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Housing prices will attract outsiders

Forget the smoke, forget the elbow room, and take a look at housing prices.

At least in the eyes of one economist, who is a member of the California Treasurer’s economic advisory council and who appears on CNN, Southern Oregon and the upper reaches of Northern California are among the last bastions of affordable housing on the West Coast.

“You look across the West and how overpriced things are, and people are looking for a West Coast experience that they can still afford,” Christopher Thornberg said. “And this is it.”

Thornberg, director of the University of California-Riverside School of Business Center for Economic Forecast and Development, addressed a Chamber Forum audience at Rogue Valley Country Club Monday, saying there will be more people discovering the region.

“True Northern California — not the Bay Area — and Southern Oregon is the last hump, and people realize this,” Thornberg said. “I met someone from California this morning, and they’re moving up from the Bay Area.”

If for no other reasons, the astronomical cost of housing in the Bay Area and Seattle makes places like Jackson County attractive.

The median price — half selling for more and half for less — in San Jose is $1.4 million.

“Do you know what a median priced house in San Jose looks like?” Thornberg queried his audience. “It’s a three-bedroom, one-and-a-half-bath, slab ranch sitting on about a 5,000-square-foot lot. It’s not a happy place right now; that’s what happens when you don’t build.

“The wrong way of dealing with it is to try constrain housing, start worrying about traffic, to stop that supply from coming online,” the economist said. “That will truly create affordability problems, as we’re seeing in other parts of the West Coast. This is not a question of affordability. It’s a question of supply.”

While people struggling economically should be considered individually, rent controls and curtailing new housing starts isn’t the answer, he argued.

“Overall, the market needs to be encouraged,” he said. “You need more private construction, more builders building for this next generation.”

As bad as the Great Recession was in Southern Oregon, there were places that had harder hits: Reno, San Luis Obispo, California, and parts of the Portland area among them, he said.

“You had tons of people borrowing all sorts of crazy money to buy all sorts of new homes they couldn’t possibly afford,” the economist said. “You didn’t see the huge rush of people moving into the area to bid into the housing market; your area grew slower than the rest of the nation.”

The data present the current housing market cycle in a different light, Thornberg said.

“This time around, the area is growing and it’s growing on par with the state, growing on par with the West Coast, and growing much faster than the U.S. overall,” he said.

Oregon’s population and workforce are growing faster than much of the country, he noted.

“Unlike the rest of the United States, the West Coast, Oregon in particular, has been able to grow at an above-normal pace because people are moving here,” Thornberg said.

Oregon ranks No. 4 in population growth with a 1.08 percent growth rate — behind Florida, Nevada and Colorado. That’s reflected in an expanding labor force, according to Thornberg.

“People are moving out of the Midwest, they’re moving out of the Northeast, and they’re moving to places they want to be — for climate, for lifestyle, for activities, whatever the case,” he said. “People are moving out of California because of the cost of living and the inability to get any kind of affordable housing.”

Per-capita income is also moving up, compared to other states, in part because Oregon is attracting higher-skilled, better-educated newcomers.

“All sorts of folks are moving here for the economic opportunities, and the wonderful living environment you provide people,” Thornberg said. “Oregon remains the most affordable place on the West Coast right now.”

He said the fallout from wildfires and the accompanying smoke can be overplayed.

“Fires are a tragedy, and they are very scary and can be problematic in the short term,” Thornberg said. “These don’t tend to create long-term problems.”

He said the 20,000 residential housing units started in Oregon annually squares with the workforce, unlike California, where residential building is one-half the pace necessary to support job growth.

“The issue you have with housing is that people want to move here faster than you want to build housing,” Thornberg said.

Income growth in Southern Oregon is growing faster than the state and nation as a whole, he said. Based on education levels, the region has better wage gains compared with similar attainment in the state and nation.

Thornberg said affordable housing isn’t as big of a problem as available housing.

“Home prices are going up, but before you start thinking this is an affordability problem, you’ve got to take a step back and think about incomes,” the economist said. “We just got some new data for 2017, and it shows that renters’ incomes are rising — on average — faster than rents. As a result, the share of rent-constrained renters is actually falling in the Medford region. Overall, Oregon has been remarkably good at building housing. Across the region, you’re building new homes on the basis of overall labor force growth, and in ratios that make sense. That’s one of the reasons Oregon is still one of the most affordable places on the West Coast.”

Reach reporter Greg Stiles at 541-776-4463 or gstiles@rosebudmedia.com. Follow him on Twitter at @GregMTBusiness or www.facebook.com/greg.stiles.31.

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