No one has to tell Nery Andino the rental market is tight in Lancaster County.
After separating from her husband earlier this year, Andino looked for a smaller place in the Hempfield School District for herself and her two sons, one of whom has autism.
But after looking at more than 20 houses and apartments, spending nearly $400 on rental application fees and getting beaten out by other renters five times, Andino had to take what she could get.
In her case, that meant a $650, two-bedroom apartment in Columbia, where she has to pay all the utilities.
“It’s been a tough couple of months,” she said. “It’s really hard to find a place right now.”
In fact, it’s so tough some local officials are beginning to use the word “crisis” about Lancaster County’s rental market.
The occupancy rate is the highest it’s ever been, even as the number of people looking to rent is increasing. It’s common for a rental to generate dozens of responses the first day it’s listed. And as a result, rents are shooting up.
And it could get worse. According to one recent study, by 2017, up to 43 percent of county residents will be renters. And nowhere near enough apartments are being built to accommodate the surge.
It all amounts to a “perfect storm,” said Ray D’Agostino of the Lancaster Housing Opportunity Partnership, an agency dedicated to helping low- to moderate-income people find a home.
“While it's normal to have a waiting list for affordable rental units, such a high occupancy rate and percentage of people desiring or needing to rent is not normal,” said D’Agostino, LHOP’s chief executive officer.
Though some new, low-income housing is being built, it will barely make a dent, he said.
“We’re not going to build our way out of this, and we’re not going to fund our way out of this,” he said.
What's out there?
For rent: Clean, roomy but modest home on South Queen Street in Lancaster. No off-street parking; $895 per month, plus utilities.
First month’s rent and security deposit required, as well as good credit and a clean criminal background check. But beyond that, according to the online ad, the prospective tenant must make at least $2,685 a month, or $32,220 per year.
Too much? Then step aside — there are plenty of others in line.
Dan Graboyes works for PGM Real Estate Associates LLC, which lists the Queen Street house for rent. The Chester County company created a Lancaster office last year because of the flourishing rental market here.
PGM sometimes fields as many as 70 calls a week on one property, Graboyes said. Rental turnarounds have dropped to about two weeks.
“More and more people are starting to put the first month's rent and security deposit down before their application has even been approved,” said Graboyes. “That way, if they are approved, they are first in line.”
With so much demand, more people are interested in becoming landlords.
“There is a lot of benefit to the ownership of rental housing and this market has made it very easy for residential owners to get their feet wet,” said Joseph Younger, a broker with Younger Realty Group and founder of the Lancaster County Association of Landlords.
Younger also said he’s seeing more and more affluent homeowners who are deciding to rent their current residence, rather than sell.
The lure is easy to understand, he said: An occupancy rate of nearly 98 percent is both driving rents up and boosting the value of rental housing when it goes up for sale.
“The number of available multi-family properties for sale is down significantly from the past decade and these properties are fetching unprecedented prices,” Younger said.
More renters, fewer properties
According to LHOP’s 2013 housing study, the percentage of county residents who rented rather than owned rose just 2.4 percentage points between 2000 and 2013, from 29.2 to 31.6 percent. But from 2013 to 2017, it could balloon by another 11 percentage points.
Yet despite current and anticipated demand, the report noted that between 2008-2012, a full 75 percent of housing built in the county was single-family homes.
The county has more single-family detached housing than all other types combined, according to the report.
LHOP’s D’Agostino said more than 180 new, lower-cost apartments are coming on line this year — 72 in Pequea Township, 60 in Manor Township and another 50 or so in the Welsh Mountain area. But it’s not nearly enough to meet the need for low-income rental housing, and is unlikely to have much of an impact on occupancy rates or overall prices.
“Landlords can be very choosy now,” said D’Agostino. “And as they raise rents at the lower end, more (tenants) will be leaving, and where will they go? Will they be homeless, or double up?
Some landlords acknowledge that demand is pushing rents up. “This spring we bumped up rents at least 5 to 10 percent and if this demand continues, by next summer rents will probably rise another 10 to 20 percent,” said Angela White, broker and owner of Susquehanna Realty Management which manages about 1,200 units in Lancaster and Harrisburg.
Graboyes, of PGM Real Estate Associates, said he’s noticed some landlords are less willing to put improvements into their rentals.
“Why upgrade the kitchen or add a dishwasher, they don't have to? It's going to be rented,” he said.
Looking for solutions
But Younger, of the Lancaster County Landlords Association, worries that rental housing here may be in a bubble. Can prices continue to rise if tenants can’t afford to pay them?
“With an increasing lack of federal and state financial assistance programs and the competitive nature of those that do exist, like the Low Income Housing Tax Credit Program, it is challenging for local developers to construct new affordable rental housing that enable them to cover construction and development costs while maintaining rents at affordable rates,” said Randy Patterson, Lancaster city’s Director of Economic Development and Neighborhood Revitalization.
D’Agostino said other government responses could including changing zoning laws to accommodate more multi-family housing, permitting more “accessory dwelling unit” — basically, an additional unit on the same property and exploring ways to rehabilitate upper-story apartments in the downtowns of Lancaster City and the boroughs.
“Somehow,” he said, “we’ve got to find a way out of this situation.”