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Out of house and home

The inventory of houses for sale in Jackson County declines monthly and the rental market is tighter than ever.

U.S. Census Bureau figures show the county's population crested 200,000 during 2008 as the country entered the Great Recession. Even through the dark days and a slow economic recovery, more people moved here. Interim estimates now have the county closing in on 215,000.

Yet, there is no building boom.

Building permit figures are up modestly from the worst years, but nowhere near pre-real-estate-bubble numbers.

Meanwhile, the median price for existing home sales has surpassed its previous high in some parts of the county. New construction cost per square foot is escalating, and rising rents reflect market demand. For many builders, bare land comes at a premium price if lots are available at all.

While the call for affordable housing has grabbed headlines for years, mere housing availability is a growing issue in Southern Oregon.

"I don't know if there is a magic bullet to resolve this issue," says Tim D'Alessandro, a member of the Medford Planning Commission who will join the City Council next month. "We need to stop simply looking at affordable housing and look at available housing. When it comes to rental housing, there is less than 2 percent vacancy. Our housing is just not adequate to keep up with the demand, not even close. When you have two-income couples that have the resources to rent a place, but can't find it because it just doesn't exist, that's something we have to deal with."

There won't be a quick fix, perhaps not even a short-term solution. What it will take is a concerted effort by municipal planners, builders, developers and even bankers, industry experts say.

"I think things are coming around in terms of economics that are going to encourage more building," D'Alessandro says. "But there needs to be a balance of higher density where appropriate and less in other areas. We've always moved in some visionary direction to determine what we want the city to look like. We're going to be doing that soon. Until that's done, I don't know if there will be a marked difference."

The Medford City Council in August approved an urban growth boundary expansion proposal providing room for both residential and business development during the next 20 years. It's due to be reviewed by the Planning Commission Jan. 26 before being approved by the county commissioners and ultimately going to the state Land Conservation and Development Commission.

"You never know how long it will take to go through the process," says Kelly Akin, Medford's interim planning director, adding environmental groups who oppose the boundary expansion or landowners who weren't included can appeal to the LCDC.

State approval, however, won't necessarily get the building ball rolling faster. That means tight new construction, resale and rental markets for the foreseeable future.

Southern Oregon Multiple Listing Service reported the median sales price for existing houses at $250,000 over the past three months. San Francisco-based real estate analytics site Trulia noted the price at $156 per square foot for existing homes. New construction is closer to $200. Trulia pegged the median monthly rent in Medford for a family-sized home at $1,475, $1,800 in Ashland, $1,375 in Central Point and $1,795 in Eagle Point.

The peak inventory for homes in the SOMLS system was 3,061 in August 2007. There were 792 listings on Nov. 30.

"It fluctuates from month to month, but it's been in general decline," says Loran Hughes, who crunches the numbers monthly for the Rogue Valley Association of Realtors and SOMLS.

"I have conversations with first-time homebuyers that have lived their whole life here," says Colin Mullane, spokesman for the Rogue Valley Association of Realtors. "They know the market is tight, but they don't know yet what that means."

Tenants pursuing home ownership so they can avoid rent increases quickly discover it's not an easy transition.

"They see home ownership as the only way to get consistent rates over a period of time," Mullane said. "I tell them not to give notice quite yet, because it may take some time to find a place."

Builders ask real estate agents to keep an eye out for viable building land within urban growth boundaries.

"But not every owner is willing to sell," he says. "If you're buying a lot where you could build four houses, they do the math. Instead of selling the lot for $500,000, they want $1.5 million and anything remotely affordable goes out the window."

Housing and Urban Development figures indicate building permits were issued for 444 single-family homes and 156 multifamily units through October this year in Jackson County. For all of 2015, there were a total of 496 single-family and 108 multifamily units. In 2005, 1,707 single-family and 329 multifamily unit permits were issued.

"Permits aren't at levels they were in the early 2000s, and don't know if they should be," says Randy Jones, president of both Oregon Home Builders Association and Mahar Homes. "Our industry is market-driven. When the market accelerated like it did in the early 2000s, it overheated and there was runaway inflation. That isn't good, and we hope those days don't come back."

Jones points out that hundreds of acres included in the UGB approved in 1993 remain undeveloped.

"Some of the property owners were never interested in developing or annexing," he says. "Others haven't done anything because the infrastructure isn't there. If sewers and water aren't available or are so expensive that other lands have to be developed first, it delays things. I think the UGB expansion that the city adopted will solve some of our problems and make connections for lands that have been too expensive to develop. Now it will be less expensive to develop."

