand that the housing problems for the county are more economic development problems (low wages, low quality labor, distant market) than housing problems (old stocks, old population) • The two are strongly related, BUT distinct Cluster* - Sale Price** Cluster* - Days on Market Place Name Place Type Average Sale Price Average Sale Price per Sq Ft Average Days on Market Abandon- ment Rate Homeowner- ship Rate Demand Rank 1 4-6 Rouseville borough Borough $28,055.60 $23.37 195.9 6.3% 77.1% 7 1 4-6 Silverly Neighborhoo d $29,983.77 $23.38 170.5 3.7% 57.6% 7 1 4-6 Oil City North Neighborhoo d $29,504.21 $21.16 201.9 4.2% 62.6% 7 2 4-6 Oil City city City $50,438.51 $29.49 190.8 4.3% 62.5% 7 2 4-6 Emlenton borough Borough $43,469.23 $22.22 159.2 1.1% 63.1% 7 2 4-6 Oil City South Neighborhoo d $51,289.87 $30.12 185.1 4.7% 61.5% 7 2 1-3 Clintonville borough Borough $55,633.33 $31.49 129.0 0.0% 61.5% 7 3 4-6 Utica borough Borough $65,700.00 $39.64 221.1 0.0% 83.1% 6 3 4-6 Clinton township Township $72,485.71 $53.10 164.1 0.7% 91.9% 6 3 4-6 Cooperstown borough Borough $70,345.00 $43.29 172.6 0.0% 95.7% 6 3 4-6 Franklin city City $62,382.98 $36.86 198.2 1.3% 57.4% 6 3 4-6 Pleasantville borough Borough $70,992.06 $44.02 159.9 2.4% 84.4% 6 3 4-6 Oilcreek township Township $78,502.29 $51.51 164.1 2.0% 90.8% 6 3 1-3 Irwin township Township $76,200.00 $50.72 139.4 0.9% 82.2% 5 3 1-3 Allegheny township Township $94,300.00 $41.46 77.0 2.2% 82.9% 5 3 1-3 Mineral township Township $81,756.82 $55.04 133.8 0.7% 88.7% 5 3 1-3 Sugarcreek borough Borough $60,633.95 $44.42 151.5 1.3% 83.9% 5 3 1-3 Polk borough Borough $70,348.13 $42.00 131.2 0.0% 74.2% 5 4 4-6 Rockland township Township $81,724.88 $69.88 174.3 1.0% 89.8% 4 4 4-6 Sandycreek township Township $103,092.42 $69.43 170.6 1.1% 88.6% 4 4 4-6 Oakland township Township $102,491.32 $62.29 210.2 0.8% 92.3% 4 4 4-6 Oliver Manor (Oil City) Neighborhoo d $107,071.57 $52.80 177.3 0.7% 74.1% 4 4 4-6 Cornplanter township Township $83,062.69 $54.78 162.1 1.1% 89.1% 4 4 4-6 Pinegrove township Township $90,376.45 $59.16 169.7 0.3% 88.1% 4 4 4-6 President township Township $75,226.00 $66.21 175.9 0.6% 90.9% 4 4 4-6 Jackson township Township $90,285.00 $56.03 159.1 1.1% 79.9% 4 4 1-3 Richland township Township $87,816.67 $58.62 105.8 0.0% 85.4% 3 4 1-3 Frenchcreek township Township $95,825.49 $71.08 138.7 1.4% 87.1% 3 4 1-3 Barkeyville borough Borough $115,000.00 $55.18 136.0 0.0% 84.8% 3 4 1-3 Cranberry township Township $83,562.12 $57.07 158.3 1.3% 80.6% 3 5 4-6 Plum township Township $119,342.67 $81.02 176.3 0.0% 88.7% 2 5 4-6 Victory township Township $104,422.22 $89.80 167.1 1.2% 81.3% 2 5 4-6 Cherrytree township Township $103,928.57 $77.23 159.3 3.1% 88.5% 2 5 1-3 Scrubgrass township Township $119,206.67 $94.75 131.2 2.7% 84.5% 1 5 1-3 Canal township Township $116,259.88 $66.84 140.8 3.9% 90.3% 1
- 37. Concluding Comments • We have submitted a DRAFT report. It is a DRAFT • There are some calculations still to be done, and • Some to be refined, such as actual unit catch up/keep up counts • Please review and contact me immediately with concerns, or ideas, or suggestions, particularly • MLS data concerns • Rents • Unit Counts