WILKES-BARRE — Teri Ooms, executive director of The Institute for Public Policy & Economic Development at Wilkes University, this week said Northeastern Pennsylvania is facing a housing divide.

Ooms said Northeastern Pennsylvania has been characterized as an affordable place for housing and when compared with larger metropolitan areas, costs for rent and home-ownership are relatively low.

“However, some households continue to experience homelessness, housing instability, or a lack of affordable options,” Ooms said. “This represents a housing divide, separating those who can attain appropriate housing on the market or with a subsidy, and those who cannot – in particular, those with very low incomes and those with other barriers to housing access.”

In Lackawanna County, Ooms said approximately 64% of all occupied housing units are owner-occupied, while the remaining 36% are rented.

In Luzerne County, owner- and renter-occupied units make up 69% and 31% of all occupied units respectively.

The statewide percentages of renters and homeowners are nearly the same as those of Luzerne County, while the national percentages mirror those of Lackawanna County.

“There is a large difference in the vacancy rates of the two counties,” said Andrew Chew, The Institute’s Senior Research & Policy Analyst. “Larger percentages of owner- and renter-occupied housing units are vacant in Luzerne County than at the state or national levels. The opposite is true in Lackawanna County, where the supply of vacant homes is relatively limited for both renters and buyers.”

Ooms said one way of assessing the affordability of housing in an area is to examine how many households in that area are housing cost-burdened. Households are considered cost-burdened when they spend 30% or more of their income on housing. This is a simple but widely accepted standard for measuring whether people can afford to pay for their homes without excessively restricting their ability to pay for other necessities.

Ooms said Luzerne and Blair counties have the smallest shares of cost-burdened households, with just over a quarter of all households spending 30% or more on housing. However, renter-occupied households in both counties are more than twice as likely as owner-occupied households to be cost-burdened. This is true (or nearly true) in every region examined here.

Lackawanna County is less affordable by this measure — 30% of all households in the county are cost-burdened, higher than the statewide level and about on par with the national level. It is worth noting that a greater share of owner-occupied households are cost-burdened in Lackawanna County (23.7%) than in any other region except for Philadelphia, which has the highest overall rate of cost-burdened households at 38%.

Burdensome costs

“Renter households throughout Pennsylvania and the United States are more likely than homeowners to be housing cost-burdened,” Chew said. “In Erie County and Philadelphia, nearly half of all renter households spend 30% or more of their income on housing. Although Lackawanna County has a higher rate of cost-burdened homeowners than most of the comparison regions, its rate of cost-burdened renters is lower than that of every other region except for Luzerne County.”

While renters are more than twice as likely as homeowners to be cost-burdened in Lackawanna and Luzerne Counties, Chew said the total number of cost-burdened households in the two-county region is split almost evenly between owner- and renter-occupied households. In other words, renter households are disproportionately cost-burdened; they comprise approximately one third of all occupied households in both counties (and throughout Pennsylvania), but close to 50% of all cost-burdened households.

There is a negative correlation between a household’s income and the likelihood that the household is cost-burdened — households with higher incomes are much less likely to be cost-burdened than those with lower incomes. This trend is consistent across all regions examined here, and it is true for both renters and homeowners. The table below shows the percentage of households in five income categories that are cost-burdened.

Renter-occupied households with lower incomes (less than $35,000) are significantly more likely to be cost-burdened than owner-occupied households with comparably low incomes.

For example, at the national level, 89% of renters earning less than $20,000 per year are cost-burdened, compared to 76% of homeowners with similar incomes. The only exception among these regions is Lackawanna County, where owner-occupied households with incomes under $20,000 are more likely to be cost-burdened than renter households in the same income category.

The gap between renters and homeowners is largest in the $20,000 to $34,999 category. In Pennsylvania, 74% of renters in this category are cost-burdened, compared to 47% of homeowners. In both Lackawanna and Luzerne counties, about two thirds of renters in this income group are cost-burdened, compared with 53% of homeowners in Lackawanna and 39% in Luzerne.

“As household income increases beyond $35,000, the gap between the shares of renters and homeowners that are cost-burdened generally shrinks and sometimes reverses,” Chew said. “In several regions, owner-occupied households with incomes over $50,000 are more likely to be cost-burdened than renter households with similar earnings.”

Income matters

In Lackawanna and Luzerne Counties and Pennsylvania, renter-occupied households are more than twice as likely as owner-occupied households to have incomes under $35,000 per year. Throughout the commonwealth, about 20% of homeowners have incomes in this range, compared to 44% of renters.

This trend is reflected in the two counties.

