Over the past couple years or so, there has been a growing connection between the job market and the housing market. A couple keys factors in business as we know it today have been influencing the housing market, affecting the number of people buying homes. Here are a couple of things happening in the job market that are affecting how people are buying homes today.
It was reported that roughly 235,000 jobs were created in February alone. The household wage growth is going up. An increase in earnings means people now possess the funds with which to buy a home and can do so without needing to resort to loans or becoming virtually broke.
There has been a steady uptick in the confidence of consumers as of late. With a wage increase, it’s easy to understand why this is. Customers have more room to work with when they have a steady, livable income and thus, their confidence starts to grow. With the freedom of having a greater income, people are more likely to spend that money on something they really need or want, like a house.
As reported above, new jobs are being created every day and typically those jobs are very good, high paying jobs. People are much happier in their jobs and are feeling more comfortable than they would in a job that they didn’t like. And with more opportunities presenting themselves, people may find themselves needing to relocate to where the job is, leading them to purchase a house in a different area. In fact, 2.7 million workers left their jobs in June 2015, likely seeking different and better employment elsewhere.
Interest rates are starting to increase. The Federal Reserve is wanting to clamp down on funds ahead of surging business and consumer confidence. However, this has yet to show any drastic effect on the housing market, though it still may end up changing things down the road.
Based on the nation’s steady job creation, increasing household wage, and boost in consumer confidence, neighborhoods across the country are seeing more homes pop up.
Yet, commentary in the latest Z Report, “New Home Buyers Barreling Through Higher Rates Thus Far,” states, “We remain modestly concerned that further upward pressure on long-term interest rates and/or any disruption in macro confidence could cause accelerating new home order growth to retrench, but at this point, the market is enjoying the favorable combination of limited inventory, strong household formation, improved confidence and accelerating entry-level demand.”