Insight: Housing improvement may herald return of U.S. workforce mobility
NEW YORK/WASHINGTON (Reuters) - When David Pendery, a corporate public relations specialist, decided to move his family from Colorado to Illinois this year for work, his biggest worry was whether he would be able to sell his home quickly.
It took just three days.
"We certainly thought selling our house would take longer," said Pendery, who started in February at Kerry Ingredients, a flavoring provider for the food and beverage industries.
Pendery's experience may be on the extreme side, but his case may be a sign of a revival in one of the historical advantages of the U.S. job market: the ability of workers to go where the jobs are.
For much of the past five years, falling house prices effectively locked people in their homes, since many were "underwater" - owing more on their mortgages than they could raise by selling.
At the same time, double-digit unemployment across much of the nation meant there were few jobs to move for anyway.
That may be changing. While far from their 2006 peak, home prices in major metropolitan areas have been rising since early 2012. If that persists, it should make it easier for Americans to move and for employers to match job seekers with available jobs, lowering the jobless rate and increasing overall economic productivity and growth.
"Until the real-estate market picked up, people wouldn't even consider a move without the certainty that they could sell their homes," said Jerry Funaro, vice president of global marketing for TRC Global Solutions, a domestic and international relocation service based in Milwaukee.
"Companies are now more inclined to make offers since we're seeing real estate markets across the country coming back," he said. "Last year, the pace of business started to improve and that momentum has continued in 2013."
Housing added to growth last year for the first time since 2005, and single-family home prices recently notched their biggest annual rise since mid-2006.
Increased hiring, meanwhile, pushed the jobless rate down to 7.5 percent in April, its lowest in more than four years.
In 2013, employers have added an average of 196,000 jobs per month, although economists say that is still too few to absorb the nearly 22 million Americans who have lost a job, been forced to accept a part-time position or left the workforce altogether.
"The lack of housing mobility has been a serious detriment these last few years and, frankly, is something we haven't seen much of since the Great Depression," said Russell Price, senior economist at Ameriprise Financial Services in Troy, Michigan.
The unemployment rate reached 10 percent in late 2009, the highest in nearly three decades.
While mobility is not as robust as it was before the crisis, Price said the economic cycle is "about at the point where these types of structural employment problems start to fall away."
The U.S. Census Bureau found that the number of people who moved last year rose to 35.6 million, pushing the overall mover rate to 12 percent from 2011's record low of 11.6 percent, the first rise in four years. Long-distance moves ticked up as well.
"It's not a huge gain, but when you consider that for two years, we've had the lowest migration rates since World War II, any move up is good news," said William Frey, a demographer at the Brookings Institution in Washington.
Pendery said his job offer was a "phenomenal opportunity that I just couldn't pass up," but said he feared a prolonged selling process in Colorado would make a stressful cross-country move even more harried by delaying the purchase of a new home.
"No firm is going to offer unlimited temporary housing, and you don't want too much out-of-pocket expense," he said. It took about a month to close on a new home in Rockford, Illinois.
According to the National Association of Realtors, it took on average 62 days to sell a home in March, compared to 91 days in March 2012.
Of course, housing is far from fully healed. More than 20 percent of mortgages are still underwater and foreclosure rates remain elevated. On average, home prices nationally are back at levels seen in the fall of 2003 but well off their 2006 peak.
Not all regions are booming, either.
Hiring has been strong in energy-intensive industries in places such as Texas and North Dakota, said Craig Selders, president of Paragon Relocation, a global relocation firm.
"I myself moved from Houston to Dallas last year and was not worried at all about selling my home," he said, noting Houston's oil and gas sector is one of the country's hottest job markets.
Florida and Las Vegas, areas hit especially hard when the housing bubble burst, still face challenges, several firms said.
And while U.S. growth picked up in the first three months of 2013, some worry that higher payroll taxes and government spending cuts could slow momentum in the second quarter.
That is keeping some firms "hesitant and cautious" about moving workers, said Richard Smith, chairman and CEO of Realogy, owner of the Danbury, Connecticut-based global relocation firm Cartus, which saw a 4 percent decline in relocations in the first quarter.
Companies "are still relocating employees but perhaps not as robustly as they would otherwise," Smith said on a recent conference call with investors. Cartus did see a 10 percent jump in broker referrals, suggesting things may be improving.
Tight bank lending standards, cost-of-living variations and a rise in two-earner families also present difficulties for job seekers, said Ellie Sullivan, vice president of consulting at Weichert Relocation Resources in Morris Plains, New Jersey.
Chirag Shah, 29, a radiation oncologist, moved to St. Louis last June when his residency at a Detroit hospital ended but pulled up roots again this year when he and his wife decided prices in the upscale St. Louis suburbs of LaDue and Clayton were too high.
"A single-family detached home in a good school system was bordering on $700,000 to $800,000," said Shah, who took a new job in Akron, Ohio, and moved in with family in Cleveland while he hunts for a house. He's still paying rent in St. Louis and Detroit, where his wife is finishing her own medical training.
One of Sullivan's corporate clients has tried to address all of this by luring potential employees with cash for down payments on new homes. "But these are critical new hires, really high potential talent. That's not a trend for your average Joe."
Indeed, Joshua Shapiro, chief U.S. economist at MFR, a New York global consulting firm, noted that a lot of recent hiring has been concentrated in low-wage industries such as retail, health care and hospitality as well as temporary employment.
"These are not exactly positions that get people to say, 'Oh wow, I have this fantastic $7-an-hour job with no benefits, I think I'll sell my house and move across the country,'" he said.
But Sullivan said things are moving in the right direction.
"We are starting to see a pickup in activity, especially among new hires," she said. I don't know if it's contributing to hiring across the board, but I do think it improves mobility, because employees are not tethered to their houses."
(Editing by Claudia Parsons)