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You would think the improving employment numbers would be good for home buyers, but it turns out that we just can’t build homes fast enough for our rising number of workers.
So says a study by the National Association of Realtors®, which looked at job creation and housing starts from 2012 to 2014 in 146 metro areas. The bottom line: We have “inadequate new construction.” Some 63% of markets were creating one home for every 1.2 jobs, and 72% were creating only one home for every 1.6 jobs.
Close to 3 million jobs have been created in the past year, and an estimated 1.6 million households were formed in the past four quarters, yet total starts are now at a pace of just 1.2 million. You know that story: low supply, high demand.
“As we’ve previously reported, the high price appreciation in recent years is tightly correlated with job growth,” said Jonathan Smoke, chief economist of realtor.com®. Job creation, he said, is one of the fundamental drivers of housing demand.
And it’s a story that likely won’t end any time soon.
“The level of new construction is losing more and more ground as the race goes on,” said Smoke. “Supply will remain tight and thus prices and rents should continue to appreciate at above long-term average rates.”
So which places have the most jobs and the fewest new homes? Not shockers: San Jose, San Francisco, and San Diego, CA, top the list, followed by New York City and Miami. Other tight spots: Jackson, MS; Colorado Springs, CO; Chattanooga, TN; Amarillo, TX; and St. Louis, MO.
Unfortunately, the situation forces difficult trade-offs: Either pay more for housing in job-filled cities or head to the hinterlands where jobs are few but housing is a-plenty. Perhaps you could get work in the homebuilding industry.
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