Economy Watch: Good News for the Real Estate Industry in 2014
- Jun 11, 2015
All together 48 out of 50 state economies grew in 2014, according to new data from the Bureau of Economic Analysis, with the largest growth states mostly west of the Mississippi. Topping the list for the year was North Dakota, which experienced annual growth of 6.3 percent state GDP. Texas was number 2 on the list with a whopping 5.2 percent growth, which meant intense growth in a lot larger real estate markets than anything the Dakotas has to offer: Houston, DFW, San Antonio and Austin. Wyoming and West Virginia tied for third at 5.1 percent growth each (by comparison, the U.S. economy as a whole grew 2.2 percent for the year).
Driving a lot of the increase in these states was “mining,” a government economic classification that not only includes the extraction of minerals from the earth, but also oil and gas. Thus the oil states did very well in an environment (much of the year) in which oil was selling for roughly $100 a barrel. Although “mining” wasn’t a significant contributor to real GDP growth for the U.S. economy as a whole, the industry was a large spur to growth in the five fastest-growing states — the aforementioned four and Colorado. By contrast, “mining” continued to decline in Alaska due to lower output on the state’s North Slope. What a good 2014 also means is that 2015 is going to be a letdown for these states and their real estate markets (though Texas and Colorado, as a much more diversified economies, probably won’t hurt quite as much).
Some states did well without much boost from “mining.” Professional, scientific and technical services was the largest contributor to U.S. real GDP by state growth in 2014, with the industry growing 4.2 percent in 2014 compared with 0.7 percent in 2013; and it contributed 0.29 percentage points to U.S. real GDP growth. It was the leading contributor to growth in the New England and Far West regions. It was a large contributor to growth in three states—California (whose GDP expanded by 2.8 percent), Massachusetts (up 2.3 percent) and Utah (up 3.1 percent).
As an industry, real estate and rental and leasing grew 1.5 percent in 2014, down slightly from 1.6 percent in 2013 and all together contributing 0.2 percentage points to U.S. real GDP growth. In 2014, the industry was the largest contributor to growth in the Southeast region and contributed to growth in 32 states and the District of Columbia.