Housing, Real Estate, Building Permit and Construction Trends in the South Coast
November 4, 2024As 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, and escalating prices are becoming a common refrain in many communities. Whether you are looking at housing for those without a residence at all, to families or individuals who are paying a considerable portion of their income for shelter or can’t make the leap from renting to home ownership, it is a challenge that many are facing.
According to data from the Census Bureau’s 2023 American Community Survey, 44% of Oregonians are considered “rent burdened,” meaning they pay 35% or more of their household income on gross rent. In Coos County, 38% were estimated as rent burdened. For those with a mortgage, 25% pay 35% or more of their household income on “selected monthly owner costs.” In Curry County, 34% of renters spend 35% or more of their household income on rental costs and 26% of homeowners with a mortgage spend 35% or more of their household income on selected monthly owner costs.
To address this growing crisis, in 2019, Oregon Housing and Community Services launched the agency's first five-year Statewide Housing Plan following extensive listening sessions across the state. The purpose of the plan was to identify areas of critical need and provide a strategic framework for OHCS to inspire coordinated action and build support for addressing Oregon's housing challenges. A progress report was recently published at: https://www.oregon.gov/ohcs/pages/oregon-state-wide-housing-plan.aspx
Prior to the 2007-2009 Great Recession, the problem of providing adequate, affordable, and attainable housing was already on the public agenda. Since 2006, when the Southern Oregon Workforce Housing Summit occurred to address affordable workforce housing in the local area, the housing market has been affected by several national and global events. Some of those were a bursting of a housing bubble and the Great Recession, and a global Covid-19 pandemic. This update looks at a few recent data points that show where we at today in some of those metrics surrounding the topic of housing.
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. In the South Coast, residential permits have ranged between about 75 and 130 units from 2016 to 2023. While above the low point of around 40 annual residential permits issued 2011-2012 period, the level most recently is below the 200 to 250 or so residential permits issued back in the housing boom era of 2003-2006. During the first seven months of 2024, year-to-date totals show the South Coast on a similar pace for residential building permit issuances as in 2023.
Various legislation actions have encouraged increased production of ADUs in some cities in Oregon. Data from BuildinganADU.com show that from 2018 to 2022 Coos Bay issued permits for 13 ADUs. Statewide, 3,231 permits for ADUs were issued, with Porland accounting for 1,655 of those according to these estimates. You can find more resources at https://www.buildinganadu.com/.
Construction Employment
Oregon has recovered construction jobs that were lost during the Great Recession, reaching the housing boom-era peak again by 2018, on an annual average basis. During the pandemic, not seasonally adjusted data shows Oregon lost jobs only in April 2020, and then regained those lost jobs during May and June. By May 2021, Oregon construction employment reached 111,400, 1,900 jobs above the prior May employment peak in 2019 when construction employment totaled 109,500. As of August 2024, Oregon construction employment was 7.6% or 8,700 jobs above the August 2019 pre-COVID total.
The South Coast hasn’t been as quick to recover jobs lost during the Great Recession. Locally, construction employment peaked in late summer 2006, with about 1,900 payroll construction jobs. There are many who are self-employed in construction and are excluded from this analysis. Six summers later, after the bursting of the housing bubble and near collapse of financial markets resulted in recession that cost the industry nearly 40% of its prior peak August employment, construction declined to about 1,200 jobs. Summer peak employment plateaued at about 1,500 to 1,600 jobs from 2019 through 2024. Even with the steady gains, August 2024 construction employment in the South Coast was about 400 jobs below the total reached in August 2006.
Many construction workers who lost jobs during the Great Recession found work in other industries during the recovery. In addition to construction worker retirements as the workforce ages, 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. Workers who leave an industry, retiree, or migrate to a different area all create job vacancies in addition to job openings due to growth. Even in slow growing or even overall declining industries, there are many vacancies created due to replacement openings and a constant need to train the next generation of workforce. In our 2023 job vacancy survey, the construction industry had 307 vacancies with and average wage of $26.01 in Southwestern Oregon, fourth behind the health care industry with about 800 vacancies. Construction and extraction occupations accounted for about 10% of Southwestern Oregon vacancies in 2023, according to our survey.
One part of the solution is having enough trained workers to keep filling the demand for construction industry jobs. A list of programs and other information about the pre-apprentice programs in Oregon can be found at the Bureau of Labor and Industries.
Home Prices at the South Coast
With less construction employment recovery relative to Oregon, and less permit activity than before the Great Recession, area home prices and housing costs are relatively high. Many millennials looking to transition to home ownership and positive net migration have been conspiring to squeeze the supply of available homes, putting upward pressure on home prices. The remaining analysis focuses on the home sales market. Zillow publishes a home price index for our counties, estimating home prices for mid-tier housing units – those selling between the 35th and 65th percentiles of all home sales.
It took several years for South Coast home prices to reach their prior peak reached during the housing boom years in the mid 2000s. By 2016, home prices in Coos County hadn’t quite reached the peak of 2008 prices. Recently, the Zillow home value index for the South Coast peaked in summer 2022, when the mid-tier home price for Curry County reached nearly $490,000, quite a bit above the prior peak value of about $310,000 back in 2008. Since then, price growth has eased and drifted a bit lower, with the Curry County index value at $476,840 and Coos County at its highest value at nearly $290,000 as of August 2024, also substantially higher than its past peak value.
Other government and private sources of home price and sales data corroborate this theme of escalating shelter costs. One source is the Federal Housing Finance Agency. They publish a quarterly home price index for Metropolitan Statistical Areas. As of the second quarter 2024, U.S. home price rose by 4.5% from the same quarter in 2023. Annual home price change is published for county areas in Oregon. Coos County saw average home prices rise by 4.2% in 2023 and rose by 227% since year 2000. Curry County home prices rose by 4.3% over the year and by about 212% since year 2000. Among Oregon counties, only seven others had faster home price growth in 2023 than Coos and Curry. Among Oregon’s metropolitan areas Bend had the fastest price increase, up by 5.3%, or the 145th fastest among the 260 ranked U.S. MSA’s. The advantage of the FHFA data is that it compares the change in prices for the same residence over time, whether it is sold or refinanced. They also publish a purchase-only index for larger geographies.