Blogging on Employment and Job Markets in US Metro Areas

Where New Grads Can Find a Roof and a Paycheck

Jed Kolko (Chief Economist at Indeed) and Ralph McLaughlin (Chief Economist at Trulia) look at job opportunities for new graduates and housing affordability:

The bad news is that the local markets with the most opportunities for young grads are among the least affordable. The good news is that some lower-cost markets also offer numerous opportunities for recent grads, though not as many as the priciest markets. While there’s no place that offers the magic combination of extensive job opportunities and easily affordable housing (and if that place existed, it probably wouldn’t stay affordable for long), we found six metros where you can spend a bit less on housing without giving up too much on the job options.

Click the graphic below to read the whole post:

Where New Grads Can Find a Roof and a Paycheck

March Metro Area Unemployment Update

The BLS recently released March unemployment figures for metro areas, so let’s take a look, focusing on the nation’s 51 largest metro areas (those that had population of 1 million or more as of the 2000 census):

Denver had the lowest unemployment rate at 2.4% (down from 3.6% as of March 2016), and is the only large metro area with an employment rate less than 3%. A year earlier, March 2016, Austin, Texas had the lowest rate at 3.1%. In March the national unemployment rate was 4.6%, down from 5.1% a year earlier.

Compared to year earlier, six large metro areas saw their unemployment rates drop by more 1%, Chicago with the largest drop of 1.8%:


Of the 51 largest metros, only eight did not see a decrease in their unemployment rate from a year earlier. Of those eight, two were unchanged from a year earlier: Baltimore and Memphis. Here are the six that saw an increase in unemployment from March 2016:


Interestingly, four of those six are Texas metro areas. As noted above, as of March 2016, Austin, Texas had the lowest unemployment rate of any large metro area at 3.1%.

Here is a table showing the March 2016 unemployment rate, March 2017 unemployment rate, and the change in unemployment rate for all 51 large metro areas. The table can be sorted by any of its columns.

Metro AreaMarch 2016
Unemployment
Rate
March 2017
Unemployment
Rate
change
Chicago, IL6.3%4.5%-1.8%
Las Vegas, NV6.1%4.8%-1.3%
Denver, CO3.6%2.4%-1.2%
Indianapolis, IN4.7%3.5%-1.2%
Seattle-Tacoma, WA4.8%3.7%-1.1%
Providence, RI5.9%4.8%-1.1%
Milwaukee, WI4.7%3.7%-1.0%
Portland, OR4.9%3.9%-1.0%
St. Louis, MO5.0%4.0%-1.0%
New York, NY5.0%4.1%-0.9%
Los Angeles, CA5.0%4.2%-0.8%
Hartford, CT5.9%5.1%-0.8%
San Diego, CA4.9%4.2%-0.7%
Philadelphia, PA5.3%4.6%-0.7%
Inland Empire, CA6.0%5.3%-0.7%
Pittsburgh, PA6.1%5.4%-0.7%
Phoenix, AZ4.7%4.1%-0.6%
New Orleans, LA5.5%4.9%-0.6%
Sacramento, CA5.6%5.0%-0.6%
Birmingham, AL5.6%5.0%-0.6%
Atlanta, GA5.1%4.6%-0.5%
US5.1%4.6%-0.5%
San Francisco, CA4.0%3.5%-0.5%
San Jose, CA4.1%3.6%-0.5%
Orlando, FL4.4%3.9%-0.5%
Jacksonville, FL4.6%4.1%-0.5%
Boston, MA3.8%3.4%-0.4%
Columbus, OH4.4%4.0%-0.4%
Cincinnati, OH4.6%4.2%-0.4%
Hampton Roads, VA4.6%4.2%-0.4%
Miami, FL5.0%4.6%-0.4%
Tampa, FL4.5%4.1%-0.4%
Salt Lake City, UT3.6%3.2%-0.4%
Detroit, MI5.5%5.1%-0.4%
Oklahoma City, OK4.1%3.8%-0.3%
Charlotte, NC4.7%4.4%-0.3%
Louisville, KY4.7%4.4%-0.3%
Washington, DC3.9%3.7%-0.2%
Minneapolis-St. Paul, MN4.0%3.8%-0.2%
Richmond, VA4.1%3.9%-0.2%
Raleigh, NC4.3%4.1%-0.2%
Kansas City, MO4.4%4.2%-0.2%
Buffalo, NY5.4%5.2%-0.2%
Rochester, NY4.9%4.8%-0.1%
Baltimore, MD4.5%4.5%0.0%
Memphis, TN5.0%5.0%0.0%
Nashville, TN3.5%3.6%0.1%
Austin, TX3.1%3.6%0.5%
San Antonio, TX3.6%4.1%0.5%
Dallas-Fort Worth, TX3.8%4.3%0.5%
Houston, TX4.9%5.7%0.8%
Cleveland, OH5.5%6.5%1.0%
data source: Bureau of Labor Statistics

