Housing in the Lehigh Valley remains in high demand following the region’s post-pandemic population boost, and there isn’t enough to go around.

While the area 60 miles north of Philadelphia, centered on Allentown, Bethlehem and Easton, added 21,000 new residents between 2020 and this year, it is short about 9,000 housing units, according to the Lehigh Valley Planning Commission. To keep pace with the anticipated growth, developers will need to add 54,000 new homes by 2050.

As has long been the case, many of the newcomers are fleeing the cramped and pricey greater New York City housing market, Jaindl Enterprises Chief Operating Officer Zachary Jaindl said.

“Rather than living in an apartment with a couple hundred other people, you could basically get a single-family home for a fraction of the cost,” he said of the longstanding logic that became even more common during the pandemic lockdowns.

“Our housing demand just plumed. It was unbelievable how fast it grew.”

Multifamily developers are stepping up to address the shortage. LVPC counted 5,891 units proposed last year, including 3,450 apartments and 952 townhomes.

Jaindl Enterprises is delivering 201 units at its Waterfront campus along the Lehigh River in Downtown Allentown this month. It is the first phase of a mixed-use project, which the COO aims to have include 350 more rentals by 2029 and up to 150 for-sale townhomes sometime after that.

In 2019, Jaindl said his company was working on the assumption that it could secure monthly rents of about $1.28 per SF for those apartments. They are now expecting $2.42, which is up nearly 90%.

Downtown Allentown has attracted an array of multifamily projects in recent years.

City Center Group owns more than 1,700 apartments in the neighborhood, Chief Investment Officer Josh Taykowski said during Bisnow’s Lehigh Valley State of the Market event last month.

The firm is set to deliver another 257 later this year at the Standard on the corner of Sixth and Turner streets.

Taykowski lauded Allentown Mayor Matt Tuerk’s efforts in recent years to streamline the zoning code and permit more density, which he said helped the project move smoothly.

The mayor hopes that work will set an example for the region’s other municipalities.

“That should light a fire under everybody's butts in the Lehigh Valley to make it easier to build,” the mayor said during the Bisnow event. “The fastest way that we can get to solving the housing crisis is through regulatory reform.”

Jaindl highlighted Allentown’s Neighborhood Improvement Zone as another important driver. 

The program, created in 2011, allows state and local tax revenue collected from participating businesses and properties within 128 acres of the city to be used to pay debt service on money borrowed for qualifying capital improvements.

“The NIZ is the most powerful tax incentive ever passed in Pennsylvania state law,” he said.

Significant multifamily development is also underway in similarly walkable Downtown Easton, where City Center is building a 274-unit project called the Confluence at 185 S. Third St.

Taykowski said the developer took advantage of a 10-year tax abatement the city offers for eligible projects through Pennsylvania’s Local Economic Revitalization Tax Assistance program, which is meant to incentivize development in aging parts of the commonwealth.

Allentown is considering a similar LERTA program focused exclusively on mixed-income developments with a significant number of units for residents making up to 80% of the area median income, Tuerk said.

The mayor has lived in Allentown for 22 years, which he said makes him an “old-timer” in a region now defined by transplants.

“We keep growing, and it's not natural growth,” Tuerk said. “It's not that a lot of people are having a lot of babies in the Lehigh Valley. … The thing that's driving Lehigh Valley's growth is in-migration.”

This has led to significant growth in the local economy, including a 134% boost in arts and entertainment employment since 2001, which is 2.5 times higher than the nationwide rate. 

Manufacturing employment grew by nearly 29% between 2010 and last year, almost three times the national rate.

But some of the newcomers are also continuing to commute to their jobs in the New York area, according to Realty One Group agent Yajaira Villena, who sells homes in the Lehigh Valley. Their big-city spending power is putting upward pressure on housing prices.

While her clients are often looking to spend between $250K and $350K, the median sale price in the Lehigh Valley hit a record $385K in June, which was up 4.1% year-over-year, according to Greater Lehigh Valley Realtors.

“Their options can be very limited,” said Villena, a New York native who has lived in the Lehigh Valley for two decades.

“There’s a lot of competition, especially for homes that are priced well and in good condition,” she added. “Sometimes we’re competing against stronger conventional offers, cash offers, higher down payments, or buyers that are willing to pay more over asking.”

While transplants are a key source of tenants for the Lehigh Valley’s new multifamily product, Jaindl said longtime residents looking to downsize after cashing in on these soaring home prices are another major demand driver.

The competition has led some of Villena’s clients to consider longer commutes from more peripheral areas, but she said the affordability crunch hasn’t reached the point where people are completely locked out of the region.

Jaindl said there are still ample pockets of affordability in Allentown proper, even if they aren’t in the downtown areas that have seen significant new construction over the past decade and a half.

He said the new, relatively high-end product Jaindl Enterprises and its counterparts are building will help take pressure off that segment of the market.

“A lot of the inventory coming online now, the Class-A, is opening up the ceiling as opposed to the floor,” Jaindl said.