Jobs and the housing market

Employment gains continue to prop-up the housing market. Jobs are the fundamental reason that home prices are not crashing as they did between 1991 and 1995 when 3 major military installations were closed in Sacramento. That was the beginning of a period of high unemployment, and severe job losses not only in the capital region but all over California. It contributed to thousands of homes going into foreclosure. This housing market adjustment is different and it will be brief. Here is why.

In August California added 37,000 new payroll jobs according to the California Employment Development Department. Non-payroll jobs and independent contractors are not counted in the department’s numbers so add a few thousand more new workers. Construction did lose 3,800 workers but professional and business services gained 40,700 jobs.

The four-county Sacramento area saw its unemployment rate drop to 4.2 percent down again from July. In 1996 it was 8.5 percent. The region added 18,100 jobs in the past year. “Sacramento is typically one of the top-notch job markets in the state,” said David Lyons, a labor market economist with the state EDD. “We certainly don’t have any looming areas of concern.”

The declining housing market is more psychological than real. Our economy, measured by all normal statistical standards such as productively, employment, wages, and low inflation is doing just fine. That’s probably little help if you haven’t been able to sell your home in the past few months, however, as long as employment continues to grow, traditional homebuyers will again recognize the opportunities and the housing market and the market will cycle back from uncertainty. It’s just a matter of time.