Southwestern Oregon and the Housing CrisisMarch 17, 2017 Prospective homebuyers in Portland, Bend, rural Oregon, and the communities in between report finding limited inventory, especially within the buyer’s budget range. National news reports 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 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.
Total Building Permits Issued Reflects the Underlying Economy
When examining permits for the construction of new, privately owned residences in Coos, Curry, and Douglas counties, the ebb and flow of the overall economy is evident. With the exception of Coos County, there was a slight drop in permits in 2002, corresponding with a short-lived economic slowdown. By mid-decade, plans for building, as evidenced by the issuance of permits, had increased and peaked in 2005 at 841. Overall, building permits increased 47 percent between 2001 and 2005. The Great Recession, however, took its toll. The number of permits issued bottomed out in 2011 with only 137 permits issued across all three counties – an 84 percent drop from 2005 levels. Although permit issuance has increased by 76 percent since 2011, the 2015 level is still 71 percent below the 2005 peak.
Construction Employment Lags Changes in Building Permits Issued
Getting a building permit for new construction is only the beginning of a time-intensive process. It is not surprising that although the number of residential permits peaked in 2005, those employed in the construction industry peaked a year later in 2006. Southwestern Oregon saw a 60 percent increase in construction employment from 2001 to 2006, corresponding with the overall increase in housing development. Although statewide, some arenas of the economy showed signs of turning around by 2009, rural Coos, Curry, and Douglas counties’ economies lagged. Construction employment continued to decline and finally bottomed in 2013 (46 percent below 2006 peak). Since then, the industry has experienced a modest recovery of 12 percent. Still, overall, this industry is down 39 percent from its peak employment levels.
Declines in building permits issued since 2005, coupled with the decline in construction employment, has resulted in fewer residential structures built. Additionally, the majority of the region’s houses are at least 30 years old; 61 percent were built prior to 1980. Aging inventory, especially in coastal and mountain climates, often present added maintenance issues and increased costs. These inventory and structural issues and modest population increases (especially in Curry and Douglas counties, 17 percent, each), significantly contribute to the housing shortages experienced in rural southwestern Oregon.