Employment: Promising, but seen through a glass darkly

Posted by Mark Chapman on June 24th, 2012 at 6:26 pm

Dane Hahn

By Dane Hahn

Real Estate

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.

Our 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 local year-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 per­cent — but if they were regained, it would dou­ble — always being based on “last year”.)

Florida Employ­ment Year Over 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 per­cent in May 2012 com­pared to 10.3 per­cent 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 per­cent range for two more years, but there will be suc­cess sto­ries on a state by state basis.

With our tourism engine and cli­mate engine, we have two extreme mag­nets to bring peo­ple and jobs to our region 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 in man­u­fac­tur­ing and trans­porta­tion. 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. See him on the web at www.danesellsflorida.com

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