State of the Market: Job Growth's Influence on Housing
Sep 10, 2023
What’s one thing we know is a driver of home purchases?
Job growth. πΌπΆ
A rising number of employed people generally leads to future growth in real estate demand and prices.
This makes mapping out areas of rising employment and job growth a very valuable exercise for predicting the future of real estate.
That said, let's do some predictin’! π€
A State by State View on Job Growth
First, let’s start out with a 10,000 foot view of the country and which states have experienced significant job growth.
This is the government’s estimate on the number of jobs (not people) that are new. This includes people taking on 2nd jobs (which is happening).
There’s two ways you can look at changing numbers: 1) % change and 2) # change.
This is a good example of how the biggest % gain is in Nevada, but Florida, Texas, and California gained over 5 times the number of jobs.
Regardless, we see the three strongest performers on a % basis were Nevada, Texas, and Florida. π
These have been states with massive migration from California and New York and they’re coming to work.
Zoom In On FL Unemployment Rates
This chart focuses on the alternative way to look at jobs: the unemployment rate.
It’s not the number of jobs being created, but rather the percentage of people looking for work and currently unemployed. π²
Similar thought here - the lower the unemployment, the stronger the local economy.
You have to remember that the government only counts people looking for a job in this number.
If you’ve decided to be professionally unemployed, you get removed from the equation after a certain period of time.
This can result in artificially low unemployment rates. π‘
Google U-6 unemployment for a more complete unemployment rate.
This graphic shows Florida is continuing to outperform the nation as a whole with lower unemployment rates.
There are only 4 metro areas in the center of the state with rates higher than the national average (Sebring, Homosassa Springs, The Villages, and Lakeland). π€―
What It All Means
Put these two together and you can get a picture (literally) of where real estate is likely to perform better. πΌοΈ
While job growth has been slowing recently, there is still significant strength in many areas around the country (especially Florida and Texas).
People concerned about a real estate crash should consider statistics like these to maintain a more complete point of view of the housing market. π€
One last thing to remember with jobs: they are a lagging stat.
What I mean is that the economy gets worse and then people lose their jobs. Also, people get jobs and then they buy a house.
All this comes together to help you understand and speak more confidently about the economy and real estate market.
Let's go win the week! π
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