Friday, May 1, 2015

New Problem In My Allentown Neighborhood

One of the problems of living around a college is student creep. In the past real estate investors were buying homes to rent out to students. Through zoning overlay restrictions this problem has been eliminated. BUT a new problem is now emerging.

Because the college had increased room & board it's now become economically advantageous for parents to buy up homes for their kids while they attend college. This year two more homes on our block were added. Rather then pay room & board some parents have opted to buy a house for their kids while they attend college for the same or less then what room & board expenses would cost.

There's no legal way to restrict private homeowners from who can live in their home. As a result they can collect a few bucks from other students to live there. Thus enabling their mortgage payments to be practically zero. Potentially making not only the costs for living expenses for their kids free but also flipping the property after a few years making it possible to earn a profit.

The Snowball Effect
As this neighborhood ages some opt to sell their homes to these parents of students. There is a secondary repercussion. As more and more students occupy these homes other neighbors who become annoyed and can afford to, sellout. This results in a further reduction of property values making these homes even cheaper to buy on the real estate market for the next set of parents. This has been going on for some time.

It is only a matter of time before Allentown's west end will not only be a private extension of the college campus but so too it's tax base which will be reduced due to having lesser property values. We've seen this happen in other Allentown neighborhoods for different reasons, but the results are the same.

To be truthful I was reluctant to post this since it serves to give other people ideas who haven't thought of this. In the end decided to despite the fact I may be shooting myself in the foot in doing so. It seemed like the right thing to let people know. Yeah I'm kinda stupid that way.


  1. Allentown's student zoning restrictions prevent any home that did not house students at the time of the law's passing/redrafting in (1997/8) to house more than 2 students at a given time. So there is no spillover or growing effect. Only houses that have already housed students can continue to house students.

    1. The law only applies to property investors
      Parents of two boys who are going to college bought a house for them to live in while then attend. Therefore it is not considered a rental . However there are two others also living there, I'd be quite certain they are paying something under the table hence the parents are getting a good portion of their mortgage covered as well.

      As far as the "2 students at a given time" thing. During the first few years zoning agreed to come out and inspect a house we reported housing 4 more students then allowed. Each time when zoning visited the ones on the lease told zoning the others were not living there but were just overnight guests staying for a few days. This occurred several times until zoning admitted it would be both expensive and legally questionable to try and prove otherwise. I'm certain this is how it would play out for these properties I'm speaking of as well.

      I am very familiar with the "zoning overlay". We lived here before Tom Burke researched it and the neighborhood watch group pounded on city hall's doors to get it passed.

      However since this is not officially a rental (two of the boy's parents own it) and there are no leases nor rental agreements drawn up (they probably pay under the table) these kind of properties slip through the cracks of the legislation. Especially when one has to try and legally define who house guests are. How long can they stay or whether someone can prove they remunerated the owner.


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