Residential construction activity is forecast to slow significantly during the next five years, according to the latest forecast for the Eastern Panhandle region, issued Tuesday (Oct. 24) by the West Virginia University Bureau of Business and Economic Research.
The Eastern Panhandle Region includes Berkeley, Jefferson and Morgan counties in West Virginia. The forecast was presented today at the Eastern Panhandle Region Economic Outlook conference at the Martinsburg Holiday Inn.
The value of residential construction contracts in the region has risen by nearly 500 percent during the 2001 to 2005 period, while single-family house prices have also skyrocketed in both the Hagerstown-Martinsburg and Washington MSAs [Metropolitan Statistical Areas], roughly doubling from 2001 to 2005,said George W. Hammond, research associate professor in the College of Business and Economics.
These strong increases are unlikely to be sustained during the next five years, as the forecast calls for 30-year fixed mortgage rates to rise nationally from 5.86 percent in 2005 to 7.2 percent by 2009.
Strong construction activity has been connected to strong job and population growth in the region, which remains one of the fastest growing in the state.In 2005, the region added 1,250 jobs, 6,027 new residents and drove its unemployment rate down from 3.8 percent in 2004 to 3.5 percent,Hammond said.
The majority of new jobs generated in the region last year were in the service-providing sectors, primarily trade, transportation and utilities; education and health care; government; and financial activities. The goods-producing sectors also contributed to job gains last year with construction dominating job growth. Jobs in manufacturing, as well as natural resources and mining, were up modestly in 2005.
The outlook for the Eastern Panhandle Region calls for continued strong economic growth with job and population gains well in excess of state and national rates. Job growth is expected to bounce back from weak performance in 2006 to average 1.6 percent per year. That would far exceed job-growth rates expected for the state (0.8 percent per year) and the nation (1.3 percent per year). Population gains are expected to remain strong compared to the state and the nation with the region forecast to add 3,000 to 4,000 residents per year. Inflation-adjusted income growth will continue but at rates similar to the state and below the national average, Hammond predicts.
Details of the forecast are presented in the Eastern Panhandle Region Outlook: 2006-2010, available free online atwww.bber.wvu.edu.