Housing, Real Estate, Building Permit and Construction Trends at the South CoastJuly 6, 2021 As one of life’s most basic necessities, shelter plays a critical role in the lives of residents of any community. Increasingly, challenges surrounding homelessness, housing availability, lack of supply, and escalating prices are becoming a common refrain. This is not new news. Even prior to the 2007-2009 Great Recession, the problem of providing adequate, affordable, and attainable housing was already seen locally as an important piece of fostering long-term economic growth in Southern Oregon. The global pandemic and its effects on local jobs and economic security, as well as the need to attract workers as the economy reopens, have reawakened conversations about the low stock of housing, and affordable housing in particular.
Residential Building Permits
Building permit data, a proxy for the supply of shelter or residential housing units, gives a forward-looking indicator of potential housing supply. If a permit is issued, it’s not a certainty that it will be built, and when the residential housing unit is finished and ready for occupancy is not known. But overall it’s a good measure of the pace of residential construction activity over time. Following the Great Recession, residential permits have shown modest recovery. At the South Coast, residential permits have ranged between about 150 to nearly 400 units from 1990 to 2007. By 2011 and 2012, the number dropped to just 37 in the wake of the bursting housing bubble and the Great Recession. While above the low point, the most recent level of about 110 permits issued in 2020 is far below the 344 and 275 residential permits issued in the housing boom era of 2005 and 2006.
The South Coast recovered the construction jobs lost during the Great Recession at a much slower pace than the state. In May 2021, Coos County’s construction employment of 1,100 about matched the prior peak year employment for May, reached back in 2006. Curry County is still down about 200 construction jobs when comparing employment in May 2006 with May 2021.
We know that many construction workers who lost jobs during the Great Recession found work in other industries during the recovery. In addition to construction worker retirements, fewer younger workers may have been attracted to this sector that experienced a large contraction in the early 1980s and again in the late 2000s. Analysis of unemployment insurance wage file data did show this shift of construction workers to other industries in Oregon following the Great Recession. When I shared these findings during a presentation, a county commissioner in the audience said that was his personal story. Workers who leave an industry, retire, or migrate to a different area all create job vacancies in addition to job openings due to growth. It’s important to remember that even in slow growing or overall declining industries, there are many vacancies created and a constant need to train the next generation of workforce. In our 2020 job vacancy survey, the construction industry had 177 vacancies in Southwestern Oregon – which also included Douglas County. Construction and extraction occupations accounted for about 8% of Southwestern Oregon vacancies in 2020, according to our survey.
Building permit and construction job trends have combined with other factors like many millennials looking to transition to home ownership, rising incomes, and historically low mortgage rates, resulting in a squeeze on the supply of available homes and therefore putting upward pressure on home prices.
Rental cost data are available from the Census Bureau’s American Community Survey. The most recent data are for 2019, so they might not reflect more quickly changing conditions. Real estate company Zillow publishes a home price index for our counties. These data estimate home prices for the medium tier housing units – those selling between the 35th and 65th percentiles of all home sales. The Zillow home value index shows an accelerating trend for the South Coast in the past few months up through the end of May 2021. The mid-tier home price for Coos County reached $271,380, quite a bit above the prior peak value of about $190,000. Curry County’s most recent home value index put the mid-tier home price at $376,064 also substantially higher than its past peak value.
Another rich source of local real estate, home sales, and price data is available from the Regional Multiple Listing Service. They were kind enough to share their latest Market Action publications. A few highlights from the most recent reports show year-to-date data through May 2021. There were 428 closed sales in Coos County, up from 414 in the same period in 2020. Curry County closed sales also increased from 174 to 263 over that time. The median residential home sales price during the January through May 2021 period rose by 25.7% from the same period in 2020 in Coos County and was essentially unchanged in Curry County. Coos County’s median sales price in May 2021 was $313,000 while Curry’s median residential home sales price was $365,500. Total market time has been on the decline too. That is the number of days from when a property is listed to when an offer is accepted on that same property. The statistics show average total market time of less than 30 days for both counties, below usual market time seen in the past few years of data.
During the past year, inventory of homes for sale also declined. On May 31, 2021 there were 134 active residential listings in Coos County, down from 249 on May 31, 2020. Curry County active residential listings fell from 209 to 111 during that same time. Much appreciation to the Regional Multiple Listing Service for sharing their reports.
In case you weren’t sure just yet, this would seem like a strong seller’s market and a tougher time to be trying to buy a home in the hot market for homes at the South Coast. It remains to be seen if changes such as curtailing single family zoning, incentives to create additional dwelling units (ADU’s), and other recent Oregon legislative changes that have been enacted will help increase the supply of available and affordable housing.