After this past Thursday's upbeat June employment report from the Labor Department, it's only right that we begin looking more carefully at the correlations between job formations and housing's on-going recovery.
Have a look first at Wall Street Journal staffer Kathleen Madigan's "5 Takeaways from the June Employment Report," to get bearings around the good, the bad, and the still-ugly parts of America's jobs picture.
Among the encouraging trends below the headlines includes the fact that wage growth suggests that household incomes will be supportive of new household formations, and broader geographic dispersion in jobs growth is beginning to fuel earnings and spending expectations in more than a few isolated, industry-specific markets.
Since most of what is positive in housing expectations springs from the well of capital, it's now important to note that home building and development's smart money is betting big that a new jobs-to new household formations-to home buying virtuous cycle will end all doubts about whether young adults will buy homes in numbers sufficient to support a housing rebound.
Here, we get a look at the strong correlation between job formations--in this case, financial services job formation--and new-home demand in microcosm form. Markets that New Geography demographers Joel Kotkin and Michael Shire identify as absorbing new financial services jobs are showing especially strong demand and growth in new-home sales. Our Data Desk's Katie Gloede blended New Geography's leading metros for financial services employment with new-home sales data from Metrostudy's Builder Insight to arrive at the "Top 10 Financial Jobs Growth Magnets for New-Home Sales."
Then we took the data a step further so that we could begin to look at the price-range concentrations and dispersion in each of the 10 markets. Here's where the data gets interesting, because you can easily see how most of the purchases are taking place at the move-up and second-time move-up part of the price spectrum.
We expect that as wage growth and household incomes track up a bit and stabilize across more U.S. markets, the financial services employment growth--with its tie to new-home demand--will serve as a preview of housing performance in a greater number of arenas in the months ahead.
The two takeaways here are 1) jobs-fueled economies--right now being energy-, tech-, and finance-driven--show a strong correlation between good-paying jobs formation and new-home demand, and 2) when private capital takes cues from jobs formation trends ahead of the housing uptake, it's a big opportunity to snatch up lots and get building programs going as the demand begins to crest.
The smartest money is getting out ahead of this phenomenon as we speak.