Economy Watch: 3 Things Going Right for the Real Estate Industry
- Feb 12, 2015
There were some positives for the real estate market in mid-February:
1. Jobs and job openings. At the end of December, there were 5 million job openings nationwide, up from 4.8 million in November and in fact the highest number of jobs looking for workers since January 2001. That’s the newest number form the Bureau of Labor Statistics, and it’s the latest in a strong of strong jobs numbers (hiring is also as strong as it’s been since those hard-to-remember pre-recession years). The more job openings, the more businesses want to hire, and even though wages aren’t growing that fast, more employed people benefits pretty much every property type: retail and multifamily directly, as consumer spend money on them, and office and industrial indirectly, as businesses spend on them to service the needs of the expanding economy.
2. The housing non-bubble. The last time housing prices were going up, in the mid-2000s, everyone was happy about it except for a few curmudgeons who held that the growth was unsustainable. And so it was, with the apartment business later emerging as the only clear long-term winner from the busting of the bubble, and even it took a few years to get into full stride. Other property types, though not directly related to housing, took a lot more lumps, only recently recovering their something like pre-recession health.
Fortunately, there’s little risk of a new housing bubble right now. Sales are still sluggish, and the run up in prices in 2013 and part of last year was only the market crawling out of a deep hole. A couple of recent reports confirm, once again, that housing appreciation is only creeping along now, which is a good thing. FNC reported that since last December, residential prices were up 5 percent; FNC’s index has been slowing down since peaking in March 2014 at 9 percent. Also, Trulia said that asking prices on for-sale homes climbed 0.5 percent month-over-month in January, the smallest monthly gain since August. Year-over-year, asking prices rose 7.5 percent, down from the 9.3 percent in January 2014.
3 Moderate gas prices (for a while longer, we hope). Gas prices have ticked up lately, but not much. The Energy Information Agency reported that gasoline retail prices averaged $2.04/gal on January 26, the lowest since April 2009, before increasing to $2.19/gal on February 9. Still, EIA expects U.S. regular gasoline retail prices, which averaged $3.36/gal in 2014, to average $2.33/gal in 2015. The average household is now expected to spend about $750 less for gasoline in 2015 compared with last year. More money to spend in stores, in other words.