Trends to watch in Dayton’s economy in 2022
Q: As for home sales in the Dayton area, they broke records and helped drive up rental rates in the Dayton area last year. What will be the trend in 2022? And is there a danger of overpricing housing in our area?
Kunal Patel: The market is going to be strong in 2022. What we saw in 21, we will have some changes. With the lack of inventory, which we all hear about all the time – low supply, high demand – this drives up prices for rentals and sales of homes for sale, but we also take into account that the cost of living ends up being as low as we are. There is less rental inventory on the market than there are homes for sale. But the two go up together. So the country as a whole is currently behind by about 5-6 million units, and that includes senior residences, renters, and owner-occupied homes. We’re just underbuilt. Rental rates increase more in percentage terms than housing prices. Going back to 2008 (the Great Recession and the housing crash): builders have just exited the market and we haven’t caught up on construction like we’ve been doing for the last 10-12 years. We therefore simply do not cover this request.
The other two things I would try to address that affect the price of our housing are our interest rates. Our interest rates today are very low, historically speaking, so you can get into a 2,000 square foot home much easier than in years past, when full affordability is what makes Dayton so strong. We have many of our clients and friends who were in New York, and now they can telecommute thanks to COVID. Knowing that you can eat in town, and that it’s $20 where you usually pay $70 in New York. I have clients from New York or DC who come where they are used to a 200 square foot apartment and you get a 2000 square foot house for the same price. But affordability is going to go down if we just can’t maintain that supply and that demand.
The second part – there is more liquidity in the market than ever before. This means that consumers today have more money in the stock market, cash and savings than ever before. We are seeing cash transactions at the real estate level, one out of three transactions is a cash transaction. It used to be one in five to one in seven. So just in the last three years we’ve seen a big change.
In my opinion, affordability is not a major issue right now. We’ve been below percentages in the past, so affordability was great four or five years ago; it’s good now. Which means it’s gone down a bit, but it’s better than years past.
Q: What’s kind of the big picture of what will boost the region’s ability to prosper economically this year?
Oluwaropo A. (Abbey) Omodunbi: There was a very strong recovery. The labor market has therefore improved and many economic indicators are moving in the right direction. But the Dayton area still lags behind the national economy. Thus, employment is about 4% lower than the pre-crisis level in Dayton. Compare that with the United States, where it is about 2% below the pre-crisis level. So there is still a long way to go.
I expect there will be improvements in labor markets and from 2022. There are a few industries that I think will drive job growth.
So first production. Manufacturing has had a tough year in 2021 due to supply chain disruptions, semiconductor shortages, and more. I expect to see improvements in these areas this year.
In addition to education and health services, this sector will also stimulate employment growth. Dayton’s economy is relatively more stable than many other economies due to industrial diversity. So you have Wright-Patterson Air Force Base, education and health services are also a big industry there. The economy has therefore performed better and been less volatile than other economies in the past. But in 2022, I expect manufacturing, education and health services, and the public sector to contribute to job growth and the innovation economy.
Richard Stock: There are two sides to the region at this point when it comes to the flourishing situation. You think of the rental markets and the pressure on rental rates, they’re very concerned about eviction rates going up, they’ve never really gone away in the last couple of years. And this is having a significant impact on many low-income families whose wage rates are not rising at the same rate as rental rates. And they were already under pressure. So I think there’s kind of two economies for Dayton – one that’s going to do very well at the top end and another group of people who are going to really, really suffer because some of the industries where these people work, leisure and hospitality in particular will lag behind.
Q: The region has been very successful in attracting logistics companies, many of which use much of the low-skilled labor pool. Meanwhile, established local businesses are struggling to attract applicants for jobs that offer competitive wages and benefits and the opportunity for people to get job training that can lead to better pay in the future. What more can be done to help existing businesses that need skilled labor and attract more businesses like these?
Julie Sullivan: When it comes to economic development, our role is to support, not only to attract businesses to come to the region and to continue to enrich our economic base, but also to ensure that the existing industry that we have here, which is often locally sourced and who have been with us for a very long time, to ensure that they continue to be successful. So it’s both. Our goal is to add a variety of jobs to the area and across all sectors to create opportunities for all of our residents. We want these jobs to be diverse in both industry and pay, from entry level to highly skilled career professionals. We have worked hard on this diversification since the Great Recession. We have found that by losing large established entities like NCR, GM, Delphi, etc., we never want to be in that position of being dependent on a few large employers again.
(Another part of this question) is really about how can employers compete when labor markets are tight like the position we find ourselves in now? We often hear companies say that the ability to have multiple candidates applying for an opportunity is really not the environment we find ourselves in. Businesses need to work hard to not only attract that talent and leverage the resources available in the region to do that work, but also think and be aware of how do you retain that talent? This means being aware of what your salary looks like, but it also means awareness to educate potential candidates about jobs within their organization and what that career path may look like. There are organizations working on it every day. One in particular I might highlight is the Dayton Area Manufacturers Association. They do a very good job of reaching out to middle school and high school students to help them understand the industry and the great programs that are available at our vocational technical schools, many public schools have programs at this point, and our community colleges have programs available to train them. So I just encourage businesses, be sure to contact Resource Partners, Sinclair Community College, Clark State College, Job Center, your regional manufacturers association, or any other association that may represent your industry. These are all organizations that are available and want to help you continue to grow in the region and ensure you can find the talent you need.
Q: There has been a lot of research on the uneven nature of economic recovery for people of color in particular, and what are some potential approaches or interventions that would help address this inequality?
Whitney Barley: When you look at communities of color, traditionally those communities have already been disadvantaged. And because of the coronavirus and the things that we’re seeing now, I think we’re seeing the result of things that have continued. So occupational segregation, economic exploitation, employment discrimination – these are all things that I believe are key factors that put people of color at greater risk of unemployment and limit their ability weather some of these economic downturns.
Now, when I look at the solutions, these are a few things that come to mind. One of the big things where we see progress, especially with the gender pay gap, and just pay gaps in general, is pay transparency. So companies share what employees earn so people know their options. Right now, I think people have a choice. They recognize that they now have choices. They can shift and rotate, and do things a little differently. But I think it will help, in a way, let people know where they are in the process.
I have also always pleaded for entrepreneurship. I don’t think entrepreneurship is the answer to everything, but I think it can help. As a contractor, you have more control over what you can charge. You can finally understand what your worth is. This is based on a number of variables, but it gives you more flexibility and freedom to pursue your own business and really set those goals for yourself rather than letting an employer do it for you. Also using programs like Dayton’s Greater West Incubators to avoid some of these business pitfalls.
Having more access and exposure to higher paying career paths is important.
And then when it comes to economic aid, things that are a bit more targeted help. When it comes to people’s specific needs, like childcare, transportation, those are things that can ultimately affect someone’s job or their businesses.