The US real estate market is a huge component of the nation’s economy. The US housing market is directly connected to the economy. But does the well being of the US economy and job growth have an effect on the purchasing power of real estate customers? The answer is a resounding yes.
Related: 6 Real Estate Market Trends 2017
Job Growth in the United States
In the latest studies, the unemployment rate in the US has decreased to 4.4%, its lowest rate in 10 years. Job growth can be credited to employers and employees who have found that more economical opportunities are on the rise. The expansion of several markets such as real estate, retail and trade have boosted job opportunities throughout the country to create hundreds of thousands of jobs for unemployed Americans.
The Trump administration and its focus on the economic situation of the US have put markets on the rise. 230,000 jobs were created in February which has decreased the unemployment rate. Wages have also shown a slight increase in the last few months with an average of a 7-cent increase on the hour.
Related: Real Estate Investing Under the Trump Administration
Job Growth Effects on US Housing Market
In logical terms, a boost to the US economy is naturally going to cause a rise in the most popular markets. Real estate investing being a necessity to most people and an investing opportunity for some becomes more desirable with job and wage growth.
People want to invest in the real estate market to purchase their own home and to stop enduring the expenses of rent. However, unemployed individuals are unable to do that because they have no income to either be able to afford a property or take a loan to buy one. This leaves the unemployment population without the need to invest in the US housing market. Creating jobs for these people creates a sense of security for them that the time has come to purchase a property because they have a stable paying job. Interest rates, which are at a low point for years, provides the extra motivation for them, because they want to grasp the opportunity now.
Job growth creates growth in wages and salaries for the entire economy. Having a lower unemployment means more consumption, sales and services being provided. This creates increased wages for a portion of the population. Having a better salary for people who are saving because they already own a property and all the necessities they need means investment. Most people understand that real estate investment in the US is one of the best to undertake. The extra wages they earn makes people think about how they can make better use of it. Purchasing a property and renting it to make extra money is certainly an incentive for many working people.
Job growth also leads to more properties and more investing opportunities. How? In economic terms, creating jobs for hundreds of thousands of people will lead many of them to start purchasing properties. This demand will be met with an equal amount of supply from real estate development firms or people who decide to sell properties. The demand and supply in US housing market ultimately leads to its overall growth as a sector.
Related: What to Expect in US Real Estate Trends Over the Next 10 Years
Job Growth Effect on Rental Market
Rental property owners benefit immensely from job growth. The job opportunities created for people who are unable to take loans or purchase houses yet leads them to renting properties. Demand for rental properties leads to less vacancies, more competition and more profit for owners of rental properties.
Job growth and the US housing market are closely tied together. The housing industry is viewed by many as one of the lowest risk investment a person can go into. The fact that housing is a purchase that all people need makes its demand more evident and obvious. Job growth in the US is expected to rise even more in the coming months because investors, businesses and corporations feel secure to invest more and expand. With the growth of the economy it is not far fetched to assume that the US housing market is booming.