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SILVERTONAPPEAL.COM | WEDNESDAY, FEBRUARY 17, 2021 | 3A Housing Continued from Page 1A The real estate agent at Tu Casa Real Estate had braced for a downturn when the pandemic hit, but people kept buy- ing homes. "At the end of the day, people were ready to buy," Trejo said. "They want to see homes. They want to make offers." Chris Glynn, a senior economist with Zillow, said Salem is seeing the same trends as the rest of the country. "One of those trends in 2020 was just extreme demand," Glynn said. "There was a demand for housing that was quite extraordinary." Glynn attributed this demand to sev- eral factors. Millennials and Generation Z buyers are starting families and aging into peak ownership, and are among the largest generations in history. And historically low interest rates are allowing buyers to keep their monthly payments low, he added. According to a realtor.com survey, Salem is the most affordable Oregon market — with a square foot price of $209 in November, far below Portland's $291. In Salem, even with prices rising, it's not difficult to find a house with a mort- gage that's cheaper than the also-rising rents. Zillow listed a three-bedroom house for sale in southeast Salem with an esti- mated monthly payment of $1,243. A three-bedroom apartment in the same area listed rent at $1,690. The COVID-19 pandemic also last year motivated some to move toward homeownership. While some people are out of work, others are working from home, children are distance learning and access to recreation is limited. "Some households are reevaluating their housing needs in light of COVID-19 with perhaps additional space needed for outdoor space or work-from-home space," Glynn said. "All of these factors have combined to create really extraor- dinary demand for housing in 2020, and we expect that to continue into 2021." Working from home during the pan- demic allowed Thomas Bryan to recon- sider where he wanted to live. He put his Newberg townhouse up for sale and began looking for a house in more affordable Keizer, near his family and with a bigger yard for his dog. "In Newberg/Sherwood, it's about $550,000 for a 2,000 square foot home. It's more than a $100,000 difference in a 30-minute span," he said. But the competition to actually get one of the houses has gotten more fierce, he said. He estimates that he's looked at 20 houses and put in offers on two. "Houses go very fast and for quite a bit over asking (price)," Bryan said. Glynn said he wasn't sure whether this could be attributed to the pandemic or technology enabling buyers to find homes quickly even when they live in another city or state. "The number of homes for sale in Sa- lem is 27.5% lower than it was last year," he said. There are also fewer new homes be- ing built. Estimates are that Oregon is building about half of the housing that it needs to keep up with the current de- mand, and the future demand is project- ed to rise. “Oregon has among the worst hous- ing stock shortages in the nation,” Ore- gon REALTORS CEO Jenny Pakula said. “We need to build about 600,000 hous- ing units to meet the state’s projected need through 2040.” Much of the lack of new development can be traced back to the recession, when home building cratered. There were more than 30,000 new housing starts in the state in 2007, but that plummeted to under 10,000 by 2010, according to the Oregon Office of Economic Development. “The whole country was deficient in housing because of the recession,” said Roger Kaye, president of Friends of Mar- ion County, a land use conservation group. “That’s why it’s going to come back strong.” The state still hasn’t recovered, pro- ducing about 20,000 new homes a year. Marion County issued 338 permits for single-family and duplex homes in 2020, up from 284 in 2016 — but not enough to keep pace with the rising population and buyer interest. Housing inequalities Long-hailed as a signifier of success and stability, homeownership can feel out of reach for many in underrepre- sented communities and those strug- gling with student loan debt and low wages. "We believe that homeownership is the single greatest way that Americans build wealth," said Saxe. Since the mid-1990s, the organiza- tion has built and sold 155 homes for low- to moderate-income buyers. Their recent projects include homes in Cot- tage Grove and Florence, and they are scouting locations in the Salem area. After reaching a 20-year low in 2015 following the Great Recession, home- ownership rates in the United States have been steadily climbing for the past five years, according to the U.S. Census Bureau. The latest data finds that 65.8% of households own their home. Obed Molina shows a newly built townhouse to the Sandoval family, located on Lancaster Drive Northeast on Feb. 5 in Salem, Oregon. PHOTOS BY ABIGAIL DOLLINS / STATESMAN JOURNAL Obed Molina shows a newly built townhouse located on Lancaster Drive Northeast. But that rate can vary starkly de- pending on race. In Oregon, homeownership rates for white residents were at 65%, according to the Oregon Housing and Community Services. At the other end of the range, 26% of Pacific Islanders, 35% of Black residents and 43% of Hispanic resi- dents own their own homes. In Salem, most of the census tracts with the highest homeownership rates — ranging from 87% to 78% — also tend to have smaller Hispanic and Black pop- ulations. The tracts with the three lowest homeownership rates are more diverse, with 50% or fewer white residents. There, about a quarter of the house- holds own their own homes. Historical inequities and structural racism have limited first-time home- buying opportunities for BIPOC and marginalized communities, Saxe said. Historic practices like redlining to re- strict which neighborhoods people of color could live in and current issues like lower wages, less access to credit and struggles to save for a down payment have been