The residential housing market has been an economic engine the past five years, spurring record home starts and sales and boosting consumer spending through increased home equity and refinance activity. The housing boom has also resulted in significant job creation across several industries related to homebuilding and sales, including construction, real estate and mortgage lending. Residential housing supports an extended number of industries, including furniture and home improvement retailers, home inspectors and appraisers, title companies and banks and credit unions, among others, and a slow down could affect employment bases across the board.
Given the role the housing sector has played in the economy’s recovery, some economists say a slower housing market will not be able to support employees who came on in recent, better times.
According to data collected by the Mortgage Bankers Association, an industry trade group, mortgage loan application volume is down 30 percent from a year ago and continues to decline.
Interest rates on 30-year fixed-rate mortgages averaged 6.66 percent in the last week of May, matching a four-year high reached two weeks ago. The same mortgage averaged 5.77 percent at this time last year, according to the MBA.
The U.S. Commerce Department said housing starts fell 7.4 percent in April, the third straight monthly drop and the lowest since November 2004.
Clark County has also shown a change in home sales activity, according to Realtors Multiple Listing Service data for April, the number of homes sold year-to-date was off 13.4 percent to 2,635 and new pending sales were down 16.6 percent to 827 homes. Active listings of 3,679 show an increase of inventory to a supply of 4.8 months, versus just 1.9 months of available inventory last year.
Though off from record numbers last year, home sales locally remain comparatively strong, which should help Clark County buck continued interest rate increases.
Scott Bailey, regional economist with the Washington Employment Security Department, said new-home construction in Clark County has had less of an impact than existing home sales and the spike in refinancing. Census data shows housing permits in Clark County at between 3,000 and 3,500 every year except one going back to 1993, said Bailey, creating less worry on the construction employment side in Clark County.
Unemployment data for the county in April showed construction payrolls added 100 jobs, but employment in this sector typically rises by 200 to 300 this time of year. The total of 12,300 is an increase of 700 from a year ago. These figures put the Clark County construction industry "on a soft landing path," said Bailey.
Jim Johnson, manager of the Vancouver branch of construction industry staffing firm Madden Industrial Craftsmen Inc, agrees there will not be a slowdown in the demand for skilled construction workers. The firm has seen demand for their services increase steadily since coming to town in 1998.
"We have a stronger need for good carpenters and laborers today than we did last year," said Johnson.
He said the strong housing starts and fewer people going into construction trades keeps demand for workers high. With Clark County considering opening up more urban growth area to development and a continued strong remodeling market, construction employment is bound to grow, said Johnson.
The Clark County Association of Realtors has doubled in the past five years to nearly 2,000 members, said Executive Director Sandy Hendrick. Statewide, the number of licensed real estate agents jumped to 42,712 at the end of April, versus 22,356 in 2001. And while the market has softened from its white-hot pace of last year, the association is still growing, said Hendrick.
"People don’t tend to board a ship that is going down," said Hendrick. "It suggests to me people see opportunity or they wouldn’t be joining."
If the market continues to slow, it’s the newer agents that would feel it most, he said.
"It takes six months to get up and going," said Hendrick. "The challenge is getting their name out there to let people know that they are in business."
It may take more aggressive tactics, such as mailings and targeting communities and knocking on doors to market themselves, said Hendrick.
Bailey notes that 100 percent commission employees such as Realtors don’t show up in unemployment data. Many may have eased into the field part time and could "melt back into what they were doing," said Bailey.
The mortgage industry has also seen a spike in workers, which saw a big boost in business from refinancing activity.
"There are many more brokers in the market," said Sheldon Harmon, president of Lighthouse Financial Group in Vancouver. "Now that the rates have started to go up, brokers are starting to drop off."
The Mortgage Bankers Association reported refinancing applications are off 37.7 percent from a year ago. The refinance share of mortgage activity has declined to 34.9 percent of total applications from 39.2 percent at the same time last year.
Brokers who have relied on refinancing and businesses that grew too quickly will be hurt most, said Harmon.
Lighthouse has grown from about 15 loan officers when it entered the market in 2002 to 100 today. Harmon said its business with investors, ability to finance Federal Housing Administration loans and discounts from a high volume of loans will allow the company to continue to grow.
Harmon said he receives several calls per day from loan processors looking for work. Processors, who compile and verify information for loan applications, are the first to go when business slows, he said.