In the dynamic landscape of Oregon’s construction sector, multifamily housing starts are anticipated to witness a notable decline in 2024, contrasting with the steadfast trajectory of the remodeling market, as per forecasts by the National Association of Home Builders (NAHB).
Multifamily housing, a pivotal segment in the state’s real estate arena, is set to experience a downturn this year. According to projections by the NAHB, multifamily starts, which reached a total of 472,000 units in 2023 nationwide, are expected to plummet by 20% in 2024, totaling to 379,000 units. This trend mirrors a 14% decrease observed in the preceding year.
Danushka Nanayakkara-Skillington, the NAHB’s assistant vice president for forecasting and analysis, highlighted the factors contributing to this downturn during a recent press conference at the NAHB International Builders’ Show in Las Vegas. “Tight lending conditions and the high cost of development loans continue to hinder additional multifamily housing production,” stated Nanayakkara-Skillington. These challenges, compounded by a scarcity of skilled labor, are projected to impede growth in the multifamily sector.
The influx of new apartment units into the market is poised to mitigate rent escalation, thereby alleviating inflationary pressures. However, this surge in supply is anticipated to temporarily dampen market conditions until stabilization in 2025, with NAHB forecasting 388,000 units for the subsequent year.
Conversely, the remodeling sector in Oregon appears poised for stability amidst these fluctuations. Eric Lynch, an economist with NAHB, underscored the resilience of the remodeling market, emphasizing its fundamental support from various demand-side factors. “While we may not see growth in the remodeling market this year, it still remains on solid ground,” Lynch remarked.
Indeed, despite challenges such as labor shortages and material scarcities, remodeling activity is expected to hold steady in 2024, with a marginal 2% gain projected for 2025. Lynch highlighted the NAHB/Westlake Royal Remodeling Market Index (RMI), indicating a slight year-over-year decline but maintaining positivity with a reading of 67 for the fourth quarter of 2023.
Addressing the persistent issue of labor shortages, Lynch emphasized the necessity of concerted efforts to attract skilled workers. Initiatives led by organizations like the Home Builders Institute and local associations are deemed crucial in bridging the workforce gap in the construction industry.
Furthermore, material and product shortages have posed additional challenges for builders. Appliances, windows and doors, HVAC equipment, plumbing fixtures, and cabinets are reported as the most difficult to procure. Nonetheless, Lynch noted a modest improvement in supply compared to previous years, offering a glimmer of optimism amidst these challenges.
As Oregon navigates the intricate terrain of its construction industry, stakeholders are urged to adapt to evolving market dynamics while leveraging opportunities for sustainable growth and resilience.
