November's encouraging jobs numbers bode well for the struggling housing market
With a new jobs report that shows nearly 120,000 more Americans are off the unemployment rolls, real estate insiders say the good numbers could impact home sales.
Here's a rundown of the important stats for housing you might have missed in today's jobs report:
Unemployment among young adults
Unemployment fell sharply among adults 25 to 34 years old in November, but it's still high at just more than 9 percent. Young adults were hit hard by the recession, with many "doubling up" to live with parents or friends rather than renting or owning their own place.
That has sucked a lot housing demand out of the market, worsening the problem of houses sitting for years without a buyer.
And until employment prospects improve for the 25 to 34 crowd, demand for housing won't pull the sector out of its malaise.
"[This age group] is very important for future housing demand," Kolko says. "When their economic prospects improve we will see more new household formation and more demand both for rental and owner occupied."
Bottom line: Unemployment among youngsters is getting better, but there's still a ways to go before they make a meaningful impact on the housing market.
Construction employment fell slightly for the second month in a row, and has remained relatively stagnant for the past two years.
The construction industry is the bridge between housing and jobs, and a key indicator of the health of the housing market. In general, more demand for housing leads to more jobs in construction and other related industries. When more people have jobs and income, there's generally more demand for housing.
That cycle still hasn't ramped up, as construction employment lags behind overall job growth. While total employment is up almost 2 percent from recession lows, construction employment is barely up 1 percent from its bottom in
Still, construction covers a lot of different areas. While gains in employment have been disappointing, the multi-family construction and remodeling segments of the industry have seen significant improvement as builders respond to more demand for rental properties and homeowners hunker down and invest in their current homes instead of moving.
Bottom line: Construction still has a lot of catching up to do
Jobs in hard-hit cities
While virtually no market was spared from the housing meltdown, some regions were slammed harder than others. Markets in
Job growth in these regions is particularly important, as more jobs typically means more housing demand. More housing demand helps burn through excess inventories in those cities allowing home prices and the local housing market to recover over time.
According to Kolko, cities hit hard by the recession and housing crisis had faster job growth than the U.S. overall, a complete turnaround from a couple of years ago when it was just the opposite.
One boon for regions that have seen severe price declines is the historic affordability of property. That's attracting businesses -- and jobs -- to these regions and fueling economic rebounds in some places.
"They are cheaper places for business to operate," Kolko says. "With real estate prices having fallen so much -- more in these places than in others -- there's a relative cost advantage for businesses that are looking for less expensive locations for themselves and for their workers."
Bottom line: Things are looking up for some regions hardest hit by the recession. These areas could also be the first to see a housing rebound if job growth continues.
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