By Marina Starleaf Riker • The Bulletin

With Bend in the midst of housing shortage and the city working to annex more county land, there’s still a key problem in addressing Bend’s housing shortage — housing is only available if there are enough construction workers to build it.

Bend economists and builders say what happened during the Great Recession is affecting the availability of homes today. Bend’s real estate market collapsed after the December 2007 market crash, and the construction industry took a hit that it never fully recovered from.

“A lot of those construction people completely left the industry, and to date, they’re not returning,” said Steve Klingman, president of Hayden Homes, which builds homes in Washington, Oregon and Idaho. “Builders who went out of business are having a hard time getting back into business because banks won’t loan them money.”

Klingman, who has been with the company for nearly 15 years, said Central Oregon’s market took the hardest blow during the downturn.

Now, Bend is facing a severe housing shortage, and city estimates say it will need about 13,000 units to accommodate population growth up to 2028.

The housing demand is vastly outpacing the supply, with a vacancy rate hovering near 1 percent for the fourth year in a row, according to the Central Oregon Rental Owners Association 2016 Rental Survey.

In the peak before the Great Recession, more than 2,600 building permits were issued in Bend during 2005, according to city data. The number of construction jobs was at a high of more than 8,000 in Deschutes County in 2006 — making up about 12 percent of the total economy, according to state data.

But after the crash, only 132 building permits were issued in Bend during 2009, according to city data. Meanwhile, the number of construction workers shrunk by more than 60 percent to less than 3,000 workers in 2012, according to state data.

“Some of them moved out of town, some of them got out of the state,” said Tim Knopp, executive vice president of the Central Oregon Builders Association and a Republican state senator representing Bend. “I’ve heard of contractors and subcontractors becoming nurses and teachers and just going into a variety of different industries.”

The construction industry was slow to respond once the local economy started to recover, said Damon Runberg, regional economist for the Oregon Employment Department. By the time construction companies start building new units, most of the housing that was vacant during the recession had been gobbled up, said Runberg.

“They have been playing catchup ever since,” said Runberg.

Now, Bend’s housing market is on the rebound, with home prices continuing to soar and dozens of people moving to the area each month. But often, builders are forced to decline or delay jobs because their workforce can’t keep up.

The number of construction workers — more than 5,000 in 2015 — is still less than it was during Bend’s pre-recession peak, according to state data. Similarly, the number of building permits is on the rise but still nowhere near the levels before the crash, according to city data.

Builders say figuring out how to attract workers to the industry is a challenge — particularly young workers.

“They’re focusing their energy on where they can make the most money and the work is the easiest,” Klingman said.

Census data show a decreasing number of workers 19 to 24 are getting into the construction industry. Instead, workers 45 to 55 are taking their place.

“It’s a tough industry, it’s hard work,” said Knopp. “It’s pretty long hours.”

Meanwhile, there are about 25 percent fewer construction companies in Deschutes County now than there were in 2007, according to state data. Skilled laborers such as plumbers, electricians and tile installers can be hard to come by, which means developers are often competing for their contracts. This often drives up the price of labor, which inflates home prices.

“When the trades are in low supply, and they’re in high demand, then they are going to charge more,” explained Klingman. “When there’s a limited supply of housing, builders are going to charge more.”

­— Reporter: 541-633-2160,

mriker@bendbulletin.com

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