The Real Estate Market Must Match Workforce Improvement

Posted by Chris Clothier on Fri, Dec 19, 2014

realestateinvestment laborIt’s no secret that the real estate market and the job market are closely connected to one another. 

For instance, we know that the real estate market has been struggling due to a lack of first-time homebuyers — because the job market is making it difficult for them to have the resources necessary to purchase a home. Because of this reason, the housing market has remained more sluggish than it should in the midst of economic recovery.

The Effects of the Workforce on Real Estate Investment

In many ways, real estate investors have helped lift the real estate market out of its slump since the market crashed several years ago. They bought homes in foreclosure and increased renting as a viable alternative to homeownership.

Two factors that are preventing further recovery of the real estate market are the barriers facing first-time homebuyers and the decreased supply to meet housing demand.

There is a lack of new home construction and development in general, and that’s slowing recovery. Because supply isn’t meeting demand, prices are rising, which makes it even more difficult for those would-be homebuyers to help the market with their home purchases. 

The Workforce is Improving

According to recent reports from the Bureau of Labor Statistics, there is some positive news coming out of the job market. In fact, employers added more jobs in April than have been added since January 2012, and unemployment rates are the lowest they’ve been since 2008. Unemployment rates jumped from 5.6% to a whopping 9.5% by June 2009. As of June 2014, unemployment was back down to 6.1%.

But while the data suggests the job market is improving, the housing market must also keep up. The housing shortage in some states must be addressed if there’s to be hope for market improvement on a national level — or prices will grow out of control.

In states where housing availability is keeping pace with job growth, price growth is healthy. And, in fact, housing starts are picking up their pace after the first quarter of 2014. Real estate investors should look for opportunities to grow along with the recovering economy. 


What do you think will help perk up the real estate market? Share your thoughts in the comments.

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Topics: real estate investors, real estate market