Housing markets with higher asking-price gains have faster job growth, Trulia’s latest trend report finds.
“The correlation between price changes and employment changes in July 2014 is 0.53 – a strong and statistically significant relationship,” writes Jed Kolko, chief economist for Trulia, noting Detroit, Mich. is the outlier, with the biggest job loss. Excluding Detroit, the correlation between price changes and job growth is 0.59.
By comparison, the correlation between year-over-year price changes and peak-to-trough price decline during the bust in July 2014 is 0.51.
Rents in July rose more than 10% year-over-year in five large rental markets – San Francisco, Sacramento, Oakland, Denver, and Miami.
“These five markets all had job growth ranging from solid to stellar,” Kolko says, adding that the rebound effect, or local markets where prices had fallen most are now seeing larger price gains, is diminishing as housing markets depend more on job growth.
Overall, rents rose 6.1% nationally, with rents increasing more in markets with faster job growth.
The month-over-month increase in asking home prices of 0.8% was in line with the average monthly gain over the past year, settling back down after a 1.2% month-over-month in June.
The quarter-over-quarter increase of 2.5% remains below the level of last spring’s price spurt, when the quarter-over-quarter increase was 3% or higher in March through June 2013.
“Although prices aren’t rising as fast as they did in spring 2013, price increases continue to be widespread, with 97 of 100 metros posting year-over-year price gains, and 94 posting quarter-over-quarter gains,” he says.
Read the full report here.
Written by Cassandra Dowell