How Recent Lehigh Valley Economic Growth Will Affect Housing Prices
Site Selection Magazine recently reported that the Lehigh Valley ranks among the top 5 fastest growing regions in the United States with less than 1 million people. This area has developed a great deal over the past 2 decades and is in a much better financial position than at any time in recent memory. What many residents are wondering is: How will economic growth in the Lehigh Valley affect home prices?
What is Driving Lehigh Valley Economic Growth?
The office and manufacturing sectors are the primary drivers of growth in the valley. Despite a large portion of economic growth being attributed to these industries, there is still a well-balanced mix of sectors that underpin the area's growth. Large companies like the home-security firm ADP and French multinational Air Liquide have decided to expand their facilities, creating thousands of jobs in the area. The area has a wealth of skilled blue and white collar labor, which allows these companies to hire the necessary talent for operations in the Lehigh Valley.
Real Estate Value in the Lehigh Valley
Real estate valuations tend to follow positive economic and social indicators. As these indicators rise, real estate values increase at the same time. Some of the most important variables for housing value growth include employment stats, school quality, crime rates, population growth, and other metrics that track the overall quality of life in a given community. Despite a recent history of unimpressive economic growth, the Lehigh Valley has turned around considerably and is one of the most robust economic zones in the country.
As more workers move to the area with their families the supply of housing will tighten. New developments often take years to come online, so the only pressure relief valve to satisfy increased housing demand is when people sell existing home stock. This stock is limited; thus prices increase. Zillow's Economic Research Team reported 3-8 percent value gains on many neighborhoods in the Lehigh Valley, with some properties rising in value by as much as 12-13 percent.
The Hearthside Hunch: Where is Lehigh Valley's Real Estate Market Headed?
Many homeowners, investors, and real estate professionals vividly remember the 2008 housing crisis. Even when times are good, and values are rising considerably, people are worried that the good times will not last forever. One benefit of large employers moving to the area is the fact that new projects take years, or even decades to come online. The capital investments in new facilities, workers, and infrastructure provide a stable source of income for the region.
Industry in the valley is also very diversified, which makes it more immune to system shocks like other regions that are driven by a singular industry. Due to the broad industrial/service base of the region, and the numerous large projects coming online in a 5-10 year window it is likely that housing values in the area will remain stable/positive for the foreseeable future.