By Michael Barbella
The number of building permits issued in the greater Pocono area fell sharply during the first nine months of 2009 despite the availability of state and local programs designed to boost homeownership and end the housing market freefall.
Compared with the first nine months of 2008, the number of single-family building permits fell by an average of 38.7 percent in Carbon County, 55 percent in Monroe County, 54.1 percent in Pike County, and 23 percent in Wayne County, according to the latest data from the Pennsylvania Builders Association, a trade group based in Lemoyne. The figures include permits issued for single-family homes, modular homes and townhouses.
Some of the steepest declines occurred in Monroe, Pike and Wayne Counties. In February 2009, the number of permits issued in Wayne County dropped 66.6 percent, while permits issued in Monroe County plunged 67.3 percent the following month, according to the Association’s figures. Pike County’s worst month for housing starts occurred in May, when 18 permits were issued—a 65.3 percent decrease compared with the 52 permits issued in May 2008 (see chart at right).
“The housing market in the Poconos area is not great,” says Peter Gallagher, president of the Pocono Builders Association, based in Stroudsburg. “A lot of builders are really hurting. They’re doing what they can to keep their heads above water, but it’s been very difficult. Two years ago or so, we had some of the best (housing) markets ever. From then until now has really been devastating.”
With rising unemployment rates and plummeting home prices over the last few years, housing starts in the greater Poconos area has taken a nosedive. Building permits in Monroe County, for example, fell 47 percent between 2007 and 2008, according to the Monroe County Planning Commission’s 2008 Annual Report. The decline intensified in 2009, when 174 permits were issued through September. That figure represents a 56 percent decrease compared with the 396 issued during the first nine months of 2008.
Pike County’s housing market didn’t fare much better last year. The 161 building permits issued through September 2009 represents a 54.6 percent decrease compared with the 355 issued during the same period in 2008, according to data from the Pennsylvania Builders Association. Carbon County experienced the smallest overall decline: building permits there fell 26.7 percent between the first nine months of 2008 and first nine months of 2009.
Despite the grim numbers, however, some industry experts believe there is still a reason for optimism. “I think the numbers are good compared to the world economy, the U.S. economy and the Pennsylvania economy,” said Clyde Kreider, 2009 president of the Pike County Builders Association in Milford. “We’re fortunate to have the (housing) starts that we have. There is still demand even though we still haven’t taken our full medicine. We’re lucky to hold 50 percent from our 2008 starts.”
Kreider attributes part of that luck to the federal $8,000 tax credit program for first-time homebuyers. Included in the stimulus bill signed by President Obama last February, the tax credit allows first-time homebuyers to claim a credit of $8,000 or 10 percent of the home’s value on their taxes. The credit applies to sales occurring on or after Jan. 1, 2009 and on or before April 30, 2010. In cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010, will qualify.
At the time Obama signed the stimulus bill, economists estimated the $8,000 tax credit would bring 300,000 additional new homebuyers into the market. Economists also predicted that the tax credit would create a domino effect, with each first-time homebuyer sale eventually leading to two additional trade-up transactions.
Though it is still too early to determine the full extent of the tax credit’s impact on the housing market, Kreider claims the move helped spur some activity in the greater Poconos area. “I can tell you for a fact that the $8,000 tax credit has helped. Some of the building permits that have been issued are a direct result of the tax credit,” he notes. “I don’t think it’s 50 percent of the new starts, but I think it’s 10 percent of them.”
Gallagher, however, believes the tax credit has helped resales more than new housing starts. Kreider agrees, but says that resales also have helped trigger new housing starts in the Poconos area by people who sold their homes in neighboring New York or New Jersey.
“We got some people to build houses here that were not first-time homebuyers but were able to sell their homes before coming here to retire and build,” he explains. “The tax credit has brought some new people to the area.”
Single-family housing unit building permits, 2008 and 2009