Employment Losses and Declining Homeownership in Toledo
HUD’s Comprehensive Housing Market Analyses provide information on changes in local economies, housing markets, and populations and provide 3-year forecasts for demand in the area. This article is part of a series that sheds light on the content of these analyses.
The Toledo Housing Market Area (HMA) sits on the Maumee River in Ohio and borders Michigan and Lake Erie. The Toledo HMA has an estimated population of 602,300. The HMA is coterminous with the Toledo, OH Metropolitan Statistical Area and consists of Fulton, Lucas, and Wood counties. A recent Comprehensive Housing Market Analysis on Toledo highlighted the economic and housing market activity in the area.
Employment Losses in Many Service Sectors
The number of jobs in the area has declined by 900 over the past 12 months and 1,100 over the past 24 months. Employment declines occurred in service-providing sectors with relatively little growth in the goods-producing sectors of manufacturing and mining, logging, and construction. The professional and business services sector had the largest decline in employment over the past year with a loss of 1,400 jobs, or 3.8 percent. Other sectors with large employment declines include the government sector, which lost 700 jobs, a 1.5 percent decline, and the wholesale and retail trade sector, which lost 500 jobs, a 1.1 percent decline.
Despite overall employment losses in the Toledo HMA, some sectors experienced growth. Notably, employment in the education and health services sector increased by 1,200 jobs, or 2.4 percent. The education and health services sector is the area’s largest, accounting for 52,000 jobs and nearly 17 percent of employment. It also has been the fastest-growing sector since 2000, with an average annual growth rate of 500 jobs, or 1.1 percent, from 2001 to 2016. The education and health services sector includes the area’s largest employer, ProMedica Health Systems. In May 2018, ProMedica and the University of Toledo College of Medicine and Life Sciences opened a neurosciences center on the ProMedica Toledo Hospital campus with more than 450 employees.
Despite these job losses, the Toledo HMA’s unemployment rate fell from 5.5 percent to 4.9 percent over the past year because of a reduction in the workforce. Payrolls are expected to increase modestly by an average of 100 jobs per year over the next 3 years.
Existing Home Sales Lead All Home Sales in a Balanced Housing Market
The sales housing market in the Toledo HMA is currently balanced, with an estimated vacancy rate of 1.8 percent. Existing home sales in the Toledo HMA have increased since the housing crisis but are still below prerecession levels. Over the past year, 10,100 homes were sold, which is a 1 percent increase from the previous year. Existing home sales prices rose 4 percent over the past year to $131,400. Although existing home sales have increased over the same period, new home sales have increased more slowly; the report attributes the slow new home sales to high sales prices for new homes, which are at least 50 percent higher than the sales prices for existing homes. Over the past year, 300 new homes were sold in the Toledo HMA, which is more than the annual average of 260 from 2011 to 2016. By comparison, an average of 660 new homes were sold each year from 2000 to 2006.
A Decline in Homeownership and a Balanced Rental Market
Since 2010, the homeownership rate in the area has declined by 3.9 percent to 61.1 percent as rental units have gained popularity. Rental households account for 38.9 percent of all households in the Toledo HMA, an increase of 35 percent over the previous year. The rental housing market is currently balanced, with an estimated vacancy rate of 7 percent. Approximately 40 percent of area renters live in single-family homes. The average market rent for a three-bedroom single-family home was $883 over the past year. Conditions in the apartment market are currently tight, with a vacancy rate of 2.5 percent and an average monthly rent of $671.
Demand is estimated for 2,275 new homes over the next 3 years; the 270 under construction will satisfy some of this demand. For rental units, demand is estimated for 870 new market-rate rental units, and the 390 units under construction and 420 units in planning will satisfy a large portion of this demand.