U.S. Wage Growth Outlook Bodes Well for Real Estate
A recent article on Fortune.com reveals that the majority of U.S. business economists believe that corporate sales, hiring, and wages are on track to rise throughout the next three months.
Expert forecasts have been optimistic about continued U.S. economic growth, with the most recent report from Fortune.com explaining the results of a survey of U.S. business economists. According to Fortune, the results of the National Association for Business Economists’ (NABE) Business Conditions Survey released on Monday shows that 68% of the 98 respondents predict that sales will grow over the next three months. All of the panelists foresee the country’s GDP to expand over the course of the next year.
U.S. Wage and Job Growth
Sara Rutledge, chair of NABE’s Business Conditions Survey, explained what’s contributing to the expected wage growth. “Labor market conditions are tight, with skilled labor shortages driving firms to raise pay, increase training, and consider additional automation.”
Additionally, over the next three months, further job growth is anticipated by a majority of the survey respondents. The Net Rising Index (NRI) for employment increased from 26 in April to 41 in July, which is an all-time high according to NABE.
“U.S. job growth remains steady and now we’re seeing wages making some gains. These are very good signs for the U.S. economy and they make a good case for future economic growth,” said David Brodsky, broker/owner of David Brodsky Properties, one of Austin’s premier boutique real estate firms.
“Jobs and wage growth have a very positive effect on real estate. As wages continue to strengthen along with the jobs market, we will likely see an increase of buyers entering the real estate market or homeowners who are now ready to sell and purchase a move-up home,” Brodsky explained.
Texas Economic Outlook
Statewide, the economic outlook is also faring well. According to the most recent Texas Economic Update from the Federal Reserve Bank of Dallas, year to date, state employment has grown at a 3.6 percent annualized rate. Texas job growth has been driven by gains in the goods-producing sector and has been broad based across Texas’ major metro areas, with Austin showing solid gains.
Dallas Fed Economic Policy Advisor and Senior Economist Anil Kumar said in a video accompanying the release that the Texas economy continues to expand at a solid pace. “The Texas Business Outlook Surveys indicate that economic activity accelerated in May, with most key indexes hitting multiyear highs,” he said.
Like the factors affecting the national economic outlook, tight labor markets are also feeding into wage growth, according to Kumar. “The wage indexes from the Texas Business Outlook Surveys are well above their long-term averages. Although payroll survey data indicate that wage pressures may still be moderate overall, there are strong signs of pickup in certain sectors, such as construction and leisure and hospitality.”
The Austin Real Estate Outlook
Both economic reports support a recent prediction by one real estate expert that this will be another “banner year” for Austin real estate.
Jim Gaines, the chief economist at the Real Estate Center at Texas A&M University, spoke at an industry presentation at the mid-year forecast event sponsored by the Austin Board of REALTORS® (ABoR). This year, the Austin area has seen a robust 3.7 percent job growth.
In addition to the swelling population seeking job opportunities, limited inventory to fill housing demand continues to push home prices up, he said. In fact, he expects the median home price in the Austin area to climb about 5.5 percent this year.
“This area has just been booming,” Gaines said. “That momentum is still going, and it’s still going strong.”