As of May, Combined Trailing 12-month permit levels, which includes both single family and multifamily permits, increased 20.9 percent. Despite generally increasing permit levels, total permits for 2019 were 34,576 or 49 percent below our previous market peak of 68,402 units in 2005. Given the current market, 2020 permits are expected to remain near, or slightly above, 2019’s permit amount. Current E/P Ratio is -2.85 due to the significant jobs loses associated with Covid lockdowns. The Employment-to-Permit Ratio (E/P) looks at how well supply is keeping up with demand. Equilibrium = 1.2, meaning for every 1.2 jobs added, there is 1 permit issued.
Full article on AZBigMedia (with updated May numbers by Cooke Multifamily Team’s Research Director Thomas Brophy within the parentheses):
(1) Arizona fared better than U.S. unemployment in April 2020 at 12.6%, as opposed to 14.7% nationally (for May, Arizona was tied for 4th lowest unemployment at 8.9%, behind Utah which was #2 at 8.5%. Texas was 34th at 13%)
(2) Even during the economic boom in 2019, retail never regained all of the jobs lost between 2007 and 2010. Half the jobs lost in April, 128,600 were in those two sectors. The bright spots, groceries and building supplies added 3,000 jobs between the two subsectors. (In May, Retail gained 3.2% or 7,000 jobs)
(3) Phoenix still showed strong job gains in the advanced industry sectors. It’s in those sectors that Phoenix and other metropolitan area cities, and the state focused on new company recruiting efforts over the 10 years since 2010.
a. Manufacturing was flat, no jobs lost in year-over-year comparisons (in May 2020 contracted 4.8% YoY)
b. Aerospace, computer and electronic device production subsectors added 1,000 jobs. (in May the combined sector increased an additional 1,700)
c. Wholesale trade added 1,200. (In May, Wholesale Trade was up 1.9%, 1,600 MoM and up 5.9% or 4,900 YoY)
d. Financial activities added 9,500 jobs (In May, added 500 positions over-the-month, 900 over-the-year but is slightly below January 2020’s peak employment of 204,700 as of May is 202,000)
e. Bioscience healthcare sector added 10,100 new jobs
(4) Between the advanced industries, the Phoenix metro added 22,100 jobs. During 2019, the average month gained over 30,000 jobs in year-over-year comparisons with 2018.
(5) Of all U.S. metros over one million population (51 Metros), Phoenix and Dallas had the lowest year-over-year April job losses, 7.6%, according to U.S. Bureau of Labor Statistics (In May, the Phoenix MSA had the lowest unemployment rate at 8.3%, SLC #6 at 9.4%, Austin was 22nd at 11.4%, DFW #26 at 12.3%, San Antonio was #31 at 12.7% and Houston MSA #36 at 13.9%)
Here’s why Phoenix job numbers show bright spots and resilient economy
It may be hard to convince anyone among the more than 222,500 metropolitan area workers losing jobs in April that there is any good news on the job front.
A post-Great Recession economic development policy change by Arizona, Phoenix, and Valley cities about recruiting jobs succeeded. The April employment report has some bright spots in the dark clouds.
An entire year of Valley job gains was wiped out in 30 days with the metropolitan area unemployment rate climbing from a record low 3.7 percent unemployment rate in December 2019 to a never-seen-before-rise to a seasonally adjusted 12.6 percent in April 2020, according to the Arizona Office of Economic Opportunity.
Compared to the rest of the nation, Phoenix fared much better. Nationally, the unemployment rate hit 14.7 percent. In California, and some metro areas in the rust belt hit around 20 percent and more.
Total Nonagricultural Wage and Salary Employment in Texas grew by 237,800 jobs in May, the highest over-the-month increase since the series began in 1990. The increase came after a combined decrease of over 1.4 million jobs in March and April as a result of economic shutdowns related to COVID-19. The May increase coincides with gradual steps to reopen economies across the state. Private Sector jobs increased by 291,000 in May, also a series high. Eight of 11 major industries added jobs over-the-month, including record monthly increases in five. Substantial year-over-year employment decreases remain statewide
for almost all industries. From May 2019 to May 2020 Texas shed 917,800 jobs including 853,600 private sector positions.
The Houston MSA, which accounted for 27% of Texas’ employment increase over-the-month, saw the 2ndhighest rebound in the region, adding 63,900 jobs, or 2.6%, over-the-month (although still 227,500 jobs below over-the-year numbers).
Over-the-month, the Service Sector was up 3.1%, or 72,900 jobs, and was led by:
#1 Leisure and Hospitality, up 18.9% or 39,800
#2 Education and Health Services up 6.6% or 24,500
#3 Retail Trade up 4.1% or 11,300
While we still await more data, specifically need to wait until mid-July to see June’s numbers, if the current trend holds and oil prices continue to stabilize there is a good chance the Houston market could see stabilization by the end-of-the-year.
