How the Job Market is Killing Housing
There are secondary implications of the disappointing September jobs report that could send the economy into a tailspin. It's all about the housing market. Jed Kolko, chief economist for Trulia.com, tells The Daily Ticker that this jobs report is terrible for housing.
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“The economy helps the housing market and the housing market should help the jobs market but right now neither one of those is working as it should,” he says.
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In September, the rate of growth for residential construction employment fell by about half -- that's a bad sign.
“Even though prices have rebounded and sales are back to normal levels, construction is still about 40% below normal levels, construction has really been the laggard in this economy,” says Kolko.
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While this lag in new home construction is partially because of the abundance of unoccupied homes, it also goes back to the jobs problem.
“A lot of young people are still living in their parents homes. They haven’t become first-time homebuyers, they aren’t even renting. That means we haven’t formed many new households and without a lot of new households there is less demand for new construction,” says Kolko.
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Employment for 25-to 34-year-olds, the prime age group for housing demand, is just 75%.
“That’s really what the final step in the housing recovery waits for,” Kolko says in the video above, “it’s for young people to start finding jobs, getting back to work, and eventually moving out of their parents homes.”
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