By Brian Summerfield, Online Editor, REALTOR® Magazine
Although it isn’t difficult to establish a connection between rising unemployment and the crisis in the housing market, I haven’t come across many things that demonstrate this relationship more starkly than a multimedia map developed by TIP Strategies Inc., an economic development consultancy.
Without even really trying, this map demonstrates the alignment between the precipitous loss of jobs in the United States, and the collapse of housing prices and spike in foreclosures in certain areas.
Starting in 2004 and continuing until late 2006, “bubbles” representing metro job markets throughout the country expand everywhere (with the notable exception of post-Katrina New Orleans in late 2005). The most rapid growth in net job gains is seen in Southern California, Las Vegas, South Florida, southern Arizona, and the New York-D.C. corridor.
These also happen to be the areas that experienced the most extreme increases in real estate values during that time. And it’s these same regions that shrink to microdots throughout the first half of 2008, only to re-explode into large red circles later that year in dramatic fashion, signifying the meltdown in the job markets that more or less coincided with the downturns in housing in these respective places.
Now, some have predicted a housing recovery is nigh, and they may well be right. But the unemployment rate in California was at 11 percent in April, according to the Bureau of Labor Statistics. And it was at 9.6 percent in Florida, 10.6 percent in Nevada, 9.9 percent in Washington D.C., and nearly 8 percent in Arizona. Furthermore, the job markets in these areas probably won’t see any major reversals before the end of this year.
Two related questions come to mind: Are employment and housing as inextricable as this map suggests? Is it possible to have a recovery in one and not the other?