A decade has passed since the start of the Great Recession. And, as any good student of history will tell you, it’s useful to understand the past so we can apply lessons to our current conditions.
Now that we are looking back through the lens of time, we can see the aftershock of things that happened during the last 10 years that continue to cause lingering impacts on the building industry and housing affordability.
The 19-month long recession pulverized public and private employment levels. After peaking at 13,300 employees in May of 2007, the construction industry bottomed out at 8,000 in February 2011, for a loss of 5,300 jobs. (All data seasonally adjusted.)
And while it technically ended in June of 2009, it took many months to years beyond that for employees to feel like the event had ended. (Current projections from Washington’s Employment Security Department have us just cresting 14,000 jobs as of February.) Massive layoffs, combined with a long recovery window, resulted in prime workers leaving the industry all together.
Local governments took longer initially to feel the impacts and they are taking longer to recover. After years of laying off workers, they have struggled to reverse course now that housing is back to almost normal production levels. Both public and private sectors still aren’t fully staffed up to meet the current pace of business. And this is across all levels — planning and production. As both sides work hard to onboard new people and get them up to speed, relationships must be reformed, and trust built up from scratch.
Housing demand has blossomed once again and home prices continue to swell. This is partly due to low inventories, pent up household formations and supply not keeping up with growth. Housing policy as of late has focused on tertiary policies like ADUs and bond passage on public housing. These are good things that add to inventory, but not at the volume needed to impact pricing. In other words, they are nibbling around the edges of delivering units when thousands upon thousands of new units are needed in our region.
Volume can be achieved with this formula: adequate workforce + adequate zoned land + speed in the financial and permitting process.
There is a lingering hangover from the decade gone by in lending. Understandably so, the mavericks are gone. Banks are reticent on risk and not wanting to outgrow the market.
Housing traditionally has been bad about reacting to the market. The processes involved are complex and can’t stop on a dime. It takes time to identify parcels, navigate the planning process, secure funding and develop infrastructure – and then build the house, of course!
Our lesson looking back – and forward? Local government and industry have a social contract. We each need to do our part. Industry has to recognize the regulations that are there and comply. Regulators have a duty to move these processes along in an expedient manner (understanding the risk being born on the private side). The regulations in place need to serve the public purpose and not the machinations of special interests.
We have a community to serve. Let’s work together to get the job done.
Avaly Scarpelli is the executive director of the Building Industry Association of Clark County.