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Researchers Differ Over Shale’s Impact on Ohio Housing
Researchers commissioned by state government agencies have offered differing opinions over whether a housing shortage is on the horizon in eastern Ohio, where development is ramping up in the state’s portions of the Marcellus and Utica shales.
The reports — four in all — were a collaborative effort between the Ohio Housing Finance Agency’s Office of Affordable Housing Research and Strategic Planning, and the Ohio Development Services Agency. The agencies contracted with researchers from Ohio State University (OSU), Ohio University (OU), the nonprofit Coalition on Homelessness and Housing in Ohio (COHHIO), and Vogt Santer Insights (VSI), a national real estate research firm based in Columbus, OH.
In a 108-page report, researchers from OSU’s Department of Agricultural, Environment and Development Economics studied housing markets in the Marcellus region of Pennsylvania from 2007 to 2011, then extrapolated the effects from shale development there to form expectations for Ohio for the 2012-2016 period.
“Although Pennsylvanian counties such as Bradford and Tioga have already experienced a sizeable shale boom with measurable impacts on its housing market, our analysis suggests that the impact on housing markets in most Pennsylvania shale counties is fairly small,” the OSU researchers said. “We expect the same pattern to develop in Ohio over two to three years.”
Mark Partridge, swank chair in Rural-Urban Policy and professor at OSU’s Department of Agricultural, Environment and Development Economics, added that “the good news is that most places with shale energy development are able to address housing needs for the middle class without too much disruption, though there appears to be some issues for some lower income households as the boom begins.”
The OSU researchers added that shale development had a small impact on population, but Pennsylvania counties that had the most activity did see a population increase because of an influx of workers.
“Regardless of the minimal impacts on housing prices, housing markets in shale counties seem to be responding to the increased housing demand or expected increase in housing demand from shale workers by building single-unit residential housing,” the OSU researchers said. “The increase in housing development could also be in response to the increase in earnings or income from lease and royalty payments.
“Many counties in the Utica and Marcellus shale region can rely on the housing stock of neighboring counties if necessary, whereas hotels can fill the needs of the temporary workforce. In fact, commuting should be a more viable option in Ohio drilling regions, reducing pressures on local housing markets. Until the intensity of drilling increases, major public intervention in the housing market in Ohio seems unnecessary. Yet, policymakers should support the development of hotels, modest increases in low-income housing, and the facilitation of home building through streamlined regulations and financing.”
But researchers from OU’s Voinovich School of Leadership and Public Affairs studied five Ohio counties — Carroll, Columbiana, Jefferson, Stark and Tuscarawas — and concluded in a 35-page report that an emerging housing shortage was on the horizon.
“As this industry expands in eastern Ohio, we anticipate that additional housing shortages will take place throughout the region, with smaller communities being affected the most,” said OU project manager Robin Stewart. “Additional analysis will help develop a regional strategy that ensures affordable housing options remain available for the area’s most vulnerable citizens.”
The Voinovich School also created a separate, 34-page study on Carroll County, where most shale workers have been able to find housing in single home rental units, hotels, campgrounds and other temporary options, but a shortage of rental homes has left moderate- and low-income residents with limited options.
“Barriers to address these housing needs predominantly center on high levels of uncertainty regarding the trajectory of shale development,” the Voinovich researchers said. “Without knowing how the industry will progress, focus group participants identified the communities’ inability to adequately plan for short- and long-term needs.”
The Voinovich researchers also found that many communities in Carroll County “are reluctant to invest in housing development and infrastructure improvements for a temporary population, which could result in a housing glut. Additionally, there has been active resistance to temporary housing solutions for workers, such as ‘man camps.’ An already limited housing and homelessness services infrastructure is further complicating the ability of Carroll County to mitigate the effects of shale development on their community.”
Researchers from COHHIO and VSI, in a 242-page study, found that in four Ohio counties — Carroll, Columbiana, Stark and Tuscarawas — over the past year, housing occupancy and market-rate rent levels have steadily increased.
“At this point in time, the employment base has not increased enough to have a significant impact on the overall housing market,” the COHHIO and VSI researchers said. “Regardless, as energy related employment increases and oil/gas companies rent housing units, the housing market is expected to continue to tighten. We anticipate that as the vacant rental inventory is occupied, there will be a continued increase in rental rates, as the options will become increasingly scarce.
“However, considering the changes that have occurred in Carroll, Columbiana and Tuscarawas counties over the past year, it will likely be at least another year before the housing markets are significantly strained. Planning could be initiated now to anticipate the demand that will inevitably create a shortage of low-income units, assuming the oil and gas exploration industry continues to increase as it has over the past year.”
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