The Death of Retail Has Been Greatly Exaggerated

The news is full of doom and gloom for retailers, driven by some high profile bankruptcies and store closings by national chains such as Sports Authority, Sears, Payless Shoes, J.C. Penny, Macy’s and others. Explanations for the difficulties faced by brick and mortar retail focus on the rise of online shopping (most notably Amazon) and the decline of suburban shopping malls.

But is brick and mortar retail dying? As gauged by employment, hardly. As shown in the chart below, retail employment is following the same trend as total nonfarm payroll employment, and both have been growing steadily after bottoming out in 2009.

total nonfarm payroll employment and nonfarm payroll employment
When looking at retail employment as a percentage of nonfarm payroll employment, we can see that it has declined from 12% in 1990 to 10.9% as of 2016. More importantly, the rate of decline has been fairly constant over that entire sixteen year period, and has not accelerated with the rise of ecommerce or millennials’ preference for the urban core over suburbs.

retail employment as a percentage of total nonfarm payroll employment
We are seeing a decline in employment in two specific retail subsectors: general merchandise stores (which include department stores) and clothing stores. The below chart shows the annual change for total nonfarm employment, retail excluding general merchandise and clothing, general merchandise stores, and clothing stores. The datapoints for March 2017 show the percentage change from March 2016.

Annual change in retail employment
As of March 2017 (the most recent figures available from the BLS), total nonfarm employment is up 1.5% from a year earlier, with retail excluding general merchandise and clothing up 1.0%, general merchandise stores down 1.6%, and clothing stores down 0.5%. Total retail employment including general merchandise and clothing stores (not shown in the above chart) is up 0.4% from a year earlier.

In short, while general merchandise stores and clothing stores are having a rough year so far, overall retail employment continues to grow with the rest of the economy.

Metro Area Population Growth – Current and Previous Expansions

Using the NBER’s method of measuring expansions from trough to peak (see this NBER page on expansions and contractions) our current expansion is still chugging along 82 months after the June 2009 trough. The previous expansion, from November 2001 through December 2007 (referred to as “the 2001-07 expansion” for the rest of this post), was 73 months in duration.

With the Census Bureau’s recent release of 2016 population estimates for metro areas, I’ve compared the growth rates for large metro areas (the 51 metro areas with populations of 1 million or more as of the 2010 census) for the current and previous expansions. The Census Bureau’s population estimates are for July 1st of each year. For this comparison of population growth, for the current expansion I’ll use the CAGR (compound annual growth rate) over the 2009 to 2016 period, and for the previous expansion the CAGR over the 2001 to 2007 period. At the end of this post is a sortable table showing the population growth rates for both expansions, as well as the difference between the two, for all 51 large metro areas.

Before reviewing the metro area population growth rates, for the US national population the CAGR was 0.93% for the 2007-10 expansion and 0.74% for the current expansion.

