As we enter into the dog days of summer and the temperatures are heating up, so does the housing market and overall job growth outlook in Orange County. As an Irvine CA accounting company we thought it would be interesting to explore this job growth and how it is affecting the overall regional economy and the housing market.
In June the Orange County Register reported that Orange County has finally recovered all of the jobs it lost during the Great Recession. Last month positions reached a historic high beating the previous peak in 2006.
According to state employment officials, that number of jobs was 1,548,800. In the past year payrolls have grown 3.4%. That’s faster than the state rate of 3% and national rate of 2.2%.
Orange County has Southern California’s lowest unemployment rate at 4.2%. That is down a full percent from 5.2% the year before. This low unemployment rate shows that the county is producing more jobs than people available. Employers are now finally looking for people who have been out of work long term.
One interesting correlation we see here are peaks in the real estate market both around this magic number. With record numbers of Orange County citizens working in 2006 and now 2015 we see similar trends in the housing markets.
These indicators tell us that as the job market grows, people generate more income and are confident with their job stability they then in turn are more likely to purchase a home. With limited inventory, as demand grows so do prices. One difference between the 2006 market vs. the 2015 market are interest rates.
The average 30 year fixed rate on a mortgage in 2006 was 6.41%. In 2015 that rate through July is 3.81%. One can only conclude that if household incomes and payrolls are at matching record highs in 2006 and 2015 and interest rates are around 40% lower the market is only going to continue to grow as long as job growth stay stable.
Low levels of homes for sale will also drive housing construction creating more jobs.
Orange County’s own Chapman University released a report in June forecasting a 3.1% increase in jobs in 2015. As the Orange County economy grows, as an Irvine CPA Firm we feel its safe to say that the financial outlook and housing markets are looking strong as long as job growth remains stable.