Significant indicator of future construction
Yet Runberg sees underlying indicators that "bode well" for continued growth in the industry in Oregon. Home prices, new housing permits and employment in the wood product manufacturing industry – "a statistically significant indicator of future construction employment," he says – all are trending upward.
After reading the report, we decided to have a conversation with Runberg about the issues involved.
The Oregonian: Construction-industry employment fell a long way and hasn't recovered. Does that surprise you?
Runberg: The construction industry was extremely hard hit, but in hindsight the employment trends in the construction industry are not too surprising. During the mid-2000's there was an unprecedented demand for new homes as prices skyrocketed. I won't get into why or how the housing bubble burst, but it is important to note that builders were simply responding to the market. People demanded homes, so they were built. When the housing bubble burst, the vulnerability of the construction industry was revealed. Construction was devastated in Oregon due to the large percentage of the industry's employment dedicated to home building.
The lack of recovery is not too surprising, either. Home values are one of the leading indicators of construction employment in Oregon. Home values declined for about four and a half years in Oregon. In fact, the first substantive gains in home prices weren't seen until the 3rd quarter of 2012. Once those home values turned the corner, construction responded. Job growth was fairly stable the past couple years, although the industry lost some momentum this summer.