Chew said renters also tend to be younger — in Lackawanna County, more than a third of renters are under 35 years old, compared to only 7% of homeowners. Meanwhile, 19% of renters and 37% of homeowners in the county are over the age of 65. The contrast is similar — but somewhat less severe — in Luzerne County and at the state level. Renters are also more likely than homeowners to be members of racial or ethnic minorities; in both counties, renters are more likely to be black or of Hispanic or Latino origin, or to identify as “some other race.” In Lackawanna County, renters are more likely than homeowners to be Asian.

Educational gap

There is a gap in educational attainment between renter- and owner-occupied households. Renters are significantly less likely than homeowners to have graduated high school.

In Luzerne County, 17% of renters have less than a high school diploma, compared to 7% of homeowners. Additionally, renters are less likely to have earned a bachelor’s degree or higher — 19% of renters and 29% of homeowners have this level of educational attainment.

Chew said income eligible residents may also qualify for project-based rental assistance (PBRA) or housing choice vouchers (HCV) through a local public housing authority. Within the metro area, public housing authorities administered 3,874 housing choice vouchers in 2017, and there are more than 14,600 subsidized units through PRA and other programs.

However, the total number of assisted households has fallen in Lackawanna County since 2010, and the number of housing voucher households fell in both counties since 2010. This stands in contrast to nationwide trends, where the number of subsidized households has grown among both PBRA and HCV.

Policy responses vary

Chew said The Institute indicated there are a variety of policy responses that could be considered to help to address the housing divide that has resulted in vulnerable families facing housing insecurity in Northeastern Pennsylvania.

One important step is to expand the supply of affordable housing units. At the end of January 2020, the Pennsylvania State Senate unanimously passed Senate Bill 30, which would create a state housing tax credit to incentivize the development and preservation of affordable housing.

The bill is modeled after the federal low-income housing tax credit (LIHTC), which is responsible for about the majority of affordable housing construction nationwide. Pennsylvania may be able to build on the success of the existing federal program by supplementing it with the state housing tax credit. In its current form, the bipartisan legislation would offer a financial incentive for private rental housing developers to build and maintain affordable housing units. At least 10% of the program’s funds will be used to provide housing for extremely low-income households (at or below 30% of the area median income).

As The Institute found in its Housing Task Force report in 2019, the region’s housing stock is disproportionately older, and many lower-income households lack the resources to make necessary repairs. One approach to help to expand the stock of quality housing for lower-income households would be to provide for subsidies (through federal, state, local, or philanthropic sources) to repair and renovate for older homes for conversion to income-restricted or market-rate housing. This could also help to alleviate the supply issue.

Raise wages for low-income workers

Chew said another step toward improving housing affordability is to ensure that the region’s workforce is earning a living wage.

In 2016, The Institute and the University of Scranton published a report examining the wages households need to earn in order to live a modest but dignified life. An updated version of this report was published in 2019. The report found that the minimum wage in Pennsylvania — the federal minimum wage of $7.25 per hour — is not sufficient for meeting the basic needs of families or individuals. Households with low incomes are the most likely to be housing cost-burdened.

Raising the wages of the lowest-earning households in Lackawanna and Luzerne Counties would help those households afford places to live. Wage increases can come from the state government, as they did in neighboring states like New York, New Jersey, and Ohio, or they could be driven by employers.

Ease restrictions

Chew said people returning to their communities after a period of incarceration face additional barriers to housing security, as do individuals who have struggled with substance use or addiction. For these populations, increasing the availability of affordable housing and raising wages are helpful but not sufficient, as people with these backgrounds often face discrimination when searching for stable housing. Local housing agencies could mitigate the problem of discrimination by reevaluating the extent to which they withhold housing assistance from people with criminal records and people who struggle with substance use.

The Housing Authority of New Orleans offers one example of how this is possible; in 2016, the housing authority shifted away from its policy of refusing applicants with criminal records, instead creating a more comprehensive screening process for applicants. New York City has similarly eased restrictions for re-entrants, establishing a Family Reentry Pilot Program to help former prison inmates access housing and support services.

State officials in Delaware have also revised the state’s reentry system, with an emphasis on improved coordination among service providers and agencies.

Invest in transitional, supportive housing

Chew said communities could also consider investing in services to meet the needs of households experiencing (or at risk of experiencing) homelessness and individuals with severe mental health conditions.

There are a number of organizations in Lackawanna and Luzerne Counties that serve these populations. Expanding the capacity of such organizations to provide transitional housing and support services may help reduce the length and frequency of periods of homelessness. There is evidence that permanent supportive housing—a Housing First model that provides long-term housing assistance and support services to people with disabilities — has been a particularly effective model for reducing chronic homelessness.