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We Need More Duplexes to Help Solve Our Affordable Housing Puzzle

Seven years ago, my wife and I bought our house in the State College area.

Rents looked high, and we said, “Why rent when we could spend the same amount on a mortgage?”

Boy, was that naive. After buying a fixer-upper in Park Forest in the low-$200s, I learned just how costly homeownership can be. We upgraded the sewer line, repaved the driveway, reshingled the roof, replaced a water heater, trimmed back ominous tree branches — and that list only includes the things we had to do. It doesn’t include the remodeling we chose to do like updating the bathrooms and kitchen or installing mini split air conditioners.

For several years, I told anyone who would listen that a house is not the investment you think it is. You’re better paying rent and putting your extra cash into index funds, I would say.

But this year, my opinion changed.

I started to see a light at the end of the tunnel. I could see that one day—one magical day—I won’t have a loan to pay back. And on that day it will be like getting an instant 20-30% raise.

I realize now that as hard and financially demanding as homeownership is, it’s also amazing because it forces us to invest in something that is not only valuable but also literally puts a roof over our heads. Something my index funds don’t do.

But here’s the problem: Houses in State College are a lot more expensive than they were when we were house hunting. From 2010 to 2020, housing prices in State College Borough increased by 54%, from an average of $218,100 to $335,800, according to research done by the State College Borough Planning Commission.

And while housing prices have increased, salaries for people entering the housing market have not. Add to that the increasing mortgage rates and you end up with a huge segment of the population that is priced out of the housing market.

So how unaffordable is the market in State College?

According to the 2021 Patton Township Housing Task Force Report, 66.5% of township households are unable to attain a home selling at the average 2020 price.

There are great programs in the community, like the State College Community Land Trust, which sells borough homes (but not the underlying land, which is leased) to families meeting federal income guidelines. But if you are at an average (or slightly above) income level, you’re stuck renting or taking a mortgage you can’t really afford.

That said, there are still affordable houses in places like Philipsburg, which is a good option for some families. But if you’re working in State College, I see my generation of millennials preferring to live in a smaller place within a bikeable distance over a bigger home with a commute. A survey by the Redevelopment Authority seems to confirm this.

So what could a local family looking to buy their first home afford?

According to Dave Ramsey, you should never buy a house with a monthly mortgage that’s more than 25% of your monthly take-home pay. He also advises to put down 20% and take a 15-year fixed rate mortgage, which today charges around 5% in interest. It’s pretty conservative advice but it ensures you’ll be able to have a roof over your head, food on the table and money left in your budget to save for retirement.

To put some numbers to it, the average family with two kids in the Centre Region brings in about $88,000 a year, which means, according to Ramsey, they could afford a home that costs around $190,000.

So the answer is to build cheaper homes, right?

Well, the developers I asked said building a home costs about $200 per square foot between the price of land, building supplies and permits. Meaning the average 2,000-square-foot house is going to cost $400,000.

So I agree with the recommendations of the Patton Township Housing Task Force Report. The answer is more duplexes.

And as far as I can see, duplexes allow developers to build a profitable house in State College that an average resident can afford.

But duplexes are few and far between. I think one reason is that developers just don’t see the demand yet. As more millennials enter the housing market, I believe this demand will increase. We want to own homes in bikeable and walkable communities just like State College.

Additionally, duplexes offer an entrepreneurial opportunity. While the approach of buying a duplex is not new, it’s getting rebranded. Shows on HGTV like “Income Property” and websites like Bigger Pockets are highlighting the old approach of real estate investing for a new audience. 

Layer on the fact that you can pay a month’s mortgage by renting out your home during one football weekend and you have a business opportunity first-time millennial home buyers are eager to try.

However, it’s difficult in our community to ensure local families buy these duplexes. The incentives to turn them into student rentals or for alumni to buy them as football houses is super strong.

So we probably have to start at a grassroots level.

If you’re in the housing market right now, talk with your real estate agent about buying a duplex.

If you’re selling a duplex, consider selling it only to a local family who plans to live there full-time—students and alumni have plenty of other options.

And if you’re a developer, consider building duplexes or working with buyers to build them.

I realize that duplexes will not solve our entire affordability problem but I do believe it’s one piece to the puzzle.