Environment
8:00 am
Thu December 29, 2011

New Report: Rent Rates Soaring In Active Drilling Areas

Most of the attention about the drilling in the Marcellus Shale formation in Pennsylvania has focused on job creation or the suspected negative impact on water from hydraulic fracturing (fracking) or on air quality from released natural gas, as well as the stress on roads from trucks hauling water to and from well pads.

But a new study indicates that the drilling boom is causing a housing crunch and increasing rental rates [PDF], especially in the northeastern part of Pennsylvania where Marcellus activity is more robust.

"We did field research in Arkansas and Texas and we uncovered some socio-economic issues [as a result of drilling], including shortages in affordable housing," said Teri Ooms, executive director of the Institute for Public Policy and Economic Development. She said that the Appalachian Regional Commission then contracted the institute to do similar research in Pennsylvania. The institute is a partnership of nine colleges and universities that engages in strategic development and impact reports.

Twelve counties were selected for the study based on their economic status (distressed, at-risk, transitional, competitive, and the top 10 percent) and the number of wells drilled and permits issued. Three of the busiest drilling counties — Bradford, Tioga, and Susquehanna — in the northeastern part of the state were included, as well as Fayette and Cambria counties in the west.

According to Ooms, the counties with high levels of drilling are doing well economically, with low unemployment rates and new business development to support people moving into the area for the drilling. "That does put stress on housing," Ooms said. "So, the cost of housing is currently increasing. So, for renters it's proven to be very cumbersome."

She said that the rents are increasing as much as 100 to 150 percent because landlords figure that drilling industry workers can afford to pay a higher rate. Existing tenants are being pushed out. "We're also seeing a drop in the number of landlords that are part of the HUD Section 8 and voucher programs," Ooms said. "They're finding they can get more money by renting to drilling industry employees than be being part of the [low income housing] program."

She said that some landlords are also changing how they rent, from a flat monthly rate for a unit to four workers paying $750 to $1,000 apiece for a two or three-bedroom apartment.

But the Pittsburgh region is not seeing the housing crunch yet because there aren't as many active wells. "Some of the people we interviewed in southwestern Pennsylvania said they are starting to see subtle increases in the price of housing, but nothing dramatic and nothing that could directly be attributed to shale developments because people are moving in," Ooms said.

She said that the study is not intended to blame the industry but rather help counties that are in the earlier stages of development because drilling "is here to stay" for several decades, so a solution to the impact on housing must be long term. Ooms said that their recommendations include allocating money for an existing Housing Trust Fund to provide low- and moderate-income housing, and requiring private firms to make a percentage of housing units in new developments available to low- and moderate-income households.

Housing and Marcellus Shale [PDF]
A socio-economic study by the Institute for Public Policy and Economic Development that examined the impact of Marcellus drilling on housing rental costs.