“bubble watch‘ delves into trends that may indicate upcoming economic and/or housing market problems.
Buzz: Rising mortgage rates are hurting real estate workers in Southern California.
sauce: Filled with August state employment statistics, my trusty spreadsheet looks at hiring trends in construction, real estate, and financial businesses in Los Angeles, Orange, Riverside, and San Bernardino counties.
Overall, local real estate companies added 600 jobs in one month and grew by 14,900 in 12 months, or 2.3% growth. This is a strong year in recovery from the 2020 pandemic lockdown and almost triple the average annual employment growth of 0.82% since 1990.
However, hiring pace at these companies slowed in August compared to the average monthly addition of 1,240 workers over the past year. And local bosses added 1,140 employees each month in 2018-19, when they knew nothing about the coronavirus.
There is a bigger “but” in the numbers.
A construction boom in both housing and infrastructure construction has slowed overall hiring, but construction workers are busy. In the region, in a month he added 1,800, in a year he added 17,700, after which 381,600 workers were making things. Recovery jobs since the 2020 coronavirus economic downturn averaged 2,260 per month.
But workers dealing with real estate transactions are doing just as well. A surge in mortgage rates in 2022 has slashed home purchases to Great Recession levels. These interest rates have also drained homeowners’ ability to refinance their mortgages. Rising financing costs cut lucrative business for property salespeople and lenders.
As such, real estate and finance company employment fell by 1,200 to 293,600 in August, down 2,800 in a year. This is a sharp reversal from employment, which averaged 400 per month when pandemic-era employment recovered.
Consider how this summer’s jobs compare to pre-pandemic.
August hiring for all Southern California real estate businesses was back exactly where it was before the coronavirus hit. The construction industry is 3% higher than his February 2020 level, while the real estate and financial firms are down 4%.
Compare these patterns to August hiring and February 2020 hiring in other key Southern California employment niches. Industries that outperformed pre-pandemic staffing included transportation/warehouses (up 20%), medical and social services and business services (up 3%). and retail (+1%). The restaurants (down 1%), manufacturing (down 3%), recreation (down 8%) and hotels (down 20%) industries are still catching up.
A region within a region
Employment also changed geographically in August in construction, real estate and financial…
Los Angeles County: After adding 400 people in a month and an increase of 7,900 in a year, it is slightly down at 324,800 workers. Recovery jobs are averaging 1,176 per month, and LA job openings are at 99% of what he was in February 2020.
Orange County: After adding 900 in a month and 2,800 in a year, we are still doing well with 199,400 workers. Recovery jobs are averaging 610 per month, with OC jobs reaching 99% of his pre-pandemic days.
Inland Empire: The boom in Riverside and San Bernardino counties ended in August with 700 workers down. Still, 151,000 workers in a year he has increased by 4,200. Recovery jobs are averaging 869 per month, and IE vacancies are up 105% of what he was in February 2020.
how is it bubbly?
On a scale from zero bubbles (no bubbles here) to five bubbles (five alarm warnings)… 3 bubbles!
Workers at real estate and financial firms are early victims of the Fed’s attempt to falsify the highest inflation rate in 40 years. People working on home construction sites may:
This fast-changing market for workers in real estate companies is one example of how higher interest rates could slow the pace of the broader economy, especially real estate, but create a more sustainable pace.
Note that real estate workers represented 8.6% of all Southern California employment in August. This is a far cry from his 2006 best record of 10.6% during the last bubble era. Will solving the inflation problem of 2022 require significant job cuts outside the real estate game?
Jonathan Lansner is a business columnist for the Southern California News Group.he can be reached at [email protected]