By Gay Cororaton, MIAMI REALTORS® Chief Economist
Real estate industry[1] payroll jobs rose nationally in February 2023, with 50,600 more jobs compared to one year ago and 3,900 more jobs compared to one year ago, according to the Bureau of Labor Statistics latest jobs report. The latest figures indicate the positive long-term expectation about the real estate market amid the upward adjustment in mortgage rates with the 30-year fixed rate that hit 6.73% in the week of March 9.
In the Miami-St. Lauderdale-West Palm Beach metro area, job growth has outpaced the nation. As of December, the metro area added 118,400 jobs over the past year, at a pace of 4.3%. Nationally, non-farm jobs rose 2.8% year-over-year as of the latest February data. South Florida’s economic fundamentals remain sound and should help mitigate the adverse effect of rising mortgage rates.
That jobs continue to be added in construction, specialty trade, and contractors despite the softening of the housing market is a telling signal that developers and real estate brokers/agents are positive about the market’s long-term outlook. In fact, MIAMI REALTORS® has seen its membership increase to about 61,000 as of March 2023 compared to about 59,000 members in July 2022.
Nationally, in building construction and specialty trade contractor industry, 216,900 more jobs were added compared to one year ago, split between residential that had 90,300 more jobs and non-residential with 126,600 more jobs. Compared to the prior month, there were 16,300 more construction and specialty trade contractor jobs, of which 12,400 were residential jobs.
This sustained job growth contrasts sharply with the massive job cuts during the real estate market’s collapse during the Great Recession when 2 million jobs were lost in the construction, specialty trade, and real estate industry from May 2006-May 2012, or an annual average contraction of about 333,000 jobs.
Existing and new home sales measured on a seasonally adjusted annual rate fell from a peak of 8.5 million in August 2005 to a low of 3.73 million in August 2010, or an average annual decline of 15%. As of January 2023, total existing and new home sales have dropped more dramatically by 30% from 6.7 million to just 4.67 million.
Why the weaker association between home sales and job growth today compared to the Great Recession?
One reason is the massive foreclosures during the Great Recession that led to a steep decline in real estate prices that led to a credit squeeze that impacted businesses and households. Today, there is little foreclosure activity which is keeping home prices afloat. In the Miami-Ft. Lauderdale-West Palm Beach market, foreclosures account for about less than 1% compared to about 34% in 2009.
Another reason is that the housing market is not suffering from a glut of homes on the market compared to the Great Recession. In the Miami- Fort Lauderdale-West Palm Beach metro area, active listings are equivalent to just 1.6 months, compared to over 12 months in 2009 through January 2011. With little foreclosure activity and tight supply, the median single-family home sales price is up 18% year-over-year as of January 2023 in contrast to the collapse in housing prices during the Great Recession when prices fell by about a third in the first quarter of 2009.
https://public.tableau.com/app/profile/gaye4786/viz/Feb2023Jobs/Dashboard12?publish=yes
[1] The real estate industry (NAICS 531) is comprised of lessors of real estate, offices of real estate agents and brokers, and activities related to real estate.
