Can the Fed heat up Southern California’s chilly real estate job market?
Southern California real estate hiring slowed by two-thirds in a year where property-related businesses were throttled by the Federal Reserve’s tight-money policy.
My trusty spreadsheet, reviewing state employment stats for August, found 921,800 property-linked workers in Los Angeles, Orange, Riverside, San Bernardino and San Diego counties. While local real estate employment grew locally by 9,500 positions in the last 12 months – that’s 65% slower than the 27,000-a-year growth pace in pre-pandemic, cheaper-money 2015-19.
Next, contemplate other industries across Southern California, where jobs are up 133,800 over the past 12 months. That’s a 1.6% gain vs. real estate’s 1% increase.
Do not forget that the Fed in March 2022 began cooling an overheated economy with higher interest rates. So, it’s not that surprising that Southern California’s property-related jobs are running 9,300 jobs below their peak set in July 2022. Please note that many people who work in the real estate world are self-employed and are not tracked by traditional government job counts.
In September, the Fed reversed gears and started lowering the rates the central bank controls. If those moves make real estate financing cheaper, how will the industry’s employers react?
By the slice
Consider how real estate-related employment niches in Southern California fared since the Fed’s war on inflation upped mortgage rates to highs not seen in two decades. Look at how far some professions have slipped …
Lending: 104,100 folks in various slices of the long-suffering credit industries. Employment is off 40,800 from the post-Great Recession high hit in December 2012. In the past two years, refinancing disappeared and homebuying slowed dramatically, further slashing the need for mortgage makers.
Building supplies: 61,800 sellers of equipment and materials – 5,800 below post-Great Recession high (June 2021). Home remodeling has significantly slowed down.
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Real estate services: 143,900 people handling transactions – 3,300 below post-Great Recession high (December 2022). Fewer purchases require fewer processors.
Trade construction specialists: 318,100 employed by contractors – 1,600 below post-Great Recession (October 2023). Numerous local projects have been put on hold awaiting cheaper financing.
Building services: 138,900 jobs in commercial property operations – just 200 below the post-Great Recession high set in July. Workers returning to offices has helped this niche.
Project construction: 155,000 work at firms building homes to highways – a post Great-Recession high. A push to improve infrastructure, notably roads, boosts this niche.
Geographically speaking
August’s real estate employment breakdown by metro area reveals the Fed’s cooldown, too …
Orange County: 219,400 real estate jobs – 11,000 below post-Great Recession high (August 2018) as its mortgage lenders took a big hit.
Los Angeles County: 348,400 real estate jobs – 7,000 below post-Great Recession high (February 2020).
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Inland Empire: 184,100 real estate jobs – 2,000 below post-Great Recession high (October 2023).
San Diego County: 169,900 real estate jobs – a post-Great Recession high.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com