Good News: 47 states have created jobs over the past 12 months. Utah is leading the way with a 4 percent job growth rate. The Pacific Ocean states of Oregon and Washington are right behind. Florida and Nevada round out the top-five. Naturally, these states are seeing solid demand for home buying and for commercial real estate leasing activity.
Bad News: Though jobs are positive, nearly all states lost momentum. The job creation to August were slightly weaker compared to July in 41 states. Only 9 states had a stronger pick-up. For example, Texas had created 278,000 net new jobs in the 12-months to July; but then slipped to a fewer 212,000 to August.
Ugly News: There are fewer jobs this August compared to one year ago in West Virginia, Alaska, and North Dakota. Lower oil prices are leading to fewer drillings and coal miners are very unhappy about the current state of its industry. Fewer jobs will mean lower demand for real estate.
At the metro level, some cities continue to fly high. Here are markets with 3.5 percent or better job growth rate:
Job creations are all fine and welcomed. But inadequate new construction in relation to jobs will lead to real estate prices shooting up too high, too fast, and thereby divide the community between the haves and have-nots. Social tensions are evident in Silicon Valley where fresh job takers in Facebook, Google, and Apple forcing off long-time residents who are renters to move away. It is these types of perceived economic injustice as to why Bernie Sanders can tap into their anger even though successes of high tech companies are good for the country. Broadly speaking, there are too many cities where new home construction is lagging behind in relation to job gains. Though the solution is simple of issuing more housing construction permits by local authorities, this will not occur. Therefore, expect even more angry renters over time.
Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.