The best state for job creation was Utah as of May, marking several consecutive months of being on top. Utah’s job creation rate was 3.8 percent over the past 12 months. The West region is doing particularly well with Washington, Nevada, Idaho, Oregon, and California in the top-ten. The South was also moving along nicely with Florida, Georgia, North Carolina, and Texas in the top group.
Only two states had fewer jobs now versus 12 months ago: West Virginia and Alaska.
The job market is positive broadly speaking but weakening: 32 states experienced a slower pace of job creation compared to the prior month while 18 states moved at a stronger pace.
Not surprisingly, the real estate market is most vibrant in the states with fast job creations. More people working means more income and more potential homeowners. More jobs also entail more office leasing and increased rental housing demand.
Some worthy point of note in the latest report are the following:
Because of lower oil prices North Dakota is rapidly coming down the list. But Texas refuses to buckle because of a much more diverse economy. Dallas is in fact strengthening, even though Houston is showing marked lower job gains.
The technology sector jobs are boosting San Jose (5.7 percent growth) and Seattle (3.7 percent growth). The home prices and rents as a result are rising fast in these two cities.
Do not confuse a low unemployment rate with job creations. The local unemployment rate can be very low yet job gains may be slow. An example would be Lincoln, Nebraska which as 2.2 percent unemployment rate. But the job creation of 1.2 percent is below the national average. The reason is that few people are moving into Lincoln. Conversely, Las Vegas has a faster job addition rate than the national average, growing 2.6 percent; but its unemployment rate is 6.9 percent, which is above the national rate. For impact on real estate, it is job additions that matter not the unemployment rate.
Michigan is making a strong come back. Grand Rapids has consistently been strong, growing at 4.1 percent in the latest. Detroit is also growing at a surprisingly fast pace of 2.7 percent growth. The bankruptcy of Detroit and restructuring of debts and government spending cuts have evidently helped raise business confidence in the city.
From 2010 to 2015 (May), Utah has grown by 16 percent, Texas by 14 percent, California by 13 percent, and Florida by 12 percent. By contrast New York has grown by only 8 percent, Illinois by 6 percent, Pennsylvania by 4 percent, Mississippi by 3 percent, and West Virginia by 1 percent. The country overall grew by 9 percent. If such growth trends replicate over the next five years then there will be a reallocation of electoral-college votes for the Presidential election. Utah and Texas will gain while Illinois and Pennsylvania will lose. Legalistic reading says wait till 2020 official Census count before reshuffling. However, one could say that there is a good reason to reallocate the votes today in 2015 if following the spirit of proportional representation by population. Utah is short of one or two new Congressional members in the meantime.
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.