Rising Housing Market Likely to Lift Job Mobility

Home owners are starting to feel freer to move where the jobs are, Reuters reports, as worries about homes that won't sell or will sell at a loss begin to fade.

Since early 2012, home prices in the major metro areas have been rising. Homes are also selling faster: It took 62 days, on average, to sell a home, compared with 91 days one year prior, according to March data from the National Association of REALTORS®.

The increase in mobility from the recovering housing market is expected to have a hand in lowering the jobless rate.

"Until the real estate market picked up, people wouldn't even consider a move without the certainty that they could sell their homes," Jerry Funaro, vice president of global marketing for TRC Global Solutions, a Milwaukee-based relocation service, told Reuters. "Companies are now more inclined to make offers since we're seeing real estate markets across the country coming back."

The number of people who moved last year increased to 35.6 million, with the mover rate climbing to 12 percent, according to the U.S. Census Bureau. That marked an increase over the 11.6 percent low set in 2011.

"It's not a huge gain, but when you consider that for two years, we've had the lowest migration rates since World War II, any move up is good news," William Frey, a demographer at the Brookings Institution in Washington, told Reuters.

Meanwhile, in April, the jobless rate dropped to its lowest point in more than four years, reaching 7.5 percent, due to an increase in hiring among employers. Source: " Insight: Housing improvement may herald return of U.S. workforce mobility," Reuters (May 13, 2013)

Affordability Remains High, Despite Price Gains

Low mortgage rates and stabilizing incomes are keeping home affordability high and giving home buyers "ample buying power," according to the National Association of REALTORS®.

The Wall Street Journal highlights the following example on just how affordable housing has become: "Assuming a 5 percent down payment, a 3.5 percent mortgage rate, and 25 percent of a gross income devoted to mortgage payments, a buyer would only need an income of $36,500 to buy a house at the median price. With a 10 percent down payment, the required salary falls to $34,600, and with a 20 percent down payment, it falls to $30,700."

In the first quarter, the median family income nationwide was $62,200.

Housing affordability remains high despite recent reports that show home prices in 150 U.S. cities saw their biggest year-over-year gains in more than seven years, according to NAR’s most recent report, reflecting data from the first quarter of 2013. The median price of a single-family, existing home was $176,600 in the first quarter of this year, an increase of 11.3 percent from year ago levels, NAR notes.

Areas with strong job growth are posting some of the largest home price gains, including:

Akron, Ohio: +32.7%

San Francisco By area: +32.6%

Reno-Sparks, Nev.: +32.1%

Silicon Valley area surrounding San Jose, Calif.: +31.7%

Atlanta: +31.1%

Phoenix: +30.1%

Source: " Home Prices Jump but Affordability Remains in Buyers’ Favor," The Wall Street Journal (May 9, 2013)

Big Job Boom Expected in Homebuilding

Between 2006 and 2011, residential construction jobs saw a 41 percent drop, as the new-home market faced steep losses.

However, a big rebound is expected to be on the horizon in homebuilding. Housing starts are expected to return to normal levels by 2016, and with that prediction residential construction employment will likely rise to nearly 2.5 million jobs, according to Fannie Mae’s Housing Insights report, which looks at the historical relationship between housing starts and construction jobs.

According to Fannie’s forecast, residential construction employment will surge by 412,000 jobs between 2012 and 2016.

“This 20 percent rise in homebuilding employment will nearly triple the forecasted pace of total job growth during this time period,” HousingWire reports.

Despite the expected surge in homebuilding jobs, Fannie says that the increase still will not reflect all the homebuilding jobs that had been lost during the housing crisis. By 2016, the number of residential construction jobs is forecasted to be nearly 1 million below the peaks reached during the housing boom.

More home owners are seeing equity once again in their homes, as prices rise. The number of mortgages with negative equity dropped to 18 percent of homes with a mortgage in January, down from 41 percent one year earlier.

Source: “Housing Crash Fades as Defaults Decline to 2007 Levels,” Bloomberg (May 6, 2013)