Oregon Housing Market Slips, Weakens State Economy
Impressive employment growth in Oregon outpaced much of the nation during the first half of 2006 and boosted the state economy, but now a downturn in the housing market has weakened that growth and raised concerns about a slowdown in 2007, the Statesman-Journal reports.
So far, the flatter growth rate does not appear to signal a recession, and residents are still filling out applications for home loans at a healthy clip, according to some leading Oregon economists.
“Things were slower at the end of the year, and the slowdown is expected to continue,” said Art Ayre, labor economist for the Oregon Employment Department.
The economy will be the focus of the fifth annual Oregon economic summit on Thursday, organized by business and political leaders, including Sen. Ron Wyden and Gov. Ted Kulongoski, who will give keynote speeches.
Ayre said construction topped the list of industries that showed strong job growth statewide last year. While the Oregon housing market has softened somewhat, economists noted the market remains strong in areas of Oregon, particularly the Portland metro area.
“The housing market has weakened, but it has held up here better than it has nationally, at least from a price standpoint,” said John Mitchell, Western regional economist for U.S. Bank in Portland.
Still, the cost of an Oregon mortgage has risen so fast in some areas that it has become much harder for prospective borrowers to qualify.
Tim Duy, a University of Oregon economics professor, said the softening of the housing market has been compared to an investment “bubble” similar to the high-tech bubble that burst in 2000, wiping out the stock value of entire companies and triggering the last recession.
But Duy said there are differences between the two markets and the overall employment picture.
“The impact of the real estate market will be less severe than the tech downturn, so it gives me considerable optimism that what we’re seeing is only a slowdown in the rate of growth,” he said.
There were also signals the overall job market was going to be affected when the high-tech sector dragged down the rest of the economy in 2000. Experts hope that in this case, home prices remain stable and demand for home mortgage loans in Oregon stays high, so the state’s economy continues to boom.