By Mike De Felice
Kitsap Press Group
PORT ORCHARD — Higher living expenses for groceries, gas pumps and housing costs are issues Kitsap County residents will face for the foreseeable future, according to business watchers.
Additionally, some types of businesses in the county will continue to face labor issues in finding and hiring qualified candidates for available jobs. These are some of the challenges the county will face, according to Joe Morrison, executive director of the Kitsap Economic Development Alliance (KEDA).
KEDA is a Silverdale-based organization that promotes economic growth and investment in Kitsap County.
Cost of life
The cost of living is on the rise in Kitsap County, Morrison said. The Cost of Living Index (COLI) compares the expenses an average person needs to acquire food, shelter, healthcare and other routine needs in different regions. The average ranking on the index is 100, which means that if a city or region ranks above 100, residents there have a higher cost of living than most Americans; if the ranking is less than 100, residents pay less for their daily expenses.
In the past, Kitsap ranked 110 on the index, Morrison pointed out. “These days, largely due to house price developments, we are higher in the index by about 10 points. We are around the 120 range,” he said. .
The main reason for the county’s increase is rising house prices and rental costs, Morrison explained.
“You may have noticed changes in some of your costs – your rental prices are going up, the amount you’re paying in mortgage [costs] could go up. It is more difficult to buy a house. You pay a higher share of your income than before to put a roof over your head,” he said.
The fact that Kitsap County is seen as an increasingly popular place to live has increased the demand for homes currently on the market. This, in turn, increases asking prices, officials say. It is no longer difficult for someone working in downtown Seattle to live in Kitsap County and enjoy the quality of life in the area.
“The distance between Kitsap and the greater Seattle area by water doesn’t matter as much as it used to. People can work from home. Maybe they don’t go to the office five days a week – maybe they go two or three days a week. If you really need to get to Seattle, you can do it by boat from points north, center or south,” Morrison said.
Kitsap County’s desirability isn’t the only factor contributing to rising local housing prices.
Skylar Olsen, Ph.D., is a Principal and Senior Economist at TOTO Networks, a digital mortgage company. The Bainbridge Island resident was the keynote speaker at KEDA’s annual meeting and economic overview last month. Over 200 business people have registered to participate in the virtual session.
Olsen told conference attendees that average mortgage rates jumped “aggressively” in the first two months of the year, from 2.65% to 4.42%.
“It hurts buyers’ ability to buy,” she said.
Interestingly, despite higher mortgage rates, home sales in Kitsap have not slowed. In February, on average, a home here was on the market just 11 days before it sold, she said. Last year at this time on average, homes sold in 29 days.
Even amid the pandemic, home values in Kitsap County’s hot market have soared, the economist added. Home values have increased 26.8% per year, Olsen pointed out. “Kitsap County remains an incredibly attractive place for people to settle,” she said.
The local economist fears that due to rising mortgage rates and house prices, these new buyers will be mostly affluent people, many of whom are transplants from other states like California.
“Who is able to access America’s quintessential middle-class asset is challenged when incomes have not risen as quickly as home values. I’m very concerned about bringing in real first-time home buyers,” she said.
KEDA Director Morrison pointed out that Kitsap County is not the only suburban area to see real estate prices soar.
“Many other communities are seeing these cost increases in the Greater Seattle Area and beyond. Small towns in the Puget Sound area and Pierce and Snohomish counties are also seeing significant increases in housing prices,” Morrison said.
There’s no way to predict how much the cost of living may change in the county, he said.
“It is too early to draw firm conclusions or predictions,” he said. “There are a lot of dynamic things going on in the economy right now that make this very difficult to predict – an unprecedented recovery and changing dynamics in international relations and the pandemic.”
Another challenge that is expected to continue to affect the region is the inability of employers to find enough candidates to fill vacancies.
“No matter what your industry is, for the most part it’s difficult to hire and retain employees right now — period,” Morrison said.
“Kitsap has a strong component of technical and skilled trades in its workforce. There is a lot of demand for these skill sets, both from private employers and from the largest public employer, the Naval Base.
“We have hands-on activities, we build things, we fix things, we fix things [economy] and the maritime industry. This is how our economy is shaped. This is what is going well and needs more employee capacity,” he said.
Since business positions are such a big part of the local economy, the county should leverage its strengths and promote those areas, Morrison said.
“I think a good practice for Kitsap is to invest heavily in its technical and skilled trades people and to ensure that we have the right pathways for people who want to enter this line of business.”
Providing educational opportunities is the way to steer more people into these expanding fields, he said.
“That can mean increasing science, technology, engineering and math courses in middle and high schools, as well as pre-vocational options that are practical and career-focused. It makes sense to invest in these areas for Kitsap’s workforce while looking to the future. »
Kitsap County’s Economic Future
Even though Kitsap County faces challenges associated with rising house prices and labor shortages, KEDA’s Morrison is optimistic about the region’s future.
While some other communities are struggling with relocating residents and shutting down local businesses, Kitsap appears to be going in the opposite direction on both counts.
“We’re positioned for great things in Puget Sound,” he said.
“We believe Kitsap’s economic future is brighter than ever. Yes, there are challenges associated with the growth we are seeing, but these are good times at Kitsap. Given the presence of our defense industry, the Navy, the popularity of Kitsap, the ability to work from home more than ever before, we believe there will be more options and economic opportunities for our community.
“We are really excited about what the future holds for us.”
Editor’s note: Terry Ward, vice president of Sound Publishing, is also a board member of the Kitsap Economic Development Alliance.