Real Estate Trends - Employment Market Indicators

Yesterday we talked about Unemployment as a real estate market indicator when it comes to real estate timing. Today we are going to focus on employment. But wait, don’t they amount to the same thing?

Not necessarily. We look at both unemployment and employment for real estate trends because they can differ.

Employment is the actual number of jobs in a particular real estate market. Unemployment is the percentage of the workforce that is unemployed.

Here is how they can differ. If a particular real estate market is experiencing a large influx of population, in other words many people are moving to the area either because it offers the promise of jobs, or it’s a retirement hotspot or something like that, you might see the unemployment rate go up for a while. Why? Because people moved there but don’t have jobs yet, or retirees don’t plan on getting jobs. The result is that the unemployment rate doesn’t look as good. Conversely, what if an area is in population decline because the job market really stinks? People are moving away from this market to other markets to look for jobs. The market in population decline would actually see the unemployment rate go down because people are moving away.

But when we look at the employment numbers we can complete the picture. Since employment shows the actual number of jobs we can see that an area that is in population decline that might see an improvement to unemployment would still be showing us a drop in the actual employment. The same goes for a market with an influx of people that showed unemployment going up. When we look at the employment numbers we can see the number of jobs growing.

Both employment and unemployment are longer term market indicators when it comes to real estate investing timing. They show us the overall health of a real estate market over a longer term period. If employment and unemployment market data is solid in a market then we can expect that market to recover quicker in downturns and perform better in upswings than a similar market with poor employment and unemployment market indicators.