Even if development can be done more efficiently, labor shortages and the resulting costs, as well as rising prices for materials and supplies, remain obstacles for an industry that hasn't fully recovered from the recession.

"We don't have the labor pool we once did," Jones says. "That in itself makes it difficult to keep up with demand.

"That's a concern going forward. We pay good living wages to our workers, and we hope our education system and community colleges can bring it back."

Builders and developers are wary of overextending and losing land to banks as many did a decade ago.

"Some developers had put 25 percent cash down on the land," Jones says. "But the banking rules changed and the land had to be reappraised each year. As the values fell, they had to keep coming up with more cash to keep their position, and some developers couldn't keep doing that and lost their property. It was a horrible way to go."

Central Point was a construction hot spot a dozen years ago before the recession hit. Central Point Development Director Tom Humphrey says the city enhanced its ability to absorb a growing population when Twin Creeks was changed from a 200-acre project with 500 homes and a 10-acre park to 1,600 houses with 50 acres of open space by increasing density with apartments, row houses, and single-family residences on smaller lots.

"We tripled the number of units and quadrupled the open space," Humphrey says. "If it's well managed, you get a better product and a better return on efficient land use."

While cities have to count vacant development land within urban growth boundaries, they can't force owners to develop their land, Humphrey says. Central Point is subtly changing its approach to encourage annexation of land within its UGB.

"One of the things we're examining is how ready and willing are landowners to annex property once they're in the urban growth boundary," Humphrey says. "But there is still a lot of property within the UGB that the owner is not screaming to annex. It's not necessarily tied up by developers, but the property owners don't want to develop the land. We have to work around that as effectively as possible."

The housing availability problem isn't exclusive to the Rogue Valley or Oregon.

"It's even worse in Seattle and the Bay Area," Mullane says. "I talk to people leaving those markets and it's actually not quite as bad here."

With many metropolitan areas large and small grappling with enough housing for their growing populations, there is no impending solution.

The state has mandated increasing density requirements to encourage infill of urban areas. But Brad Bennington, executive officer for the Southern Oregon Builders Association, argues the concept of density in a large metropolitan city is different than in the Rogue Valley.

"When Portland declared its housing emergency and that it wasn't going to expand its UGB, it translated into rack 'em, pack 'em and stack 'em," Bennington says. "The lifestyle is different here, plus the majority of people moving here are retirees. When people move here from California to escape dense urban living only to be living right back in dense urban living, they don't want to do it. Right now it doesn't make sense to convert old industrial buildings into housing like the Pearl District in Portland. But in time, it will happen as the natural progression of economic forces make it happen."

Akin says Medford has taken steps to reduce obstacles for multifamily housing in commercial zones, such as removing the cap of 30 units in developments and replacing it with a 20-unit minimum. That has spurred the proposed 108-unit Almond Street Apartments, approved by the city Site Plan and Architectural Commission. But Akin says Oregon Department of Transportation has right-of-way questions because of the project's proximity to the Interstate 5 viaduct.

"We're trying to lift as many of the roadblocks as we can," she says.

At present, Akin says there are roughly a half-dozen multifamily projects with about 150 units with permits in the city. A variety of single-family subdivisions are active as well. Hayden Homes nearly has completed its Berkeley Hills project off Spring Street. The Redmond-based company has been working on an 11-acre first phase of Delta Estates near Springbrook Drive and has received approval to build Phases 2-5, covering another 33 acres.

Still, with the county welcoming another 2,000 or more additional residents annually, the market remains tight.

"Even if we process things as quickly as we can, if land is not available or there isn't a willing seller, it will remain the same," Akin says.

Bennington suggests Oregon's rapid population growth and the legalization of recreational marijuana have implications for its southern gateway.

"Marijuana is having a tremendous impact on our industry," he says. "The marijuana industry has such a great need for construction services that it is absorbing much of the capacity we have for traditional construction, be it structures and fencing, pouring concrete or putting in roads — all those things we normally do. And they are paying in cash."

Reach reporter Greg Stiles at 541-776-4463 or business@mailtribune.com. Follow him on Twitter at www.twitter.com/GregMTBusiness, on Facebook at www.facebook.com/greg.stiles.31. 

Housing Shortage in Jackson County by Mail Tribune on Scribd

Hayden Homes has been working on an 11-acre first phase of Delta Estates near Springbrook Drive and has received approval to build Phases 2-5, covering another 33 acres. The project is one of just a few in the works to help ease a housing shortage. Mail Tribune / Jamie Lusch