Friday, December 22, 2006

"High Desert jobless rate rises with tourism shift"

Central Oregon's three counties saw their unemployment rates increase more than expected from October to November and lost jobs overall last month, according to a report Thursday from the state Employment Department.

All 3 Central Oregon counties experienced unexpectedly high jumps in their unemployment rates. The Bulletin reports that most of the losses were in the "tourism, professional and business services and construction industries".

This number flies in the face of Bulletin reports that "Approximately 5,200 unfilled jobs exist in Central Oregon." From the Bulletin piece, "Survey: Central Oregon housing prices putting strain on business":

Housing prices in much of the region have climbed beyond a typical middle-income family's ability to afford them. In Crook and Deschutes counties, 92 percent of residential real estate listings are priced above what is considered affordable for households earning 120 percent of the area's median income.

The Bulletin goes on to say that lowly minimum wage types are not the only ones having troubles affording homes here. Real People with Real Jobs are too:

Bakers, gas station attendants and other low-paid workers aren't the only people who are being challenged by Central Oregon's rapidly rising housing prices this year.

Try bankers. And accountants.

At some point the extreme situation in Central Oregon housing will come home to roost. Professionals that bring high-value work to the area cannot afford homes here, much less blue collar workers. That 92% statistic is startling. If 80% of Central Oregonians workers are represented by that "120%" of median wage rate, we should expect our workforce to be gutted. Central Oregon workers will look for a place where their wages are inline with costs. Americans want to own their own home, it is an innate drive & desire and it's what makes this country great. But precious few people here can achieve it. And when people feel they cannot achieve their lifes dream somewhere, they leave.

I don't believe any one person or organization is responsible for the housing bubble. But the unfortunate truth is that Central Oregon participated to an extreme degree in the runup. And while it seemed like nothing bad could possibly come of it while it was happening, inflation in any form always kills prosperity. Businesses are closing downtown due to excessive rent increases. People with "real" jobs cannot afford to live here. New businesses have stopped coming to Bend because there is an extreme labor shortage and extremely high prices, and they cannot compete here. The lowest unemployent rate ever recorded in Deschutes County was in October, at 3.5%. The Bulletin put it bluntly:

"It's getting to the point, in other words, where housing costs are affecting business at all levels."

What will happen? A return to normalcy. That's what always happens. That's the problem though. "Normalcy" in Central Oregon is median home prices around $170,000. That's more than a 50% plunge from the current median of $352,000. Normalcy here will equate to something along the lines of a depression unlike anything this area has ever experienced, including the timber bust.

And it'll all get started with "unexpected" jumps in unemployment and the loss of jobs...

11 comments:

Anonymous said...

I agree. Once home equity starts to go away, so will spending. Once spending stops, it'll just cascade to every corner...

Anonymous said...

It's still among the lowest unemployment rates ever recorded around here

Anonymous said...

Closing knick-knack shops is tolerable... but closing Super Burrito is CRIMINAL!

Anonymous said...

I wondered where I'd heard that "92%" stat. That's unbelievable that prices could possibly get that high around here. I mean if you're making 120% of the median wage, and you can afford only 8% of the homes on the market here... something's gotta give

timmytoes said...

Something will give--prices.

Anonymous said...

Unemployment rates are lagging indicators, low means they can't get any better, STAGFLATION coming your way people, higher costs of living and lower wages . .

Anonymous said...

Love the new site, it wasn't near the bottom so why stop it, when people are hating real estate then it will be over, we are 2-5 years from anything resembling a bottom.

Anonymous said...

It's not going to crash like so many of you fervently hope and\or predict. It will level off and maybe drop a little bit before rising again. There are plenty of places in this country where people of average income can't afford homes, yet those places aren't going under economically nor do are they destined for price drops. Besides, renting homes in Bend is dirt cheap.

timmytoes said...

>>It will level off and maybe drop a little bit before rising again.

The question is, for how long? If it's for a long time, the opportunity cost and inflation make it as bad as a genuine drop.

It's not guaranteed to go down, but the risk is high, and I think that's the way to bet.

Jack Russell said...

Just seeing if my old nondeplume works here

Bend Economy Man said...

Good luck with the site Paul! Keep up the good work!