Written By:
Ingo Winzer, President
Ingo Winzer, President
Local Market Monitor
In
the long run, the economy and the real estate market are intertwined. In the
short run that's not always true. Since the end of the recession - since 2009 -
the economy has straggled along without any
help from the real estate market (or the government, for that matter). There's
been a fair amount of real estate buying,
but mainly by investors making a play for the millions of foreclosed
properties. Home construction - the
kind of real estate transaction that creates jobs - has been stuck in first
gear. Setting aside recent years, the level of construction in 2014 was the lowest since 1990 - when the country
was in a recession.
Surprisingly,
the economy is now doing well without the stimulus of construction. This seems
partly due to the new healthcare law - more insured people equals more
healthcare, which equals more healthcare jobs - and partly to the end of the off-shoring
of manufacturing jobs. From 1990 to 2010, 6 million manufacturing jobs were
eliminated in the US, but since then almost a million have been added back.
This
reordering of the economy feeds into
a reordering of the real estate
market - less demand in the middle but more at both the top and the bottom.
More demand for higher-end homes and more demand for rentals and lower-cost
townhouses and condos.
The
number of jobs in February was up 2.4 percent from last year, while
unemployment fell to 5.5 percent. Jobs were up 1.8 percent in manufacturing -
mainly for durable goods like machinery, cars and transport equipment;
significantly, the number of jobs in the off-shore-endangered textile industry
held constant. Jobs were up 2.1 percent in retail, 4.5 percent in
transportation - a strong marker of economic activity - 3.6 percent in business
services, 2.5 percent in healthcare, and 4.2 percent at restaurants. As usual,
the government added nothing.
