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Oregon Economic and Housing Update - Mark McMullen
- 1. Oregon Economic and Housing Update Mark McMullen State Economist, Office of Economic Analysis March 17, 2014 Housing Alliance
- 2. OregonRegional Economic Performance and Outlook
- 3. Job Gains Have Accelerated, but Remain Somewhat Modest (150,000) (100,000) (50,000) - 50,000 100,000 Jan-50 Jan-60 Jan-70 Jan-80 Jan-90 Jan-00 Jan-10 Oregon Total Nonfarm Employment Year-over-Year Job Gains -10% -5% 0% 5% 10% 15% Jan-50 Jan-60 Jan-70 Jan-80 Jan-90 Jan-00 Jan-10 Oregon Total Nonfarm Employment Year-over-Year Job Growth
- 4. Oregon’s Employment Outlook 4 -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% Oregon NonfarmEmployment Growth (Y/Y) Recession Employment Expansion Average
- 5. Rural Areas Have Not Improved Until Recently 5
- 6. Job Growth Has Recently Become More Broad-Based 6
- 8. Housing Metros Were Coming Back Strong -10% -8% -6% -4% -2% 0% 2% 4% Jan-07 Jan-09 Jan-11 Jan-13 Private Sector Growth Picking Up Y/Y, 3MMA, QCEW U.S. Hardest Hit Housing Metros These are the 50 worst home price decline metros, per FHFA data. http://oregoneconomicanalysis.com/2013/11/07/hardest-hit-housing-metros/ Oregon Office of Economic Analysis
- 9. But Permit Growth Has Decelerated Significantly -80% -60% -40% -20% 0% 20% 40% 60% 80% Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Single Family Housing Permits Year-over-Year Growth Housing Metros US ex Housing MSAs Oregon Office of Economic Analysis
- 10. Housing Stall Impacted Housing Metros the Most Oregon Office of Economic Analysis 2% 3% 4% 5% 6% -10% -5% 0% 5% 10% 15% 20% 25% 30% Jan-10 Jan-11 Jan-12 Jan-13 Interest Rates Slow Housing's Rebound Mortgage Rate --> 30 Yr Fixed <-- Housing Metros Permit Growth Differential -20% -10% 0% 10% 20% 30% -20% -10% 0% 10% 20% 30% Jan-10 Jan-11 Jan-12 Jan-13 Affordability Slows Housing's Rebound Housing Affordability--> NAR Composite Index <-- Housing Metros Permit Growth Differential
- 11. Slowing Down Employment Too Oregon Office of Economic Analysis -20% -15% -10% -5% 0% May-07 May-09 May-11 May-13 Private Sector Employment Seasonally Adjusted, 3 Month Moving Average Medford CES Bend CES
- 12. But Fundamentals Remain Solid Oregon Office of Economic Analysis
- 13. And Outlook is Bright Oregon Office of Economic Analysis 0.0 0.5 1.0 1.5 2.0 2.5 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 2005 2007 2009 2011 2013 2015 Housing Starts Forecast Oregon (lhs) U.S. (millions, rhs)
- 14. More Room for Improvement 14
- 16. Price Growth Will Remain Modest 40 60 80 100 120 140 160 180 200 220 1995Q1 1999Q1 2003Q1 2007Q1 2011Q1 2015Q1 Oregon Home Price Index FHFA, 2000 Average = 100 Home Price Index Inflation Adjusted Home Price Index Forecast-->
- 17. Supporting Affordability 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Jan-92 Jan-96 Jan-00 Jan-04 Jan-08 Jan-12 Portland MSA Housing Affordability Housing Expense to Income Ratio Series3 Conventional, 20% Down 10% Down, PMI
- 18. Affordability Thresholds in the Portland Metro Area 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 Household Income Portland Housing Affordability and Income Affordable Home Price (lhs) Share of Households (rhs)
- 19. Market Volume Remains Low… $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 - 1,000 2,000 3,000 4,000 5,000 6,000 Jan-95 Jan-99 Jan-03 Jan-07 Jan-11 Portland MSA Housing Market RMLS Market Action Reports, SA 3 MMA New Listings Closed Sales Median Price (rhs)
