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Cascade: No. 77, Spring/Summer 2011

Impact of Marcellus Shale on Housing Needs

One of the more difficult policy issues arising from the development of the Marcellus shale is housing. Gas workers, like most other workers, want to live close to their place of work to avoid commuting time. Therefore, these workers are seeking housing in the areas where Marcellus drilling activity is occurring. Having the workers live locally is best for the economic development of these communities because the workers will spend their salaries locally. However, most of the communities that are currently under major development pressure are very rural and have little surplus housing. In fact, discussions with key local stakeholders indicate that there is a shortage of rental housing in particular. Accommodating the new workers has proved difficult at times, with rents doubling or tripling over the past two years in some communities. This creates obvious difficulties for low-income residents and others who do not own their own homes. There are frequent reports of landlords not renewing leases with existing residents so that they can charge higher rents to incoming gas workers, as well as reports of low-income residents struggling to find affordable places to live within the community. Accommodating the new workers also has the potential of crowding out long-term residents who no longer are able to afford to live in these communities.

Companies have responded to these housing shortages, in part, by renting motel rooms for their workers. In some cases, the gas companies even are renting or purchasing the entire facilities. The result has been a shortage of rooms, raising fears among some that the Marcellus development may be affecting tourism or other travel into the communities. Campgrounds similarly have seen an influx of new residents, typically gas workers looking for temporary housing for several months. Numerous existing hotels within the Marcellus region are expanding their capacity, and new hotels are being built in high-impact areas.

Real estate agents are reporting increases in home sales to incoming transplants with families, but this growth is slower than the rising demand for rental housing. There are some anecdotal reports from companies that there are shortages of higher-end homes, which are currently limiting the number of workers willing to bring their families to Pennsylvania. In addition, some homeowners who had previously put their homes up for sale have taken them off the market to rent them more profitably instead.

One of the housing policy challenges is that the demand for labor, and thus housing, is highest during the development phase of natural gas, which is when all the wells are being drilled and pipelines are being laid. Once this current phase ends (which could be 15 or more years within an individual community, depending upon how many rigs are active), the need for housing will decline dramatically as those workers leave. The challenge for local decision-makers is ensuring that sufficient housing exists during these “boom” years without creating a large housing surplus after the activity ends and making sure that new infrastructure adds value to the community in the long run. To ensure that there isn’t an excess of housing, communities must put careful thought and planning into the housing issue and look for opportunities to address both short- and long-term needs simultaneously. For example, a lack of hotel rooms has been a chronic problem for developing the tourism potential of some parts of Pennsylvania, such as traveling to view Pennsylvania’s elk herd in Cameron and Elk counties, or in several other communities in the “PA Wilds” tourism region. If communities plan appropriately, the new hotels that are built for the natural gas workers could help the tourism industry in the future by providing more places for visitors to stay.

Editor’s note: ProximityOne, a website that provides geodemographic–economic data and analytical tools, reported that the Williamsport, PA, metropolitan statistical area (MSA) was one of two nationally that had the highest four-quarter increase in the housing price index (HPI). The HPI for Williamsport rose 8.38 percent from the third quarter of 2009 to the third quarter of 2010. See http://proximityone.com/hpi.htm External Link. In addition, an electronic newsletter, 24/7 Wall St., reported that the Williamsport MSA was one of 10 MSAs nationally with the greatest increase in home values. It found that home prices increased 18.4 percent from the third quarter of 2005 to the third quarter of 2010. See http://tinyurl.com/6zfmjg8 External Link.