What most average consumers don’t know is that real estate is directly related to the economy and the unemployment rate. The National Association of Home Builders has a strong Congressional presence because of this fact and are constantly educating government officials on how important the housing recovery is to overall job growth. The only thing that pulls a nation out of a Great Depression or a Great Recession is employment. If people have jobs, they have money. If they have money, they are contributing to the economy. New construction plays a huge roll in this equation because for every new household created (college student moving out, creating a household, and buying a house or renting an apartment), over the course of one year, 3.5 jobs are created for a new home and 1.5 jobs are created for a new apartment.
“Currently, we are creating about 225,000 jobs per month, or 2.75 million per year. That is double the pace necessary to reduce unemployment and under employment, which augers very, very well for housing demand and the housing market more broadly,” said Mark Zandi, chief economist at Moody’s Analytics.
Because college grads were unable to get career jobs starting out, during the last 5 years, multi-generational households were created where graduates were moving back in with their parents, or many people would move in together to save money. During the 2014 Fall Construction Forecast Webinar, hosted by the National Association of Home Builders (NAHB), economists predicted that all of that is about to change – that 2015 is set to be a break-out year for the construction and sales of new, single-family homes in the United States.
Economists are predicting that 2014 will end with a 2.5% increase in new home starts to rise to 637,000. At the end of 2015, they are predicting that home starts will be at 802,000 and by the beginning of 2017, home starts will be at 1.1 million, just 300,000 starts away from what is considered a normal, healthy housing market at 1.4 million home starts. So, by the end of 2015 the overall housing market will have recovered up to 68% of what is considered a good housing market.
“Single-family builders are feeling good. They are not overly confident, but confident enough to keep moving forward,” said NAHB Chief Economist David Crowe.
These overall numbers cover averages across every metro area in the United States, but one economist zeroed in on the fact that some states and areas will perform better than others. Louisiana was one of 5 energy producing states that are expected to lead the charge on the housing recovery, moving ahead more quickly in a reduction of unemployment and an increase in housing starts to possibly beat the timeline that was discussed during the webinar. So far, locally St. Tammany Parish saw an increase in the 2nd quarter of 2014 which showed over 20% increases in improved unemployment rates and housing starts, so it seems that the Greater New Orleans area is already on track to see an improvement in the housing market sooner rather than later.