Here are metro areas with the top ten rates of population growth for the 2001-07 expansion (left) and the current expansion (right):

large metro areas top 10 population growth rates, 2001-07 expansion and 2009-16
Just as the national rate of population growth has slowed during the current expansion compared to the 2001-07 expansion, so have the growth rates of the fastest growing in metro areas. For the 2001-07 expansion, the top ten growth rates ranged from 2.36% to 4.19%, while for the current expansion the rates range from 1.66% to 2.91%. For each metro area in both top ten lists, the rate of population growth has slowed during the current expansion, with the exception of Denver, Colorado. The metro areas in both top ten lists area also all in warm weather states, again with the exception of Denver.

Texas metro areas feature prominently with Austin, San Antonio, and Houston in both lists, joined by Dallas-Fort Worth in the list for the current expansion. On top of that, Austin went from the sixth fastest population growth for the 2001-07 expansion to #1 for the current expansion. The other Texas metros rose in rank, too (Houston from #10 to #3, San Antonio from #9 to #5, and Dallas-Fort Worth from #12 to #6).

North Carolina was the only other state to have more than one metro areas show up in either list, with Raleigh at #2 in both lists, Charlotte at #7 for the 2001-07 expansion, and #9 for the current expansion.

The below table shows the metro areas with the ten largest increases in population growth rates for the current expansion compared to the previous expansion:

large metro areas, top 10 increases in population growth rates, 2001-07 expansion and 2009-16
At the top of this list is New Orleans with its negative growth rate for the 2001-07 expansion showing the impact of Hurricane Katrina (the New Orleans metro area’s 2006 population was 25% below that of 2005). Next on the list are tech hubs San Francisco and San Jose, both with growth rates of 1.21% (well above the national rate) for the current expansion compared to anemic growth rates well below the national rate of population growth for the 2001-07 expansion.

Next, the below table shows metro areas with decreases in population during the current expansion:

large metro areas with negative population growth, 2001-07 expansion and 2009-16
These five metro areas that have seen negative population growth during the current expansion also saw negative population growth during the 2001-07 expansion (with the exception of Hartford, Connecticut), though at steeper rates of decline. Note that, again with the exception of Hartford, these are Rust Belt cities. The only other large metro area to experience negative population growth during the 2001-07 expansion was New Orleans, which as noted above, was due to Hurricane Katrina.

Lastly, here is the sortable table of all 51 large metro areas:

Metro
Area
2001-2007
Population Growth
CAGR
2009-2016
Population Growth
CAGR
Change
Austin, TX3.00%2.91%-0.09%
Raleigh, NC3.67%2.32%-1.36%
Houston, TX2.36%2.17%-0.18%
Orlando, FL3.13%2.09%-1.04%
San Antonio, TX2.37%2.07%-0.30%
Dallas-Fort Worth, TX2.08%1.90%-0.18%
Denver, CO1.45%1.85%0.40%
Nashville, TN2.06%1.73%-0.33%
Charlotte, NC2.78%1.72%-1.06%
Phoenix, AZ3.01%1.66%-1.35%
Seattle-Tacoma, WA1.11%1.53%0.43%
Las Vegas, NV4.19%1.52%-2.66%
Oklahoma City, OK1.32%1.49%0.17%
Jacksonville, FL2.18%1.47%-0.71%
Washington, DC1.31%1.44%0.13%
Salt Lake City, UT1.41%1.43%0.02%
Atlanta, GA2.37%1.43%-0.94%
Miami, FL0.99%1.40%0.40%
Portland, OR1.36%1.36%-0.01%
Tampa, FL1.84%1.33%-0.51%
Inland Empire, CA3.15%1.22%-1.93%
San Francisco, CA0.04%1.21%1.17%
San Jose, CA0.22%1.21%0.98%
New Orleans, LA-3.34%1.19%4.54%
San Diego, CA0.61%1.16%0.55%
Columbus, OH1.27%1.13%-0.15%
Sacramento, CA1.84%1.06%-0.78%
Indianapolis, IN1.33%0.97%-0.36%
Richmond, VA1.55%0.94%-0.61%
Minneapolis-St. Paul, MN0.96%0.92%-0.04%
Boston, MA0.06%0.82%0.76%
Kansas City, MO1.04%0.77%-0.27%
Louisville, KY1.01%0.63%-0.38%
Los Angeles, CA0.16%0.59%0.43%
Baltimore, MD0.59%0.54%-0.05%
New York, NY0.11%0.49%0.38%
Hampton Roads, VA0.72%0.49%-0.23%
Cincinnati, OH0.59%0.39%-0.20%
Philadelphia, PA0.48%0.31%-0.18%
Birmingham, AL0.74%0.28%-0.47%
Memphis, TN1.03%0.27%-0.76%
Milwaukee, WI0.26%0.21%-0.05%
St. Louis, MO0.40%0.14%-0.26%
Chicago, IL0.30%0.13%-0.18%
Providence, RI0.07%0.12%0.05%
Rochester, NY0.06%0.01%-0.05%
Buffalo, NY-0.40%-0.03%0.36%
Hartford, CT0.57%-0.03%-0.60%
Detroit, MI-0.32%-0.05%0.27%
Pittsburgh, PA-0.41%-0.08%0.33%
Cleveland, OH-0.39%-0.18%0.22%
data source: Census Bureau

