Pa. isn’t building enough housing, and that’s hiking prices, Pew says

Pennsylvania is one of the states that’s allowed the least amount of housing to be built, and the lack of supply is hiking prices for homebuyers and renters, according to new research by the Pew Charitable Trusts.

The state ranked 44th for the share of homes approved to be built from 2017 to 2023, according to a report published this week by the Pew Charitable Trusts, a nonpartisan, nonprofit research and public policy organization. Researchers point to local land-use rules as a cause and recommend policymakers loosen zoning restrictions to boost housing supply.

From 2017 to 2023, the number of homes for sale across Pennsylvania dropped 60%, from 48,199 in January 2017 to 19,361 in December 2023, according to the report. Over the same time period, the statewide median price of homes rose 55%, from $165,000 to $255,000.

And the typical rent in the 23 Pennsylvania counties the report analyzed increased by 46% — from $1,013 in 2017 and $1,476 in 2023, according to estimates by Zillow.

Housing costs grow more slowly in places that allow for more building, especially the construction of less-expensive types of housing, according to the report.

“The bottom line is the best way to bring high rents and housing costs down is to build more housing and to build more varied types of housing,” said Seva Rodnyansky, a manager in Pew’s housing policy initiative.

Local governments in Pennsylvania haven’t been keeping up with the national rate of issuing building permits.

In the country as a whole, local governments issued enough permits from 2017 to 2023 to grow the housing supply by 7.5%. The number of permits local governments in Pennsylvania issued, on the other hand, were only enough to allow for 3.4% more homes.

Meanwhile, the number of households in the state grew by 5.1% during that time period. So Pennsylvania governments issued fewer building permits than necessary to keep up with increases in population.

Since 2000, Pennsylvania governments have approved the building of 10% more homes. Nationwide, governments have approved 25% more.

From 2017 to 2023, Philadelphia issued a higher share of building permits than municipalities in Bucks, Chester, Delaware, or Montgomery Counties. And rents grew more slowly in the city.

Rents in Philadelphia grew 30% during the seven-year period the report analyzed. They rose by between 44% and 47% in the collar counties.

The share of cost-burdened renters, those who spent more than 30% of their income on rent, dropped in Philadelphia by about 8% from 2017 to 2023. The share of cost-burdened renters rose by about 5% in Chester County, about 6% in Montgomery County, and about 7% in Delaware County.

» READ MORE: Houses in the Philly suburbs are still in high demand, but developers aren’t building there

Even though municipalities added housing, it wasn’t enough to drive costs down per person.

Pew pointed to examples of how local municipalities’ zoning rules restrict how much housing can be built where.

Lower Gwynedd, Montgomery County, for example, requires at least 35,000 square feet of land — more than three-quarters of an acre — for each single-family home, according to the report. Doylestown, Bucks County, requires at least 80,000 square feet of land — almost two acres — per single-family home.

If Doylestown changed its land-use rules, one lot currently zoned for a single-family home could hold 40 townhouses on 2,000-square-foot lots.

» READ MORE: White male homeowners are overrepresented on land-use boards, survey finds

“And we can come up with a ton of examples like that,” Rodnyansky said. To increase housing supply and tamp down on prices, he said municipalities could change their zoning requirements to allow for duplexes, triplexes, and small multifamily buildings on what are now single-family lots.

“Where it’s been done, it’s worked,” he said.

Pew also said most Pennsylvania municipalities ban the building of accessory dwelling units or make building them difficult. Allowing above-garage apartments, basement and attic apartments, converted garages, and other types of accessory dwelling units also increases housing density.

Pew recommended that Pennsylvania policymakers allow and encourage changes to land-use rules, so municipalities can add more housing.

The report’s recommendations include:

“Had Pennsylvania made some of these changes and added more housing earlier, rents would now be lower,” the report said.

Pew highlighted Minneapolis as an example of a city that has seen more rental affordability in the years since changing its land-use rules.

Minneapolis has allowed more apartment buildings along commercial corridors, gotten rid of parking requirements, and allowed duplexes and triplexes citywide, instead of only in traditionally multifamily areas. Despite an increase in residents, rents in Minneapolis did not increase as much as rents in the state of Minnesota or the country, and a higher share of residents could afford the median apartment rent in 2023 than in 2017.