Good Economics Translates into Good Real Estate Markets
Phoenix is among the top 10 U.S. metros for beating job growth expectations over the past several years. Phoenix has been one of the leaders in job growth due to several factors of diversity. Phoenix actually has a relatively decent manufacturing sector for the city in that many semi-conductor facilities are in Chandler and Phoenix; and with these major manufacturers comes the other manufacturers that supply these giants! Phoenix has always been a leader in finance, insurance, and real estate services as well. Phoenix is well diversified across these fields as well with the credit card facilities, insurance companies, and commercial and residential real estate markets. These industries almost create a hedge against any other industries taking a downturn (with the exception of the national banking and real estate crisis). The research noted that in Phoenix, the following industries helped push job growth numbers past expectations: private colleges, universities and professional schools, commercial banking, professional employer organizations as well. I know that I have never seen so many colleges, online colleges, and trade schools being advertised before, but now in 2014 it seems as though many are going back to school to be re-educated or learn a new trade.
New research from CareerBuilder and Economic Modeling Specialists looked at the total job growth across industries for each of the 50 most populous U.S. metros from 2010 to 2013. Each metro’s actual job growth was compared to what would have been expected for that metro based on national job growth trends during that same time period. The difference between the two measurements is the competitive effect, i.e., how much the metro is exceeding, matching or falling behind national job growth trends because of something unique to that metro’s regional economy.
Phoenix was No. 6 on the list, adding about 54,000 more jobs than would have been expected during the 2010-2013 time frame. In total, Phoenix added 124,501 jobs during the three years.
“The metros producing the strongest competitive effect are often heavily dominated by specialized technical industries with well-established local supply chains,” said Matt Ferguson, CEO of CareerBuilder. “The overall job growth in these markets is not primarily a product of national economic trends, but rather distinct factors in the local economy.”
Homes Sales Are Up and New Construction is Up in 2014
Home builders are experts at reading these trends and seem to have a very polished crystal ball when it comes to finding the right time to start building. Though the resale homes numbers seem to be lagging behind last years numbers see my market updates I believe much of this differential is due to the new home sales. If we were to combine the resale figures with the new home figures I think we would see that homes sales are a bit up from last year. But this competition from the new home builders seems to have a downward pressure on prices and because all of these home builders want to build and sell and not get stuck with too much inventory; they are building on land that was acquired during the downturn, accepting thinner margins and holding resale prices in check. This is a sweet-sour message in that the economy in the Valley is doing well, homes sales are recovering, however the great windfall gains have leveled off. Again good news because the huge gains in so few years is what got us into this mess in the first place.
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