West Coast Metro Areas – Employment Growth and Housing

Up and down the West Coast, recent conversations about housing usually include the word “crisis”, as a few Google searches will attest. During the current expansion, the supply of new housing has not kept pace with employment growth, which drives demand for housing.

In a recent post, I compared nonfarm payroll (NFP) employment growth to housing permits issued over the 2011 to 2016 period for 51 large US metro areas (those that had populations of 1 million or more as of the 2010 census). This post will focus on just West Coast metro areas. The table below shows housing and employment figures for eight West Coast metro areas, and can be sorted by any column. The right-most column is the ratio of housing units per increase in employment, referred to as the “H/E ratio”, introduced in a previous post.

West Coast Metro Areas – 2011 to 2016 Housing Permits and Employment Growth

Metro Area2011-2016 NFP
employment
growth
thousands
2011-2016 NFP
employment
CAGR
%
2011-2016
authorized
housing
units
% of units
multifamily
housing units
per NFP
employment
increase
Portland, OR163.12.6%65,77449.4%0.40
Seattle-Tacoma, WA299.32.8%120,89059.0%0.40
San Diego, CA184.02.3%46,72767.8%0.25
Sacramento, CA127.32.4%27,64815.8%0.22
Inland Empire, CA262.13.4%50,14425.6%0.19
San Jose, CA219.03.8%38,34573.4%0.18
San Francisco, CA405.83.2%64,24465.6%0.16
Los Angeles, CA667.02.0%92,99272.0%0.14
data source: Bureau of Labor Statistics, Census Bureau

For these eight West Coast metro areas employment growth has been relatively strong over the 2011 to 2016 period with a CAGR (compound annual growth rate) that ranges from 2.0% for LA to 3.8% for San Jose. By comparison the national rate was 1.8%.

The Seattle-Tacoma and Portland metro areas both have H/E ratios of 0.40 (above the national large metro average of 0.34), while the California metro areas’ H/E ratios are significantly lower, ranging from 0.25 for San Diego, to 0.14 for LA. In short, relative to employment growth, Seattle and Portland have issued considerably more housing permits than the large California metro areas.

West Coast metro areas H/E ratio - housing units per employment increase

Repeating the caveat from my earlier posts on this subject: the H/E ratio tells us only about the incremental supply of housing units to be added, and incremental demand as gauged by increases in employment, and does not tell us anything about the existing housing stock or the existing employment base. That is, it does not give us the entire picture of supply and demand for housing.

2011 – 2016 Metro Area Employment Growth and Housing Permits

This is a follow-up to my earlier post on 2016 Metro Area Employment Growth and Housing Permits. Reader “MetroGuy” suggested that I look at the H/E ratio (ratio of housing units per increase in employment) over a longer period. So this post evaluates the H/E ratio over the current expansion, from 2011 to 2016. Some may note that the recession ended in June 2009, but 2011 was the year that nonfarm payroll employment (NFP) growth finally really recovered.

