Rental Housing Gains in Recent Jobs Numbers
May jobs numbers show that the US economy is continuing to build momentum. That fact, offered by Marcus & Millichap, could be read two ways. But the momentum is building on a strong track record, so much that according to M&M, the 280,000 positions added last month brings total employment to 3.3 million jobs—actually above the pre-recession peak.
On the downside, unemployment ticked up 5.5%, the firm reports, revealing disparities at both ends of the adult age scale: “The unemployment rate for 20- to 24-year-olds jumped to 10.1 percent last month, underlining the persistent difficulties young workers face in starting careers. At the other end of the age scale, older workers are remaining in the workforce longer to build retirement savings, as evidenced by growth in the labor force participation rate of the 65-years-plus segment and this group’s unemployment rate of 3.2 percent.”
Oddly, the out-of-work 20-somethings are spurring the real estate market, at least rental housing. Their inability to find work translates into a decision to rent rather than own and what M&M calls an untapped source of opportunity. Other areas of the market are fed by the overall pick-up in jobs, including office and retail expansion.
But there are cautions in every good news report, and this one comes in the form of interest rates. “With the jump in job creation last month and upward revisions to prior months, growth in US payrolls is back on track to align with last year’s robust pace,” M&M reports. “Higher employment levels, evidence of a more substantial pace of wage growth and broadening economic strength, are converging to keep the Federal Reserve on course to raise its benchmark short-term interest rate by the end of 2015.”