Suddenly, counting the number of times "housing" appears in a speech or in a candidate's political platform statement has begun to serve as validation that this or that person in office or running for it cares or doesn't care about housing.
As if, if you pass the "word cloud" test, with housing in large and bold text compared with terms like jobs, and schools, and safety, and health, and economic well-being, and right to privacy, etc., well, then you prove that you've got housing prioritized where it needs to be.
People who run companies that develop, design, build, market, sell, and care for homes and communities know better than that.
Housing can be as big as all get-out in a word cloud, but does that really signify one's level of commitment to policy around the attainability of safe, comfortable, healthy, durable, high performing, and sustainable homes?
No. It's jobs. Good jobs. Fair paying jobs. Jobs that are secure, and, providing one's willing to commit to growing more valuable, have a future.
Jobs are the best proxy for household formations, for family formation, for the microcosmic economies that are the engine of two-thirds of gross domestic product spending--the consumer household.
As he road-maps his outlook for residential new construction's 2016 leg of recovery, Mark Boud, chief of Metrostudy's Real Estate Economics unit, looks at jobs in 2016 as the root of all action. He writes:
"Housing demand is largely a function of job growth. Since 1990, the positive correlation between jobs and housing is 0.81--a higher correlation than any other factor influencing housing construction."
In that light, this past Friday's Bureau of Labor Statistics employment report print of 151,000 jobs added to United States' payrolls in January, runs consistent with what our man Boud projects to be a "moderating" growth rate for jobs overall in 2016. His informed conjecture is that we'll see that moderation play out through the year, but that growth relative to housing construction will be relatively strong. Here's where he draws the jobs-to-housing and housing-to-jobs connection most clearly:
Metrostudy predicts 1.237 million housing starts for Year 2016, while Real Estate Economics predicts 1.10 million completions and 2.80 million jobs created for Year 2016. The resultant ratio between job creation and housing completions for Year 2016 is 2.55-to-1.0 (2.55 jobs created for every home constructed). The ratio for total jobs-to-total housing is 1.05-to-1.0. Anytime the incremental ratio is higher than the total ratio, housing demand is growing faster than housing supply. For Year 2016, incremental housing demand will be growing about 2.5 times faster than incremental housing supply. The result will be a continued strong foundation for new home sales.
Boud argues that the current battering of economic dislocations--China, oil prices, corporate earnings, interest rate increases, election year posturing--will likely glance off an economy that is growing off a strong and sustaining foundation. Event dislocation--something beyond the current train of corrections and supply and demand rebalances--could introduce a blow to recovery, but that's an unknown scenario. Boud writes:
We live in increasing uncertainty, and any catastrophe – either natural or manmade – could have a dramatic impact on the forecast. An environment of very low oil prices actually increases discretionary spending and economic growth in the near-term for the United States, but it also causes international instability. Unstable conditions throughout the world should be monitored carefully in terms of their potential in contributing to unforeseen events that may derail national economic growth.
What's foreseeable ain't bad.