Table: NFP Employment Growth 2010 to 2016

As in that earlier post, this post will evaluate the H/E ratio for the 51 largest metro areas in the US (those that had populations of 1 million or more as of the 2010 census). The idea is to see how planned increases in housing supply as gauged by permits compare to increases in employment and (implicitly) demand for housing. At the end of this post is a table of all 51 metro areas that can be sorted by any of the table’s columns. The right-most column is the ratio of housing units per increase in employment, referred to as “H/E ratio” for the rest of this post. For the 2011 to 2016 period the average H/E ratio for the 51 largest metro areas was 0.34.

To repeat the caveat in my earlier post: the H/E ratio tells us only about the incremental supply of housing units to be added, and incremental demand as gauged by increase in employment, and does not tell us anything about the existing housing stock or the existing employment base. That is, it does not give us the entire picture of supply and demand for housing.

Among the large metro areas with the top 10 highest rates of NFP employment growth over the 2011 to 2016 period (shown as the compound annual growth rate, or CAGR, in the table) , the H/E ratio ranges from 0.67 for Raleigh, North Carolina to a low of 0.18 for San Jose, California. Austin, Texas, with the highest rate of employment growth over the 2011 to 2016 period, has an H/E ratio of 0.56, considerably above the average. We should also note the high rates of employment growth for these metro areas when compared to the national rate of employment growth over the same period, which was 1.8%. The top four metro areas (Austin, Texas; San Jose, California; Nashville, Tennessee; Orlando, Florida) saw employment growth at double the national rate or higher.

Top 10 Large Metro Areas – 2011 to 2016 NFP Employment Growth Rate

Top 10 large metro areas ranked by employment growth 2011 - 2016
The 10 highest H/E ratios are well above the average of 0.34, with Hampton Roads, Virginia topping the list at 1.23. However, Hampton Roads’ high H/E ratio is due to a relatively low ‘E’ as its CAGR for NFP employment over the period was 0.7%. Pittsburgh, with the second highest H/E ratio has had an even lower rate of employment growth. If these two metro areas had employment growth at the national rate of 1.8%, Hampton Roads’ H/E ratio would be 0.47, and Pittsburgh’s would be 0.18.

Top 10 Large Metro Areas – 2011 to 2016 H/E Ratio

Top 10 large metro areas housing units (permits) per NFP employment increase 2011 to 2016
Moving to the metro areas with the 10 lowest H/E ratios, California cities make up half of the list. And those five California cities all had NFP employment growth above the national rate (1.8%) for the 2011 to 2016 period. By comparison, Chicago and Cleveland saw employment growth below the national rate. As noted in my earlier post, Detroit is known to have lots of vacant housing stock, so its low H/E ratio is not surprising.

Bottom 10 Large Metro Areas – 2011 to 2016 H/E Ratio

metro areas lowest 10 ratio of housing units (permits) per NFP employment increase 2011 to 2016
Looking at the percentage of multifamily units, the New York City metro area is, unsurprisingly, at the top of the list. What is surprising, though, is that California cities Los Angeles and San Jose have a higher multifamily percentage than cities known for the their density, such as San Francisco, Boston, and Seattle.

Top 10 Large Metro Areas – 2011- 2016 Multifamily Housing Unit Percentage (Permits)

Top 10 large metro areas - percentage of housing unit that are multifamily 2011 to 2016

As mentioned above, here is the sortable table of all 51 large metro areas:

