Washington, November 2--While some of the nation’s job markets continue to be weak, at least 18 states have already surpassed their pre-recession employment peaks and others are in position to catch up fast, and that bodes well for housing demand, according to panelists at the National Association of Home Builders’ (NAHB) Construction Forecast Conference in Washington, D.C. last week.
The conference, held twice yearly, brings together top experts from across the housing industry to discuss topical issues.
Economy.com chief economist and co-founder Mark Zandi and Stanley Duobinis, founder of Crystal Ball Economics, Inc., said that employment has bounced back in these states: Nevada, New Mexico, Arizona, Montana, Washington, Idaho, Maryland, Florida, Utah, North Dakota, South Dakota, Wyoming, New Jersey, Wisconsin, Virginia, Rhode Island, Maine and Alaska.
States where they said employment should hit pre-recession peaks next year are: California, Oregon, Nebraska, Texas, West Virginia, South Carolina, Georgia, Minnesota, New Hampshire, Louisiana, Arkansas, Missouri, Kentucky and Tennessee.
But they said there are some states that will have to wait until 2006, 2007 or even later for employment to fully recover: Kansas, Colorado, Iowa, Mississippi, North Carolina, Pennsylvania, New York, Massachusetts, Alabama, Oklahoma, Illinois, Ohio, Indiana and Michigan.
The strongest metro area job and housing markets are to be found where defense-related companies are big business, since government spending in this sector has risen substantially. These cities include: Sacramento, CA; San Diego; San Antonio; Baltimore; Orlando and Jacksonville, FL; Charleston, SC; Oklahoma City; Phoenix and Tucson, AZ; St. Louis; Washington D.C.; Norfolk, VA; and a few others.
Likewise, "gateway economies" with strong in-migration are well-positioned for growth, as are technology-driven metros: Seattle, New York, Washington, Boston, Charleston, Chicago, Dallas, San Antonio, Houston, Tucson, Houston and a handful of California cities including Los Angeles and San Francisco.
On the flip side, hard-hit manufacturing centers of the Midwest and industrial areas in the Northeast continue to lag in the national recovery. At the top of the list is Indiana, where 22% of the jobs are related to the industrial and manufacturing sectors, the highest of any state. Running a close second are Arkansas and Wisconsin, each with 21%.
On a broader scale, Zandi sounded a note of caution for local economies that are particularly dependent on the automobile and other interest-rate sensitive industries, including parts of Michigan, Indiana and Ohio.
According to Duobinis, home builders will do well next year in Florida, Georgia, South Carolina, North Carolina, Arizona, Utah, Colorado, Idaho, Minnesota and Delaware – states expected to register between 8.5 and 21 housing starts per 1,000 residents. The outlook is even better for Nevada, where 21 housing starts are expected per 1,000 – primarily in the Las Vegas area. That makes Nevada "the most building-intensive site in the country by a factor of two," Duobinis said.
Interestingly, Duobinis isn’t waving builders away from the two states that he expects to show the biggest declines in housing starts this year – California and Florida. "Each of these has had such incredibly strong starts activity, it would be nearly impossible to keep up that kind of growth," he explains. "For example, Florida recorded a 20% increase last year. Not keeping up with that pace doesn’t make it a bad market by any means."
