Housing's real problem now: job growth at the high end has stalled

"For several years now, much of the focus in our industry has been on affordability. Closely tied to that, we have had many discussions regarding existing owners being frozen in place with their low-rate mortgages. No doubt, both are serious headwinds. But increasingly, those are now secondary to our core problem: effectively zero job growth of the type that drives our business."

"Unfortunately, our industry cannot sell homes equally at different price points across all job categories, at least in most major metros. Our buyers are concentrated in higher-paying professions, with arguably the three most important categories being Information, Financial Activities, and Professional and Business Services. You can see in the chart above that, combined, this has flatlined. And it is not just the last 12 months."

Affordability and homeowners locked into low-rate mortgages are major headwinds, but the primary issue is minimal growth in jobs that fuel homebuying. Buyers are concentrated in higher-paying sectors—Information, Financial Activities, and Professional and Business Services—whose combined employment has flatlined, reducing demand at higher price points in major metros. Government employment growth has been present but may stagnate or decline amid constrained federal, state, and local budgets. Leisure and Hospitality gains primarily reflect a rebound. Private Education and Health Services growth appears unsustainable. Areas that previously showed strength are now weakening, coinciding with falling high-end job growth.

Read at www.housingwire.com