2011 to 2016 Employment Growth and Housing Permits for Large Metro Areas

Metro Area2011-2016 NFP
employment
growth
thousands
2011-2016 NFP
employment
CAGR
%
2011-2016
authorized
housing
units
% of units
multifamily
housing units
per NFP
employment
increase
New York, NY932.61.7%265,14678.9%0.28
San Jose, CA219.03.8%38,34573.4%0.18
Los Angeles, CA667.02.0%92,99272.0%0.14
San Diego, CA184.02.3%46,72767.8%0.25
San Francisco, CA405.83.2%64,24465.6%0.16
Miami, FL386.32.7%98,11763.9%0.25
Seattle-Tacoma, WA299.32.8%120,89059.0%0.40
Boston, MA260.51.7%67,08858.9%0.26
Columbus, OH142.02.4%42,76053.5%0.30
Denver, CO253.03.2%91,32352.0%0.36
Portland, OR163.12.6%65,77449.4%0.40
Chicago, IL370.31.4%79,53849.0%0.21
Milwaukee, WI38.10.8%14,47648.4%0.38
Washington, DC263.71.4%138,84948.2%0.53
Austin, TX207.83.9%115,54247.5%0.56
Dallas-Fort Worth, TX624.03.2%254,29546.1%0.41
Philadelphia, PA181.71.1%65,52945.6%0.36
Kansas City, MO86.61.4%43,02444.5%0.50
Hartford, CT24.60.7%8,95443.7%0.36
Buffalo, NY21.00.6%10,04843.2%0.48
Minneapolis-St. Paul, MN199.11.8%65,90142.5%0.33
Salt Lake City, UT115.73.0%33,76241.8%0.29
Baltimore, MD115.61.4%43,58241.0%0.38
Hampton Roads, VA30.30.7%37,13139.7%1.23
Orlando, FL235.23.6%93,91439.2%0.40
Tampa, FL187.02.6%73,87438.5%0.40
Charlotte, NC175.32.8%90,13536.7%0.51
Atlanta, GA413.52.8%140,45735.8%0.34
Nashville, TN182.53.6%76,41835.8%0.42
Louisville, KY81.82.2%23,10035.8%0.28
Raleigh, NC100.73.1%67,86433.7%0.67
Rochester, NY17.30.5%10,85633.6%0.63
Indianapolis, IN134.32.3%42,69833.5%0.32
Houston, TX439.42.6%291,18732.5%0.66
Phoenix, AZ284.12.6%115,07031.4%0.41
Birmingham, AL29.41.0%19,01831.1%0.65
Memphis, TN47.21.3%20,82630.6%0.44
San Antonio, TX155.52.8%49,06430.0%0.32
St. Louis, MO101.31.3%38,08329.4%0.38
Cincinnati, OH103.31.7%27,02929.3%0.26
Las Vegas, NV147.32.8%55,31326.9%0.38
Pittsburgh, PA30.10.4%21,91526.1%0.73
Inland Empire, CA262.13.4%50,14425.6%0.19
Richmond, VA78.52.1%26,00925.0%0.33
Jacksonville, FL97.92.6%47,58524.0%0.49
Providence, RI37.31.1%10,65323.4%0.29
Detroit, MI230.22.1%35,37820.4%0.15
Oklahoma City, OK55.31.5%38,05017.2%0.69
Sacramento, CA127.32.4%27,64815.8%0.22
Cleveland, OH67.61.1%15,65915.6%0.23
New Orleans, LA39.21.2%15,67214.6%0.40
data source: Bureau of Labor Statistics, Census Bureau

JOLTS update

The BLS released JOLTS data for January yesterday (here’s the BLS press release), so it’s time for a quick update on job openings. Total nonfarm job openings for January were down 97,000 from a year earlier, but as the BLS notes here in Table 7, that is not a statistically significant change.

JOLTS job openings percentage by industry January 2017 and January 2016

Comparing the distribution of job openings by industry for January 2017 to January 2016 we can that very little changed at the industry level as well, with over half of job openings accounted for by professional and business services, health care and social assistance, and leisure and hospitality in both periods. The only significant changes in industry level job opening are the ones noted as statistically significant by the BLS (see the Table 7 link above):

  • Government: from 8.4% in January 2016 to 7.7% in January 2017
  • Real estate and rental and leasing: from 1.2% to 2.8%
  • Educational services: from 1.9% to 1.5%

2016 Metro Area Employment Growth and Housing Permits

Update: a more recent post (dated March 24) covers metro area employment growth and housing permits for the 2011 to 2016 period.

The Census Bureau recently released 2016 housing permit numbers for metro areas (click here), so I decided to compare employment growth to housing permits. The idea is to see how planned increases in housing supply match up (or don’t) with increases in employment and (implicitly) demand for housing.

