Construction, Housing, and Related Employment in Jackson CountyApril 24, 2017 The lack of recovery in the construction and housing sectors in Jackson County is creating true hardships for many people looking for affordable or even any shelter in the local area. Symptoms of the ill health in the housing sector include rising home and rental prices, low vacancy rates, and reduced affordability compared with incomes. Of course if you are a landlord of property owner, this is not a threat but an opportunity to raise rental rates or the asking price of property you may be putting on the market. A recent forum was held in Medford that was sponsored by the American Association of Retired Persons (AARP), “2017 Livability Solutions Forum: The Future of Housing.” Topics included “missing middle” housing and multigenerational communities; local opportunities and challenges; and state housing policies. My presentation as part of the panel can be found here.
Symptoms of imbalances in the housing and rental markets are not just a local issue. Many areas in Oregon and across the country are also in a housing squeeze – too much demand is chasing too little supply. Here’s a recent headline from the 4-20-17 issue of The Wall Street Journal: “Housing Crunch Threatens Reno’s Tech Boom –The supply of houses and apartments is strapped amid a permitting bottleneck as firms pour in.” Desirable places to move to, lifestyle communities where amenities attract businesses, and in-migrants are feeling the greatest pinch. Slower-growing areas of the state are feeling the effects of the slow rebound in construction following the Great Recession of 2007 to 2009. Along Oregon’s South Coast, a recent headline from the 4-16-17 issue of The World newspaper sums it up: “State economist: South Coast needs to build – In order for the South Coast economy to recover from the crippling blows dealt by the Great Recession, its residents must build.”
Statistics that point to the housing challenges in Jackson County are bountiful. Median home values reached nearly $255,000 in February 2017, an increase of 9 percent over the year. A rental index figure published by Zillow showed average rent of $1,441 in Jackson County, up nearly 6 percent over the year.
Prices are being driven up by the declining inventory of properties for sale. In spring 2011, there were about 1,800 homes for sale in Jackson County. By fall 2015 the number fell to about 1,000. As of February 2017, there were only 520 homes for sale in the county.
The lack of housing starts and home building is compounding the issue of declining inventory. From 1988 through 2007, there were at least 1,000 residential unit permits issued annually . During the peak housing boom years, between 2003 and 2005, the number spiked above 2,000. When the Great Recession struck and the housing bubble burst, the total declined to just above 300 per year. However during subsequent years, housing permit activity has failed to reach that 20-year average, and has hovered around 700 units each year during the 2014 to 2016 period.
Construction employment generally follows the trend of building permit activity. Of course, public works, commercial, remodeling, and other non-residential construction activity also affect construction industry employment. Total construction employment peaked in 2006 with about 5,770 jobs. During the next few years, construction employment declined by more than one-half to just 2,770 jobs by 2012.
Since then, overall construction employment grew by about 42 percent from 2012 to 2016 to reach almost 4,000 payroll jobs, adding back 1,160 jobs of the 3,000 jobs lost. Despite the gain, construction employment remains about 1,800 jobs below the pre-recession peak.
The employment recovery has been a little uneven looking at the components within construction. Both construction of buildings and specialty trade contractors are back to more than 70 percent of their pre-recession peak. However, heavy and civil engineering construction only gained about 70 jobs from 2012 to 2016 and stands at about 50 percent of its pre-recession employment total in 2006.
The Oregon Office of Economic Analysis (OEA) has been digging into this issue in many of their recent blog posts. Those can be found at: https://oregoneconomicanalysis.com/category/housing/
In one of those segments OEA looked at a broader group of housing-related industries including construction but also numerous others. Those include wood product manufacturing; cement and concrete products; architectural and structural metals; construction machinery; lumber and construction supply; hardware and plumbing; furniture stores; building and garden supply stores; real estate credit; mortgage loan brokers; office of real estate agents; and activities related to real estate. In this broader group of housing-related industries, employment in Jackson County totaled 10,760 in 2006, or 14.9 percent of total payroll employment. By 2012, this group lost about 4,350 jobs. In other words, of the total payroll jobs lost in the county during the Great Recession, about 60 percent were in this group of housing-related industries. In 2012, housing-related industries accounted for just one out of 10 payroll jobs. By 2016, housing-related employment rose to 8,450 and represented 11.4 percent of all payroll jobs county-wide.
While there has been some recovery in construction and housing since the end of the Great Recession, continued economic expansion, population growth and demand for housing appears to be outstripping supply for both rental and owner-occupied housing. This has led to rising prices and scarce housing availability in Jackson County, and many other places in the country.