Marcellus Drilling Means High Housing Prices in Towanda PA
When an area sees a lot a drilling, one of the unintended consequences is a serious jump in the price of housing—both rental and for purchase. Towanda (Bradford County), PA seems to be ground zero for an extraordinary jump in housing prices over the past few years. How about $2,000 to rent a two-bedroom apartment in this relatively rural part of PA? Yeah, nosebleed-high prices.
An article in yesterday’s Towanda newspaper, The Daily Review, highlights the plight of a family flooded out of their Towanda home last year. Because of the high prices for real estate due to the Marcellus drilling boom, they still have not been able to leave their FEMA trailer.
Even after losing his Tunkhannock Twp. home in last year’s flooding, Lewis Sherman thought he was one of the lucky ones.
He had insurance. Because of the size of his lot and where it was, he couldn’t rebuild on the same location. That was just as well for him, his wife Maryanne and two teenage children, who started looking for a new home.
When they saw the home prices, they started to rethink their luck.
The Marcellus Shale rush and influx of gas workers and executives has driven up rents and home prices in much of the Endless Mountains and Northern Tier region. Towanda appears to be the epicenter, with two-bedroom apartments renting for in excess of $2,000 per month. While pressure on housing prices has reduced somewhat with the decrease in drilling activity, prices linger far above their pre-Marcellus levels, pricing out many renters and would-be home buyers. Some have moved in with relatives, doubled or tripled up households to pay the rent. The Sherman family is stuck in a Federal Emergency Management Administration trailer. They looked at homes, but even with the insurance settlement, they couldn’t make the finances work. A well-appointed ranch home near Factoryville, they noted, would have suited them, but the asking price of $222,000 was too steep.
“The owner told us that but for Marcellus Shale, she would have gotten $137,000 for it,” Sherman said. The home was purchased by a gas executive, he learned.
They thought building would be more economical. But the cost of land has increased as well. Two wooded acres in Falls, he said, were listed for $47,000.*
MDN’s view: The natural, “big-hearted” inclination is for government to rush in and “fix it” with rent control (i.e., rationing). Resist the urge. Over time the free market will correct the situation. New housing will be built, more inventory will appear, and prices will come down. But it will take time—years. So what do the Shermans do in the meantime? Good question, and there are no easy answers.
The article mentions several non-profit organizations working to provide low-cost housing in the area. Perhaps the drilling companies would pitch in and help fund some of those efforts.
It seems like a perfect opportunity for churches and people of faith to put some good deeds with their good words—which already is happening according to the article.
The plain fact is, a spike in housing prices is a growing pain that comes with a rapid expansion of drilling. And being creative, big-hearted Americans, we’ll figure out how to deal with it.
*Towanda (PA) The Daily Review (Jul 8, 2012) – High housing costs hurt flooded-out residents