The housing permits figures are more properly known as “new housing units authorized by building permits”, meaning that those housing units have been approved for construction, and not necessarily that construction has started. Though we do not have data for housing starts or completions by metro area (if you’re reading this and know of a source for metro area starts and completions, please let me know), at the national level housing permits and starts trend together very closely, followed with some lag by completions (see this FRED graph).

Looking at the 51 largest metro areas in the US (those that had populations of 1 million or more as of the 2010 census), we can compare nonfarm payroll (NFP) employment growth to the increase in housing units as gauged by permits. At the end of this post is a table of all 51 metro areas that can be sorted by any of the table’s columns. The right-most column is the ratio of housing units per increase in employment, referred to as “H/E ratio” for the rest of this post. For 2016 the average H/E ratio for the 51 largest metro areas was 0.48.

Caveat: the H/E ratio tells us only about the incremental supply of housing units to be added, and incremental demand as gauged by increase in employment, and does not tell us anything about the existing housing stock or the existing employment base. That is, it does not give us the entire picture of supply and demand for housing.

Among the large metro areas with the top 10 highest rates of employment growth in 2016, the H/E ratio ranges from a bit higher than the average (0.55 for Las Vegas and 0.53 for Denver), to a low of 0.17 for San Jose, California (which is also the lowest of all 51 large metro areas). Orlando, with the highest rate of employment growth among large metro areas in 2016, has an H/E ratio just below the average at 0.46.

Top 10 Large Metro Areas – 2016 Nonfarm Payroll Employment Growth Rate

Top 10 large metro areas NFP employment growth
Next, looking at the large metro areas with the 10 highest H/E ratios, we can see that all but one the top 10 have H/E ratio of 1.0 or higher (and Kansas City, in tenth place, is very close at 0.96). This list also illustrates the importance of the ‘E’ (employment growth) in the H/E ratio: The top two metro areas in this top 10 list, Oklahoma City and Houston, with H/E ratios of 13.54 and 3.02 respectively, saw 2016 employment growth significantly below the national average of 1.4%. If they had experienced employment growth at the same rate as the national average, Houston’s H/E ratio would be around 0.95, and Oklahoma City’s would be around 1.31. Having stated that, this list of metros with the top 10 H/E ratios are building housing (or at least planning to) at a rate roughly in line with employment growth, and thus should be alleviating the pressures causing housing crunches in many parts of the country.

Top 10 Large Metro Areas – 2016 H/E Ratio

Top 10 large metro areas housing units (permits) per NFP employment increase
If we look at the large metro areas with the 10 lowest H/E ratios we can see that all except one had employment growth that was close to or greater than the national average of 1.4% (that one exception is Cleveland, Ohio, which saw employment growth of 1.0% in 2016). A few of the metro areas on this list are most likely dealing with constraints on available land on which new housing can be built, such as Boston and San Jose. Detroit is known to have lots of housing stock that is vacant, so its low H/E ratio is not a surprise.

Bottom 10 Large Metro Areas – 2016 H/E Ratio

Bottom 10 large metro areas housing units (permits) per NFP employment increase
The housing permits data from the Census Bureau shows us single unit and multi-unit figures, and from that I calculated for each metro area the percentage of units that are multifamily. Sorting by this percentage reveals that California cities San Diego and Los Angeles are building a higher percentage of multifamily housing than most cities known for their density. San Diego tops the list with multifamily units at 78.1%, higher than that of New York City. We should keep in mind, though, that these figures are for entire metro areas, and that the greater NYC metro area includes many residential suburbs. Interestingly, two other California metro area have close the lowest multifamily percentages: Sacramento (14.8%) and Inland Empire (20.9%).

