Intel is increasing demand for housing. Ohio has been there before
Intel is coming to Licking County in Central Ohio, an area that housing advocates say already has a shortage of affordable housing. The new chip-making industry, and its new employees, is expected to exacerbate that problem.
But Ohio has been through this before. Around a decade ago, the development of shale in eastern Ohio shook up housing demand. Researchers at Ohio University’s Voinovich School of Leadership and Public Service documented the fallout.
“I see a lot of parallels,” said researcher Kelli Coughlin Schoen. “I think the lessons to be learned are that there are very predictable dynamics.”
What happened to southeast Ohio?
Much like the Intel project, shale development came to eastern Ohio in waves – each with its own impact on the housing market.
First came construction employees. These temporary workers often had large housing stipends that allowed them to rent at higher rates than local residents. It shifted the rental market, as landlords raised rates to take advantage of the newfound demand.
“Those who paid low rents found it much harder to find adequate housing. That was the first sign of impact,” she said.
“It is something that we all have to rally around, and then stay with the community for the long-term.”Amy Riegel, director of COHHIO
It didn’t just make affordable housing harder to find. It also made federal tools or programs that assist low-income renters, like housing choice vouchers, less effective, said Schoen.
Those vouchers help low-income families buy housing. But the amount of money an individual gets is decided by Fair Market Rent (FMR), calculated once a year. The FMR in southeast Ohio didn’t go up with the rapidly rising rents. Suddenly, housing assistance that centered around this estimate didn’t go very far.
“Groups that are limited to that fair market rent couldn't effectively help their clients because the increased competition for rents meant that fair market rent was in the rearview window,” Schoen said.
As time went on, more permanent workers came to southeast Ohio to live. Those who were already homeowners began renting out their homes rather than selling, Schoen said. All of which made it difficult for first-time home buyers to compete in the market.
“You have generally increased competition for first time homes and a shrinking pool of these that are available and that really can cut off people's pathways to building equity and stability for their families over time,” she said.
Lessons for today
Less than half of Licking County’s units are both affordable and available to extremely low-income renters, according to Coalition on Homelessness and Housing in Ohio (COHHIO)'s most recent data.
“We're seeing rent continuing to increase, we're seeing more and more units become unavailable to low-income renters and we’re seeing more people making less money, so more people are extremely low income,” said Amy Riegel, executive director of COHHIO.
Schoen said eastern Ohio’s struggle shows what happens when stress is put on an overstretched market. She said central Ohio can expect low-income renters and first time buyers to be the most vulnerable to housing market changes.
In addition, she said housing organizations in the area should be prepared to offer support to those with imperfect credit history or a criminal record, through renter education and credit remediation. Even with that help, the area can expect a potential uptick in the number of unhoused individuals.
In eastern Ohio, housing organizations were overwhelmed by the sudden need. Schoen said central Ohio is more ready.
“There are people in the area who are working very hard to take these lessons and try to avert problems,” Schoen said.
The other good news, Schoen says, is that the industry booms aren’t the same.
Schoen said central Ohio has some advantages on its side. For one, the chip-making industry is a lot more predictable than shale development.
“People didn't know how long certain phases of the industry would be in the area. So there was concern about building and then having a housing glut later,” Schoen said. “Whereas it's not the same concern in [central Ohio], which I think is favorable.”
Plus, she said, the region has a lot more infrastructure and resources to handle the change. Even if eastern Ohio had the funds to build more affordable housing, the wastewater infrastructure wasn’t there to support it. That’s not the case in Franklin and Licking counties, Schoen said.
“Franklin County is familiar with this type of process,” she said.
But, there are some factors working against it. Riegel, director of COHHIO, said the fracking boom came after a long period of building up housing stock. Central Ohio doesn’t have that same luxury.
“So there were things that were putting positive indicators into the system's stability [in eastern Ohio]. And yet, that's still the impact that they saw, those rising costs and rents.”
Riegel said that’s not something that can be fixed overnight. She predicts Intel's impact on housing will be a lasting one.
“It is something that we all have to rally around, and then stay with the community for the long-term.”