Economy Watch: State Unemployment Rates Bode Well for Real Estate
- Nov 24, 2015
More reasonably good news about employment, which is typically good news for every real estate sector: 43 states and the District of Columbia enjoyed unemployment rate decreases from a year ago, while only three states suffered increases, and four states had no change, according to the Bureau of Labor Statistics on Friday. Every state now has an unemployment rate lower than 7 percent, for the first time since 2007. State rates are useful indicators for the real estate industry, perhaps more so than the national rate, since real estate largely depends on the health of local markets. Strong state employment numbers are built (with a few exceptions) on a foundation of strong MSAs within the state.
All together, 20 states experienced unemployment rates significantly lower than the U.S. figure of 5 percent in October, 12 states and DC had measurably higher rates. Eighteen states had rates about the same as the country overall. Surprisingly, North Dakota —which has no MSAs larger than Fargo-Moorhead — still has the lowest jobless rate among the states, coming in at 2.8 percent in in October. The energy industry’s recent contraction has affected the region, along with larger employment and real estate markets, such as metro Houston, and in fact North Dakota’s unemployment rate ticked up above 3 percent earlier this year. But it’s been improving lately, possibly because fewer job-seekers are coming into the region. West Virginia had the highest state unemployment rate, 6.9 percent, much of which is likely attributable to the slump in the coal industry.
Among the largest states, with the largest MSAs, there’s a lot of strength. California, for instance, whose unemployment rate reached over 10 percent during the worst of the Great Recession, came in at 5.8 percent in October 2015, down from 7.2 percent a year earlier. New York’s unemployment rate in October was 4.8 percent — lower than the national rate — and down from 5.9 percent a year ago. Texas, which recovered from the recession earlier than a lot of other places, partly because of energy, currently enjoys an unemployment rate of 4.4 percent. Florida’s unemployment rate is pretty close the national rate, coming in at 5.1 percent in October.
All of this points to a clear improvement — edging toward full recovery — in employment markets around the country. At the worst of the recession, 11 states had unemployment rates at or above 11 percent. These days, only eight states are at or above 6 percent. Numbers like these are probably more data that will encourage the Fed to start raising interest rates next month, and edge rates upward in 2016, as much as 100 basis points for the year, according to some forecasters.