Top 10 Large Metro Areas – 2016 Multifamily Housing Unit Percentage (Permits)

Top 10 large metro areas percentage of multifamily housing units

As mentioned above, here is the sortable table of all 51 large metro areas:

2016 Employment Growth and Housing Permits for Large Metro Areas

Metro Area2016 NFP
employment
growth
thousands
2016 NFP
employment
growth
%
2016
authorized
housing
units
% of units
multifamily
housing units
per NFP
employment
increase
Oklahoma City, OK0.50.1%6,77025.6%13.54
Houston, TX14.80.5%44,64320.7%3.02
Raleigh, NC10.91.8%13,50730.1%1.24
Austin, TX18.81.9%22,24238.8%1.18
Providence, RI2.30.4%2,54734.7%1.11
Memphis, TN4.00.6%4,35531.0%1.09
Richmond, VA4.50.7%4,83718.2%1.07
Phoenix, AZ27.51.4%28,54234.9%1.04
Charlotte, NC18.91.7%19,35332.9%1.02
Kansas City, MO10.51.0%10,06347.8%0.96
Birmingham, AL4.20.8%3,46322.0%0.82
New Orleans, LA3.80.7%2,94916.8%0.78
Nashville, TN24.32.6%18,55735.3%0.76
Hartford, CT3.20.6%2,05459.1%0.64
Tampa, FL28.42.2%17,18037.8%0.60
Chicago, IL32.20.7%19,46958.3%0.60
Portland, OR25.12.2%14,72350.1%0.59
Las Vegas, NV24.82.7%13,57735.1%0.55
Jacksonville, FL22.13.3%11,69827.3%0.53
Minneapolis-St. Paul, MN27.41.4%14,13345.1%0.52
Atlanta, GA70.82.7%36,12136.5%0.51
Dallas-Fort Worth, TX113.53.3%55,61846.3%0.49
Denver, CO44.83.2%21,32252.1%0.48
Orlando, FL50.34.2%23,25138.9%0.46
Rochester, NY4.40.8%2,00035.9%0.45
San Antonio, TX21.82.2%9,78534.2%0.45
Columbus, OH19.21.8%8,24951.0%0.43
Louisville, KY12.11.8%5,00139.5%0.41
Seattle-Tacoma, WA64.63.4%25,51663.2%0.39
Indianapolis, IN19.71.9%7,55425.3%0.38
Salt Lake City, UT23.73.4%8,80051.0%0.37
San Diego, CA28.92.0%10,66978.1%0.37
Washington, DC66.62.1%24,94448.0%0.37
Baltimore, MD22.21.6%8,04041.6%0.36
Los Angeles, CA90.01.5%32,00870.9%0.36
New York, NY120.61.3%42,46676.5%0.35
Pittsburgh, PA4.40.4%1,50933.8%0.34
San Francisco, CA46.62.0%14,98967.1%0.32
Miami, FL60.82.4%18,69464.2%0.31
Philadelphia, PA41.31.4%12,11543.7%0.29
Buffalo, NY7.11.3%1,99253.1%0.28
Cleveland, OH10.91.0%2,95510.2%0.27
Cincinnati, OH21.72.0%5,85932.9%0.27
Sacramento, CA29.33.2%7,21714.8%0.25
Inland Empire, CA40.82.9%10,01920.9%0.25
St. Louis, MO33.62.5%7,94332.8%0.24
Boston, MA53.22.0%13,01759.5%0.24
Detroit, MI33.31.7%7,53624.0%0.23
San Jose, CA36.03.4%6,12766.4%0.17
Milwaukee, WI-4.7-0.5%3,82957.3%
Hampton Roads, VA-2.8-0.4%6,37537.1%
data source: Bureau of Labor Statistics, Census Bureau

Initial Unemployment Claims Update

The DOL has released unemployment claims data for the week ending February 25 (see the DOL news release here).

Initial claims show us a labor market that continues to improve, with the 4-week moving average as of February 25 at 234,250 down 10.3% from a year earlier (here’s a link to the FRED chart below):

FRED chart: year-on-year percent change of 4-wk moving avg of initial unemployment claims

That figure of 245,250 is also well below the low point for the previous expansion, 286,500 in February 2006 (here’s a link to the FRED chart below):

FRED chart: 4-wk moving avg of initial unemployment claims