Study shows construction workers struggle to afford a home of their own
A recent analysis has found that Oregon is the eighth least affordable state in the nation for construction workers to own a home.
The study also revealed that a construction worker needs to work 40.1 hours a week consistently to afford a home.
Researchers with Seattle-based startup Porch analyzed the median wage data from the U.S. Bureau of Labor Statistics' (BLS) Occupational Employment Survey and median home prices from the Zillow Home Value index to prepare the Oct. 20 report.
They found that Oregon's median home price was $371,628, and the approximate monthly mortgage payment was $1,318. The report states that the median hourly wage for Oregon's construction workers is $25.32, or $52,660 a year.
In mid-November, a check of Zillow found it had increased Oregon's typical home value to $379,503 when seasonally adjusted, and its index includes the middle price tier of homes. It noted that Oregon home values have increased by 6.5% over the past year, and predicts home prices will rise another 7.1% in the next year. Redfin placed Portland's median sales price at $497,000 with a 13.5% year-over-year increase.
Salary.com shows that the average construction laborer salary in Oregon is $32,500 as of Oct. 28, and the range typically falls between $28,200 and $38,600. Salary ranges can vary widely depending on the city and other factors, including education, certifications, additional skills, and the number of years spent in the profession.
On Nov. 11, Indeed.com posted Oregon's average construction wage at $17.48 an hour and $5,625 a year in overtime pay. It showed that workers with a year or less of experience earn $16.14 an hour, those with three to five years of experience earn $18.70 an hour, and those with more than 10 years of experience earn $20.62 an hour.
In comparing Oregon with the rest of the country, Porch said the national median home price is $253,527, and the approximate monthly mortgage payment is $899. That requires construction workers in other states to work 30.3 hours a week, earn $22.80 an hour, and have an annual wage of $47,430 to afford a home. These figures are based on people spending 30% of their income on a mortgage payment.
The report notes that the COVID-19 pandemic has precipitated dramatic fluctuations in the housing market. According to Freddie Mac, mortgage rates are near historic lows, and data from the U.S. Census Bureau shows that sales of new single-family homes were up 36.3% year-over-year in July after a sharp drop in the first half of 2020.
As sales have gone up and inventory lags demand, prices in some cities have risen dramatically. At the same time, in many of those places, the construction workers who are building the new supply of homes are being priced out of the market. Porch points out that construction employment is highly sensitive to macroeconomic trends.
"For example, construction spending and construction employment saw significant drops both during the height of the Great Recession from 2009 to 2011 and at the onset of the COVID-19 pandemic in 2020. Both construction spending and employment had been trending upward over the past decade, prior to the outbreak," the report states.
As of July 2020, the seasonally adjusted annual rate of national construction spending declined to $1.36 trillion from its peak of $1.44 trillion in February. In the same time frame, construction employment decreased from 7.6 million workers to 7.2 million workers across the country.
The BLS reports that Oregon had more than 108,000 construction jobs in January, fell to just under 100,000 in April, reached about 107,000 in August, and decreased to 104,700 in September, the most recent figure available.
In a report released Sept. 23, Oregon's Office of Economic Analysis states that the industry could get a boost from the economic impacts of 2,000 housing starts over the next 24 months as communities rebuild from the historic wildfires that destroyed more than 4,000 homes across the state.
"These starts support just over 2,100 additional jobs, mostly in construction, on an annualized basis," according to the report. "One consideration is the overall capacity of Oregon's construction industry. How large of a net increase in building activity the state sees, versus a reallocation of industry capacity to the impacted regions and away from the less impacted areas, remains to be seen."
The report also notes that while construction repairs of homes and other buildings damaged by the wildfires could help the industry gain jobs and have a larger economic impact, the likely potential for rising timber costs due to the loss of forestland could counter those gains.
In looking at the national picture, Porch says that even with a growing demand for construction in recent years, wages for construction workers have grown more slowly than overall wages for all occupations. According to the BLS, in 2000, the median wage for full-time construction workers was $580 per week compared to $575 a week for all full-time workers. As of January 2019, the median wage for construction workers was $866 per week compared to $917 for all workers, signaling a slowdown in construction wage growth.
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