In the last week, the following two stories were published on regional unemployment:
“The unemployment rate in the Austin area dropped slightly in August as seasonally-expected hiring offset some of the significant job losses the region has endured.”
“California’s unemployment rate in August hit its highest point in nearly 70 years, starkly underscoring how the nation’s incipient economic recovery continues to elude millions of Americans looking for work.”
These stories continue to underscore how lucky we have been in Austin. When in comes to real estate values, nothing is more important than employment. People who don’t have jobs don’t buy houses. People who lose their jobs often sell their house, pushing values down. Job losses also lead to foreclosures which push down values significantly.
In general, Texas has been lucky with an unemployment rate of 8% — significantly lower than the national rate of 9.7%. At 7.2%, Austin’s rate is downright dreamy in these difficult times. In comparison, things are looking very bad in California.
According to the New York Times, “While job losses continue to fall, [California’s] new unemployment rate — 12.2 percent, according to the Bureau of Labor Statistics — is far above the national average of 9.7 percent and places California, the nation’s most-populous state, fourth behind Michigan, Nevada and Rhode Island. Statistics kept by the state show California’s unemployment rate was 14.7 percent in 1940, said Kevin Callori, a spokesman for the California Employment Development Department.While California has convulsed under the same blows as the rest of the country over the last two years, its exposure to both the foreclosure crisis and the slowdown in construction — an industry that has fueled growth in much of the state over the last decade — has been outsized.
In Austin, by comparison, the Austin Business Journal reports that “The region added 900 jobs between July and August, with many of the gains coming in areas such as retail trade (600 jobs) and education and health services (300); gains in those sectors are typical in August. The professional and business services sector also saw an increase of 1,000 jobs, but that was offset by losses in areas such as construction (300 jobs lost) and manufacturing (200 lost).”
Throughout the turmoil of the last year, Austin is very lucky to have lost just 7,200 jobs — less than 1% of its year ago job total. For anyone with a stake in local real estate, this is very good news.