21 Mar Unemployment Rates Are Down. What Does That Mean For Real Estate?
There are many reasons unemployment rates affect the Real Estate market. But is the effect large enough to make an impact in Minnesota specifically? Not really, and here is why. First and foremost, with a permanent and reliable job many feel ready to put roots down and buy a house. Secondly, people can only get financing for a home if they have a steady job. Finally, with a steady job, higher paying job or promotion many people choose to upgrade to a newer or more luxury home.
How does this affect the Real Estate Market?
I am to be realistic with my clients. The truth is more jobs are always good but the effect on the Real Estate market is marginal at best. Part of this is due to Minnesota’s better than average economy and higher than average employment rate. Additionally, not all jobs are equally affected by the low unemployment rate.
The information I found on the governments Bureau of Labor Statistics shows industries with the highest job growth are natural resources and mining: 1.4 percent raise, construction: +0.8, good production: +0.7, other services: +0.7, transportation: +0.6, and professional and business service: +0.5. Notable industries with falling employment rates are leisure and hospitality: -0.2, information: -0.3, utilities: 0.3, and retail trade: -0.4. This is good for Minnesota with our constant need for construction crews as soon as the snow melts or even starts.
In fact, Minnesota is a hot bed for almost all the highest growing jobs. According to City-Data.com, and several other sources I cross-referenced, manufacturing or goods production is one of our primary industries. We are also the leading source of iron mining in the US. Combine all of this with the impressive 16 Fortune 500 and 30 Fortune 1000 companies that have headquarters in Minnesota. Then, on top of all that, you can add road and building construction. All this means is that Minnesota has a strong economy. More importantly, we have a historically strong and stable economy which trickles down and affects every market including Real Estate.
The unemployment rates effect on Minnesota
The Bureau of Labor Statistics shows Minnesota, as of December 2018, has a 2.8 unemployment rate. This is both wonderful and not surprising. Minnesota always has a lower than the national average unemployment rate. In 2015 the U.S. average was 5.3 while Minnesota’s was 3.7. Even in some of the harder years, like 2013 when The U.S. average was 7.4, Minnesota had a 5.0 unemployment rate.
Because Minnesota is consistently less affected by the rise of unemployment rates and has a generally robust economy all its own, our local Real Estate market is less affected by the spike in jobs. Consider it this way, in 2015 the rate was 3.7 which is only 1% lower than now. Take Nevada on the other hand, in 2015 the unemployment rate was 6.8 making them 50th out of 51 in the nation. Currently, the rate is 4.4 rising up to the 42nd spot. A 2.4 drop in unemployment will cause quite a splash in the market, while in comparison, Minnesota only sees a little wave in the market. To sum it up, because of our location the unemployment rate has a relatively small effect on the market.
No matter the market or employment rate, selling a house is not easy and requires a knowledgeable Realtor. To show I am one of those knowledgeable Realtors, be sure to read some of my other blog posts including:
- Real Estate in MN is a Fractured Market. What Does that Mean for You?
- 3 Reasons for the Low Inventory in Real Estate and Why It Matters
- How We Determine Your Home’s Value
If you have any questions, please let me know. I’m always happy to help. You can give me a call at 612-889-6496 or send an email to [email protected]