barriers to homeownership and can contribute to generational pov- erty. Saxe said lower homeownership rates can impact family stability, stu- dent success and long-term savings. "When you look at the data about the racial wealth gap, homeownership is typically the biggest driver of the gap between the wealth accumulation of white families versus families of color," she said. Saxe said DevNW works to help peo- ple overcome financial hurdles to save for and buy a house. The organization can provide up to $15,000 down payment assistance for those who take financial education and homebuying courses. The non-profit also contributes a five-to-one match in Individual Development Accounts for saving for down payments and school- ing. Saxe said the demand exceeds their supply of funds and not all who apply can access the financial assistance. But there are also other assistance programs. Oregon Housing and Community Services has prioritized helping low- and middle-income Oregonians, espe- cially those in communities of color, achieve homeownership. The agency helps people save for down payments and works with region- al organizations for down payment as- sistance. Nicole Stingh, interim director of public affairs for OHCS, said the agency is requesting an additional $10 million for further downpayment assistance from the governor's proposed budget to "help close the gap." Factors behind rising prices Justin Wood, a contractor and presi- dent of the Oregon Home Builder’s As- sociation, said that when he started building houses 20 years ago, they were selling for about $120,000. That same house now sells for over $400,000. “We’re not making any more margin than we were back then,” Wood said. Developable land has become scarce and expensive, employment levels in the sector have plateaued, fees to build have increased and the cost of materials has shot up, especially since the pan- demic started. These rising costs are being passed on to buyers. A year ago, new homes in the Craw- ford Crossing subdivision in the north end of Turner were being listed for about $325,000. Homes there are now listed at $425,000, and there are few of the 205 lots in the subdivision left to be developed. The city’s elected leaders recognized two years ago that it was running out of developable land. Turner started the process of expanding its urban growth boundary. Turner city administrator David Sawyer estimated that process will cost the city at least $80,000, and another $40,000 in staff support and resources. “And that’s just to bring 49 acres into a small city that will then allow the con- struction of 250 units,” Sawyer said. Expanding an urban growth bound- ary is a complicated process. Sawyer estimates if everything goes smoothly, ground could be broken on the next subdivision in September 2023, but there are many steps that could slow the process. Oregon has some of the most restric- tive land-use laws in the nation. Some say adding more developable land to cit- ies is going to be the key to assuring home builders keep up with demand and housing prices remain affordable. “If somebody added 100,000 acres to Salem, all of a sudden, land would be- come cheaper because there is a lot more of it,” Wood said. But such a decision is complicated, and requires consideration of efforts to preserve farm and forest land, as well as assuring that land already within the current boundaries is being used effec- tively. Once developers secure land, there are also rising hurdles to completing construction. Though the sector has recovered to recession job levels and the industry was allowed to continue working during the pandemic, it still lags behind in the number of employees needed to meet the current need, according to those in the industry. Just before the recession in 2008, Oregon employment in the construction sector was about 104,000. When the housing market crashed, the sector dropped to about 70,000 over the fol- lowing four years. It had risen to 109,700 by December 2019, and then fell this December during the pandemic to 104,700, according to the Oregon Employment Department. “I can tell you the amount of people in the trades is woefully under where it should be,” Wood said. “A lot of them want to get out of the business because they’re 50 years old.” “I hate to say it’s a generational thing, but we find a lot of kids don’t want to do labor work with their hands.” The shadow of the Recession Gonzalez, the real estate broker, said it feels like the market is still living in the shadow of the Great Recession. "For many years, there just wasn't a lot built. Even new home construction is still half of what it used to be," he said. "And now financing is coming back after being very difficult — almost impossible — from 2009 to 2012." But during those years, people were still getting married, having children and wanting to move from renting into buying — creating pent-up demand. Gonzalez said now, with better fi- nancing options, many of those who waited are jumping into the market. And even in such a competitive mar- ket, there are still ways for home buyers to get their foot in the door. Gonzalez and Trejo said they both encourage buyers, especially first-time homebuyers, to write a personal letter along with their offer to the seller talking about themselves and why they love the neighborhood and the home. When competing against big down payments and cash offers, emotion can still win out. "The biggest opportunity is on the emotional side where you share with the seller, that you're gonna live in this home ... and you're gonna take care of it and raise your kid there," he said. "Sell- ers really think about who is buying." For questions, comments and news tips, email reporter Whitney Wood- worth at wmwoodworth@ statesmanjournal.com, call 503-910- 6616 or follow on Twitter @wmwoodworth. Bill Poehler covers Marion County for the Statesman Journal. 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