Oregon Office of Economic Analysis

Busy around here with putting together the upcoming May forecast – to be released Friday, May 16th – so not as much time for blogging lately but hopefully some more in a week or so. One item I’ve been working on but probably won’t be ready for the next forecast is a more thorough look at housing in Oregon. I’ve been trying to create a better housing affordability measure that incorporates more than just the sales price and prevailing interest rate. This will include things like property taxes, homeowners insurance premiums, repair/maintenance, etc. Also trying to do something similar for a price to rent ratio. I think these items, in addition to a broader discussion on housing, are very important to think about. Not only when it comes to making a buy vs rent decision but also in terms of migration and population growth. Oregon’s relatively lower cost of housing, when compared with our neighbors to the south, which is where the vast majority of our net in-migration comes from, is a positive factor in driving migration trends, population growth and the local economy. Oregon has been a big beneficiary in net in-migration, particularly among the younger age groups, in recent decades.

Also, more and more reports and articles have begun to throw around the word “bubble” again regarding housing and price appreciation. Just because prices are rising (even at a fast rate in, say, Phoenix) does not a bubble make. As I tried to highlight previously, one aspect of these recent gains in home values is due to very constrained supply – growing yet low levels of new construction, partially due to lot supply, and not many new listings for sale for existing homes – coupled with an increase in demand. Higher sale prices are the natural outcome to clear supply and demand in such a market. These factors alone do not mean we’re in another housing bubble. Maybe/possibly/hopefully not will we get another housing bubble, but we’re not there yet.

In thinking about the overall housing stock – and therefore potential housing supply for homes sold on the market – one aspect to examine or at least look at is the number of second homes or vacation homes. These homes obviously count in terms of the number of housing units that exist but are not full year-round and are generally considered vacant housing units by the Census Bureau. Should consumer preferences change, these homes can impact both the prices of homes sold and the need for new construction. If as the population ages, more and more people want to have multiple homes (and have the ability to afford them) then it may put upward pressure on building new homes, helping to drive the construction and broader housing-related industry. However if preferences change such that the Baby Boomers do not want multiple houses (either because they settle-in in retirement in one location, be that where they currently live or migrating to be in warmer weather or closer to family, or cannot afford multiple houses), then these changes may have a big (negative) impact on the level of new construction. So, where in Oregon do we see these types of properties? The map below uses the 2010 Census data for “seasonal, recreational, or occasional use” housing units.

Overall in Oregon, there are about 55,500 such properties, or about 3.3% of all housing units. As expected, the percentage of housing units in tourism-related, or vacation-related areas is higher than average. The Northern Coast counties (Lincoln and Tillamook in particular, however Clatsop is above average too) have both the highest absolute number of such units at just over 18,000 and as a percentage of the local housing stock at nearly 26%. This is followed by Central Oregon at nearly 11,500 units or 11.5% of all housing units in the region. The larger population areas – essentially the I-5 corridor – have the lowest of such units as a share of the base given that most units in these areas are for full-time residents who live and work in the cities. Anyway, just some food for thought on this May Day. I hope to have much more on housing later in the month or early in June.