Houston Chronicle (5/27/2020)
Exxon Mobil, one of the largest employers in the Houston area, said Wednesday it has no immediate plans to lay off workers in response to the coronavirus-driven oil bust. The Irving-based oil and gas producer plans to cut operating expenses by 15 percent this year after oil prices plunged along with demand for petroleum products during the global pandemic. However, CEO Darren Woods told shareholders at the company’s annual meeting Wednesday that those cost reductions do not include any layoffs of Exxon employees. The oil major employs nearly 16,000 employees locally, according to a Houston Chronicle survey.
The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 80.8% of apartment households made a full or partial rent payment by June 6th in its survey of 11.5 million units of professionally managed apartment units across the country.
This is a (0.7%) decrease from June 2019 but 60bps above May 2020’s 80.2% share. The share has been steadily rising, up 280 bps since April 2020.
Interesting to note, for the full month, May witnessed a 50 bps increase over April 2020 collections.
U.S. May jobs report by the BLS reported the highest month-over-month increase ever recorded, after April’s historic job loss due to Covid-19 lockdowns. While we still need to wait until July/August to see the full impacts and revisions, preliminary data suggests businesses are roaring back to life after staggered reopenings began in early May.
Total nonfarm payroll employment rose by 2.5 million in May and the unemployment rate declined to 13.3%. These improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it. In May, employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade.
Employment in Leisure & Hospitality increased by 1.2 million or 49.4% of the total employment increase, following losses of 7.5 million in April and 743,000 in March. Construction employment increased by 464,000 in May, 18.5% of total employment increases, gaining back almost half of April’s decline (-995,000). Employment increased by 424,000, or 16.9% of total, in Education & Health Services, after a decrease of 2.6 million in April. Healthcare employment increased by 312,000 over-the-month, with gains in offices of dentists (+245,000), offices of other health practitioners (+73,000) and offices of physicians (+51,000) and fueled in large part on the lifting of restrictions for non-essential surgeries. Manufacturing employment rose by 225,000 or 9% of total, with gains about evenly split between the durable and nondurable goods components. Full breakdown of employment changes by industry super-sector follows:
The region accounts for 12% of total US nonfarm employment. Since 2018, Arizona/Texas/Utah combined have averaged 18% of total US nonfarm job growth. Assuming this trend continues, employment for the region should increase by 451,620. Contingent upon the MSA, total nonfarm employment has been reduced to late 2017, early 2018 levels.
**Assuming this rate of growth is maintained, coupled with less restrictive lockdowns the region generally witnessed, employment recovery for the region will take between 1.5 to 2.5 years to return to employment levels witnessed at the end of 2019.**
The Cooke Team is proud to present “The Residential Permit Snapshot”.
The snapshot, an infographic detailing Single-Family & Multifamily (5+) Permits, Employment-to-Permit (E/P) Ratio & Multifamily Land Pricing Trends, showcases metropolitan Phoenix housing data from March 2020.
Despite talk of rent strikes across the U.S. due the COVID-19 crisis, the number of tenants who paid at least part of their monthly rents at the beginning of May climbed. About 86.2% of Phoenix-area renters paid their landlords this month. That compares with 80% in April, according to new data from the National Multifamily Housing Council and apartment research firm RealPage. Rent relief programs and higher unemployment benefits due the CARES Act could be helping more renters.
The increase in rent payments comes as more than 500,000 people have applied for unemployment benefits during the health and economic crisis in Arizona. “Despite the fact that over twenty million people lost their jobs in April, we are seeing evidence that apartment renters who can pay rent are doing so,” said Doug Bibby, NMHC president in a statement.
About 89% of Valley renters made their payments during May 2019. None of the data for rent payments includes student housing and lower-income properties.
Utah ranks 34th among U.S. states for overall rise in new unemployment claims (41stwithin the last week)
Texas ranks 35th among U.S. states for overall rise in new unemployment claims (12thwithin the last week)
Arizona ranks 43rd among U.S. states for the overall rise in new unemployment claims (23rd within the last week)
To view by city go here: Cities With the Biggest Growth in Unemployment Due to COVID-19
Prior to the pandemic outbreak, the Texas real estate market was hot. The various market reports and statistics were not lost on local assessors who worked to keep property values in line with the market conditions. The result has been double-digit value increases for most property types in recent years.
As part of the state’s annual reassessment, counties throughout Texas are updating real property values for the 2020 tax year. Proposed 2020 Values are meant to reflect the fair market value of your taxable real property as of January 1 – when the real estate markets was still on an upward trend. Because of this, 2020 assessed values for all property types are expected to increase.
Many counties have stated that any effect to value due to the current health crisis will NOT be considered until the 2021 tax year, making it extremely important to review your 2020 assessment notice with a knowledgeable property tax consultant for appropriateness and if the value is overstated, be prepared to file an appeal before the deadline.
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