Low Unemployment May Be Real Estate's Best Friend…

Unemployment dropped to historically low numbers this week not seen in 53 years. To 3.4%! The nation and our markets should be celebrating this and yet the FED - and others - bemoan the fact that so many Americans are working. Excuse my remedial understanding of how world markets work, but does any of this make sense? 


Aside from lower interest rates, the one thing that drives an economy - and real estate markets - more than anything is when people are working and have a taxes (so we don't borrow more!)....and don't rely on government assistance (our tax dollars, with debt borrowed at higher rates) to survive. What is so bad about improved wages and low unemployment?


Well, the FED would like to see more people lose their jobs in their attempts to lower inflation and they have been successful to a degree, with tens of thousands of layoffs in the past 9 months.....but, those people are finding other jobs, gig economy work and other replacement income for the most part. And why wouldn’t they? They all need to work to support themselves, families and their chosen lifestyles. So therefore, is the Fed’s attempt to force unemployment even working? These are strange times indeed. 


Imagine if EVERYONE was working to fill all those jobs everyone complains cannot be filled and we fueled SUPPLY instead? Increased supply would most likely bring down inflation more than anything. Simply look at the computer chips drama of a year ago:  We have no chips!!!!!! The sky was falling and prices were soaring.  Now we have too many chips......and pricing has come way down! 


In essence, that’s how markets work. Consumer pricing is almost always reliant on the balance between supply and demand. And, if you want home prices to come down, drowning demand by increasing interest rates and the cost to buy a home when people still need those homes in an under-supplied environment, is a foolish policy in my humble opinion.


When people are employed they can take care of themselves. They have the freedom to spend, get financing, buy and rent homes, etc. which in turn can fuel and build an economy. Forcing layoffs seems to us as counter-intuitive to an economic recovery. Jobs, on the other hand are REALLY good for our economy, businesses and yes…real estate!



This article was in part sourced by Leonard Steinberg, Chief Evangelist of Compass New York. 

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