Once a year the Governor’s Council of Economic Advisors gets out of Salem for our meetings and heads somewhere in our beautiful state. In recent years this has included Ashland/Medford, Astoria, Hood River, McMinnville, and Pendleton. We usually meet with local businesses and officials and also tour a business. This year (today) the group returns to Bend. A place the group last visited at the depths of the Great Recession in 2009. I’m still out on leave and unable to attend (diapers call) but pulled together a graphical update for the meetings in terms of Bend, and Central Oregon more broadly.
The bigger the housing bubble, the harder the fall. Bend was not only the largest in the state, but among the very worst in the entire country. Bend’s job losses were much more severe than even the typical housing bust metro (the 50 worst boom/busts in the country.) However, Bend is now on the upswing and making up lost ground. The metro (Deschutes County) is now back to the same number of jobs it had prior to the Great Recession (I would ignore the past few months of unrevised data.)
Expansions in Bend are awesome. I mean that literally. 6-8 percent job growth is the typical rate (!) seen during economic expansions, significantly outpacing the state overall, which significantly outpaces the nation. With growth now nearly 7 percent, Bend, like the state, is at full-throttle.
Along with the job gains have come home price gains. Again. Our naive compression line is a rough approximation of Oregon’s property tax system in which assessed values can only increase 3% per year (with exceptions of course.) It helps put the boom and bust in some perspective to see the 3% trend.
But is this time another price bubble? So far the answer is probably no. Strong price growth is based on basic supply and demand. Population growth has returned (net migration in particular) but new home construction remains subdued. Vacancy rates for both rental and owner-occupied housing are very low. The result is rising prices. Expect home building to continue to pick up in the next year or three, provided the expansion continues. Otherwise affordability will become a major problem.
One interesting aspect in the Bend data is the outsized presence of self-employed workers. To a certain degree it may reflect the fact that in a tougher labor market (higher unemployment, more potential workers, etc) workers set out on their own to try and make ends meet. However, it also reflects the mobile workers who can, pretty much, work from anywhere, so they choose an attractive and appealing location like Bend. These trends are found in different measures of self-employed workers (proprietors employment, nonemployer businesses, etc.) While such upticks are seen nearly everywhere they are much stronger in Bend than in the nation overall and significantly stronger than statewide figures.
Finally, Bend and Central Oregon is a great place to relax and grab a pint. Very similar to statewide trends, local beer production is dominated by an older, pioneering brewery that continues to do quite well. However the growth in beer production is due to newer, start-up breweries. [Don’t worry, I’m still working on the Oregon start-up brewery report.] In this case, Deschutes Brewery — one of the biggest craft brewers in the country — accounts for over half of the beer brewed in Central Oregon and consumed by Oregonians, per OLCC data. Even as Deschutes’ production for Oregonians is relatively flat, as seen below, they continue to grow strongly overall will increasing sales and distribution in other states. They continue to be a brewing pioneer in this respect, and are turning beer into a traded sector industry. Some of today’s newer breweries will follow in their footsteps in the years to come.