I just received a missive from the Florida Association of Realtors, dealing with the employment outlook and how that affects our housing market. In the world according to Dane, there are two things that are slowing down the real estate market. Income and Confidence. Both are needed when a family decides to make a commitment to buy a home. This of course boils down to “good” jobs.
The employment outlook has been so bad for so long that as jobs return, buying a house will not be the first major outlay a family will make, especially if there are credit cards and family expenses that have accumulated—but the jobs are the key to a real estate recovery.
And our customer's inability to sell their present home, to “move on”, robs them of the independence a healthy marketplace provides. Obviously this second function results in a limited number of ready buyers, which comes back to the first issue.
All the other variables that make a strong housing market are in place; good inventory, good price points, good loan rates, and willing buyers and sellers. (And lots of Realtors).
And speaking of Realtors, Erica Cross, research analyst for the Florida Realtor Association has generated localyear-over-year changes in the job market due to seasonality. Obviously, employment is affected by seasons, and that's one reason we remove farm jobs from the totals—while a farmer may have full-time employment, his employees are seasonal. Therefore the Association chooses to look at Florida’s employment change as a percentage of last year instead of a month-to-month change.
Florida’s total non farm employment is the combination of private employment and government employment. Non farm and private employment are the key drivers of economic growth. The graph below shows the year-over-year change in Florida’s total non farm and private employment from 2008 to present. The graph shows growth, without showing pain. (If, for example, half of all jobs were lost, it would go down by 50%—but if they were regained, it would double—always being based on “last year”.)
But back to the good news, each month since August 2010 has experienced positive growth in employment on a year-over-year basis. In May 2012, Florida employment was 8,506,000, some 200,000 more than in May 2011. The graph doesn't really show that unemployment was 8.5% in May 2012 compared to 10.3% in 2011. But you get the idea, figures don't lie, but liars sure figure...
Nonetheless, we are seeing marginal positive news. Employment and housing sales generate nearly the exact same graph. So as Florida makes employment gains, the state’s real estate market, both residential and commercial, will improve. We are looking at this recovery through a foggy window. And what we see is the state's overall economy progressing, albeit slowly. Federal Reserve Chairman, Ben Bernanke, noted this week that the National unemployment rate is likely to hold in the 8% range for two more years, but there will be success stories on a state by state basis.
With Florida's tourism engine and excellent climate, these are two extreme magnets to bring people and jobs to the region—magnets that other states just don't have. If Congress could pass a political initiative to grow jobs by adjusting regulations on all of us and lowering taxes on those employers who actually create new jobs, that would be a huge help and would appeal to manufacturing and transportation as well. But it's complicated...
Dane Hahn is a real estate professional practicing in Florida and New Hampshire. You can reach him at 941-681-0312 or by email at dane.hahn@gmail.com