Study: Shale Boom does not cause housing shortage - WFMJ.com News weather sports for Youngstown-Warren Ohio

Study: Shale Boom does not cause housing shortage

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COLUMBUS, Ohio - Despite fears that a sudden influx of workers related to the shale development boom in eastern Ohio could lead to a housing shortage, researchers with the at Ohio State University say the issue appears to be a manageable one.

A policy brief, "Too Many Heads and Not Enough Beds: Will Shale Development Cause a Housing Shortage?"  examines the impact of shale development on housing in Pennsylvania from 2007 to 2011, the first four years of Pennsylvania's boom period, and uses that information to predict what Ohio can expect in the coming years.

The policy brief was prompted by reports that surging numbers of shale-related workers in some areas of Pennsylvania resulted in doubling or tripling of market rents. Numerous media reports have also been published on severe housing shortages in remote areas near Williston, N.D., home to the nation's most pronounced shale boom.

However, the researchers found that in Pennsylvania, counties experiencing the most shale-related development saw little change in fair market rents (as reported by the U.S. Department of Housing and Urban Development), housing vacancy rates and median home values. However, the counties with the most drilling saw a significant increase in housing permits issued in 2010, but even those declined the following year.

The study was written by Mark Partridge, Swank Professor of Rural-Urban Policy; Michael Farren and Amanda Weinstein, doctoral students and research assistants in the Swank Program; and postdoctoral researcher Michael Betz.

Pennsylvania communities seeing the biggest influx of temporary workers appear to have mitigated the increased need for housing in part by building new hotels, Farren said.

For example, Bradford County, which is one of the Pennsylvania counties most impacted by shale development, now has five hotels, according to the county's economic development director, compared to one hotel in the county five years ago, Farren said.

After the shale boom, when the need for so many traditional and extended-stay hotels has decreased, communities could possibly convert them to other uses such as assisted-living facilities or nursing homes, Partridge said.

Another factor that would forestall housing shortages in Ohio communities is the fact that most areas involved in shale development in the Buckeye State are within 25 miles of a major population center, Farren said.

"Harrison and Carroll counties are probably the most remote, but if workers experience housing problems, Steubenville and Dover are within commuting distance," he said.

Weinstein added that some workers might prefer commuting from larger communities, which often offer amenities such as more restaurants, bars and stores.

Partridge, a professor of agricultural, environmental, and development economics who leads the Swank Program, said some Pennsylvania counties experienced "a jump in employment" in 2009 related to shale development that may have caused temporary housing shortages.

Farren added, "In Bradford County, you could see rental prices climbing during that time, but after about a year, that subsided."

Partridge noted that today, natural gas prices are much lower than they were a few years ago. And oil production resulting from the Utica shale, which lies beneath almost half the state (compared with the Marcellus shale, which hugs the eastern border), is not as promising as companies had hoped.

As a result of the lower profitability anticipated from drilling, Ohio isn't likely to see such a rapid growth spurt in shale development, he said. That, too, reduces the likelihood of shale development-related housing shortages in Ohio.

The fact that housing permits increased during this time indicates that at least some new housing was built during this period, which also could help prevent shortages.

"In Pennsylvania, 2.5 new home permits were approved for every well drilled," Farren said.

Partridge added that rural areas in Ohio typically have few zoning regulations, which would allow developers to more easily build new housing if needed.

Weinstein advised that authorities in areas experiencing shale development "wait and watch, but keep tabs on rental properties."

Farren suggested that communities develop their own metrics to determine if housing availability is becoming a problem, including keeping track of housing listings, median home prices, median rents and housing availability in the rental market.

"Housing issues related to shale are manageable in Ohio," Partridge said. "What seems to help are flexible policies regarding housing, and the development of new hotels, particularly extended-stay hotels."

The Swank Program is part of the College of Food, Agricultural, and Environmental Sciences and is supported by the college's outreach and research arms, Ohio State University Extension and the Ohio Agricultural Research and Development Center. The study was partially funded by the Ohio Housing Finance Agency.

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