Tyson layoffs: For housing sector, expect home sales, vacancies

Topeka Capital-Journal, The, Feb 3, 2008 by Michael Hooper

By Michael Hooper

THE CAPITAL-JOURNAL

EMPORIA - The layoff of 1,500 employees at Tyson Foods will reduce occupancy in the rental real estate market and could force the sale of homes owned by workers moving to other communities.

Emporia, located 60 miles southwest of Topeka, has 4,738 owner- occupied homes. The median sale price for homes sold last year was $100,658.

Emporia's rental market of 4,766 units serves a variety of occupants, including students at Emporia State University, Tyson Foods' employees and the general population.

Most of the Somalis who work at Tyson Foods have been living in rental units.

The Hispanic community, which has a lot of employees at Tyson Foods, has been in Emporia longer than the Somali population and many own their homes, said Eswin Rios, director of Friends in Faith Serving Emporia.

A good indicator of what might happen to Emporia, a community with a population of about 26,200, is to look at another town of similar size that suffered a comparable layoff.

Norfolk, Neb., a community of 24,000 people, saw its occupancy rate on rental housing units decline after Tyson Foods closed its beef processing operations there in 2006, eliminating 1,300 jobs. At the same time in 2006, Tyson Foods closed a slaughter operation at West Point, Neb., located 40 miles southeast of Norfolk, eliminating 365 employees.

Dan Mauk, president of the Norfolk Area Chamber of Commerce, said some landlords who leased run-down apartment buildings to Tyson workers got hurt, going from 100 percent occupancy to 95 percent vacancy overnight.

He said the overall rental market went from a 5 percent vacancy to a 15 percent vacancy.

"We're still at 15 percent vacancy," Mauk said this past week.

Joel Phipps, broker/owner ReMax Select, Realtors, said several investors from Topeka and Lawrence had purchased existing rental units in Emporia and fixed them up.

"Investors are concerned," Phipps said. "We have had a lot of out- of-town investors here from Topeka and Lawrence. I'm sure they will be cautious."

Before the layoff announcement, the housing market in Emporia was fairly stable and affordable.

"The market has been good," Phipps said. "We had a good year last year. We finished the fourth quarter strong."

The number of residential units sold through the Emporia Board of Realtors fell 3 percent in 2007 from 2006. The Emporia Board of Realtors includes homes in several small towns in the area.

A total of 469 homes were sold in 2007 at an average price of $100,658, compared with a total of 485 homes sold in 2006 at an average price of $97,444.

Phipps said his agency had already looked at several homes to advise clients.

"We know there will be some effect," he said.

But if values decline, he said, homeowners who hang onto their homes will see those values come back.

Phipps said the commercial market in Emporia is strong.

"Commercial real estate market has been good," he said.

Michael Hooper can be reached

at (785)295-1293

or michael.hooper@cjonline.com.