Douglas County and the Housing Crisis

Douglas County and the Housing Crisis

by Annette Shelton-Tiderman

April 20, 2017

Prospective homebuyers in Douglas County report finding limited inventory, especially for homes within the buyer’s budget range. State and national news also tell of limited inventory as well as bidding wars. What is behind the headlines and conversations when it comes to housing availability? Pivotal to the matter is the shrinkage in the number of new residential building permits in recent years and the associated decline in construction jobs. The U.S. Census Bureau’s Residential Construction Branch studies new, privately owned residential construction by tracking the number and type of building permits issued. Most telling in Douglas County is the near-absence of permits for multi-family homes. Not only are single-family dwellings in short supply, but rental options are also extremely limited.
Housing Shortages Building over Time

The relationship between population growth and housing demand is apparent in the graph highlighting both factors. Douglas County’s population climbed very quickly in the late 1800s only to slow during both the post-World War II and 1949 recessions. Housing
development matched these shifts. As the overall economy recovered, population and housing again grew in the 1950s, although a short recession in early 1960 took its toll, particularly on housing development. The last time the county’s population grew rapidly was between 1970 and 1980 (+31%); housing construction boomed during those early years. A recession in the 1980s and again in 1991, associated with the Savings and Loan Crisis, was a one-two punch. Sixty percent of the local housing inventory was built prior to 1980. Recent population growth has been somewhat subdued – about 18 percent since 1980. Housing development has all but disappeared. Demographic changes and reduced construction, compounded by an aging inventory, which presents maintenance and replacement needs, keeps today’s homebuyers and renters scrambling for options.

Type of Building Permit Has Long-Term Impacts

Since 2001, nine out of 10 permits issued for new privately owned residential construction in Douglas County have been for single-unit dwellings. Apartments with five or more units account for just under five percent of permits, and smaller multi-family dwellings account for the rest. Building permits peaked in 2005 with permits for 497 total dwellings. Of these, 438 were for single-unit dwellings; 28 were for duplexes, and 31 as part of larger multi-family units. The next few years saw a decline in building permits.

Corresponding to the depths of Douglas County’s recession, building permits bottomed out in 2011 with only 100 issued, nearly all for single-unit dwellings. Duplex permits have been issued in fourteen of the last fifteen years; the last time a permit was issued for a three or four unit structure was in 2010. Although permits for structures with five or more units were issued in nine of the last fifteen years, only two have been for more than 10 rental units.

The reduction in housing permits not only laid the groundwork for limiting current and future housing options, there was also a contraction in employment opportunities for construction workers. Construction employment increased between 2000 and 2006, reaching 2,060 jobs in 2006 – corresponding to the development of the nationwide housing bubble. Although permits started dropping off as the overall economy slowed in 2006, construction employment slowed only a little – likely reflecting the completion of housing projects already underway. Recessionary losses in the construction industry hit bedrock in 2013. Between 2006 and 2013, Douglas County lost 50 percent of its construction employment. By 2015, this sector had 58 percent of the jobs it had at its peak employment.

Conclusion: Demand but no Supply

Declines in building permits issued since 2005, coupled with the decline in construction employment, have resulted in fewer residential structures built. Adding to this recipe for limiting options, is the overwhelming issuance of single-unit housing permits to the detriment of multi-family housing developments – particularly affecting younger or less affluent home-seekers. Additionally, the majority of the county’s houses are at least 30 years old; 60 percent were built prior to 1980. Aging inventory, coupled with deferred maintenance often associated with economic downturns, usually presents added issues and increased costs. These inventory and structural issues, near-decimation of the construction workforce, and continued population increase significantly contribute to the housing shortages experienced in rural Douglas County.