promised our Chief Economist, Greg Heym, that I wouldn’t quote him in my monthly newsletter, at least as it related to a long conversation we had last week, off the record.
We had discussed thoughts about the stock market, how correlated it is or isn’t to the real estate market, and what other factors my buyers and sellers should be thinking about as they consider purchasing or selling.
But his monthly report came out last week, reporting that 78,700 jobs were added in New York City last year, which are 2% more than in 2011 and the most jobs added since 2000 .
Very good news.
What didn’t appear there is that there are more jobs now in New York City than before the crash in 2008.
The types of jobs added were mostly in professional and business services (over 50%).
Only construction and manufacturing sectors lost jobs (-3400).
Given the construction on the horizon, these positions should be positive soon enough.
What has also been widely reported is a massive push of technology companies into New York City, especially downtown.
The redevelopment of the World Financial Center into Brookfield Center confirms the interest that these firms, and many others, seeing downtown as the best place to be, and the continuing addition of jobs other than those in Finance as helping NYC’s recovery.
Firms are more interested in Commercial space not appearing to focus only on financial outfits.
Greg’s view, that I am able to discuss, is that jobs likely factor among the strongest impacts on our rental and sales market.
As jobs were added last year, the rental market strengthened to the point where renters started to look at purchasing as a better alternative.
This has almost certainly led us to where the housing market is today.
Combine this with a currently strong stock market, the strongest it has been since 2007.
A reasonable argument, then, can be made for two impacts of a push into the sales market, which we seem to be experiencing.
First, the rental prices of smaller units should finally experience a dip.
We are already seen prices dropping very slightly, as more and more renters purchase.
The volatility has been reported recently.
Second, as 1- and 2-bedroom sales continue to both increase in volume and in average sales price, we will see a pickup of inventory for these buyers to consider.
I don’t see rental prices dipping much, if at all, for larger units, however.
With a caveat about mortgage rates going up too high, I do see 1- and 2-bedroom sales prices pushing up now, and expect them to continue in that direction for another two quarters, or longer, before any pause.
I’ll cover mortgage rates in a separate post.