- 20. …but not Among Low-Price Houses 20 0 100 200 300 400 500 600 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 through July Multnomah County Sales of Homes Under $90K Condo Single family
- 21. Low-End as a Share of Sales 21 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 through July Multnomah Co: Sales Below $90K, % share of total Condos Single family
- 22. A Bit Easier to Get a Loan -30 -20 -10 0 10 20 30 40 50 60 70 80 1991 1995 1999 2003 2007 2011 2015 Mortgage Lending Standards Senior Loan Officer Survey Recession Prime All Tightening Loosening
- 23. Demographics Suggest Further Shift to Multifamily… 400,000 800,000 1,200,000 1,600,000 2,000,000 2,400,000 2,800,000 1980 1985 1990 1995 2000 2005 2010 Oregon Population by Housing Type CPS, 3 Year Average Ownership Rental 20% 22% 24% 26% 28% 30% 32% 34% 36% 38% 40% 1980 1985 1990 1995 2000 2005 2010 Renter Share 1990s Average
- 24. …but Relatively High Rents Will Slow that Shift 50 75 100 125 150 175 1984 1988 1992 1996 2000 2004 2008 2012 Oregon Price to Rent Ratio 2000 = 100 Portland Salem
- 25. Oregon Metropolitan Area Rents 25 $0.50 $0.55 $0.60 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 $1.00 Salem Metro Average Rent Per Square Foot Average Rent Per Square Foot Source: Multifamily NW $0.60 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 $1.00 $1.05 $1.10 Eugene/Springfield Metro Average Rent Per Square Foot Average Rent Per Square Foot Source: Multifamily NW $0.50 $0.55 $0.60 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 $1.00 Bend/Redmond Metro Average Rent Per Square Foot Average Rent Per Square Foot Source: Multifamily NW $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 $1.00 $1.05 $1.10 Portland/Vancouver Metro Average Rent Per Square Foot Average Rent Per Square Foot Source: Multifamily NW
- 27. Rapid Growth from a Low Base 0 500 1,000 1,500 2,000 2,500 3,000 Jan-90 Jan-94 Jan-98 Jan-02 Jan-06 Jan-10 Jan-14 Oregon Housing Permits (Monthly, SA 3 MMA) Total Permits Single Family
- 28. Halfway Back 0 500 1000 1500 2000 2500 Jan-72 Jan-77 Jan-82 Jan-87 Jan-92 Jan-97 Jan-02 Jan-07 Jan-12 Oregon Single Family Units Permits 1972-2006 Average
- 29. Multi-Family Construction Persists 0 200 400 600 800 1000 1200 1400 1600 1800 Jan-72 Jan-77 Jan-82 Jan-87 Jan-92 Jan-97 Jan-02 Jan-07 Jan-12 Oregon Multi-Family Units Permits 1972-2006 Average
- 30. Permit Recovery Across the State -100% -80% -60% -40% -20% 0% Columbia Jefferson Josephine Curry Klamath Crook Tillamook Yamhill Linn Polk Deschutes Marion Jackson Coos Douglas Lincoln Umatilla Lane Lake Washington Benton Clatsop Oregon Multnomah Baker Hood River Clackamas Union Harney Malheur Morrow Housing Permits Relative to 2005 2012 Depths of the Great Recession -100% -80% -60% -40% -20% 0% Klamath Josephine Tillamook Columbia Harney Yamhill Deschutes Douglas Washington Baker Umatilla Union Oregon Multnomah Clackamas Malheur Housing Permits Relative to 2005 2013 Depths of the Great Recession
- 31. We Are Now Under-Building! 0 500 1,000 1,500 2,000 2,500 Jan-93 Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14 Oregon Single Family Housing Permits, SA 3MMA May '10 - Jan '14 Moved Bubble Building Bubble Building Single Family
- 32. 32 For More Information Standard Contact: 155 Cottage Street NE Salem, OR 97301 (503) 378-3405 oea.info@state.or.us www.oregon.gov/das/oea Social Media: oregoneconomicanalysis.wordpress.com @OR_EconAnalysis