Dig deeper than the published reports about job growth before you decide to invest in a market.

Of the many jobs that were lost during the pandemic, some quickly returned when lockdowns ended, some turned out to be gone for good, and some are still finding their way back. That makes measuring current economic growth difficult. Touting the number of new jobs the economy has created is a staple of politicians but for real estate investors, unfiltered data are a nightmare.

If local markets really are adding new jobs at annual rates of 3%-4% a year, demand for residential and commercial real estate will quickly outstrip supply and boom times are ahead. If, on the other hand, many of these jobs are just recovery jobs, the effect on demand will be much lower. The people who go to those jobs already live in the area, and the businesses they’re joining already have commercial space.

One way to arrive at a more realistic estimate of new job growth in local markets is to separate the types of jobs that normally grow no faster than the population: jobs in health care, government, and restaurants. We’ve assigned these jobs a 1% annual growth rate (twice the current population rate) and recalculated total job growth.

As the table shows, appearances can be deceiving. Overall for the U.S., the recent job growth rate of 2.9% drops to 1.6 %, pretty much the same as before the pandemic. And in markets like Fayetteville, Fresno, and Philadelphia, the drop is even larger.

In Jacksonville, Florida, it may not matter whether growth is 5.6% or 3.8 %—both figures are high. If, however, you’re thinking of investing in Sacramento because you think jobs are growing at 2.7%, you might want to take a closer look.

City, State 1-Year Job Growth Adjusted Job Growth
Jacksonville, FL 5.6% 3.8%
Fayetteville, AR 4.8% 2.8%
Fresno, CA 4.3% 1.7%
San Antonio, TX 4.1% 2.1%
Seattle, WA 4.0% 2.1%
Philadelphia, PA 4.0% 1.2%
Oklahoma City, OK 3.9% 1.8%
New York, NY 3.4% 1.4%
Atlanta, GA 3.2% 1.3%
Charlotte, NC 3.1% 1.2%
Sacramento, CA 2.7% 0.8%
Fairfield County, CT 2.6% 0.6%
U.S. 2.9% 1.6%
Categories | Article | Market & Trends
Tags | Economy | Growth
  • Ingo Winzer

    Ingo Winzer is President of Local Market Monitor, and has analyzed real estate markets for more than 30 years. His views on real estate markets are often quoted in the national press. Previously, Ingo was a founder and Executive Vice President of First Research, an industry research company acquired by Dun and Bradstreet in 2007. He is a graduate of MIT and holds an MBA in Finance from Boston University.

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