While the national story is slow and steady job growth, the local story is much different. The US is a mix of rapidly accelerating and decelerating economies. The larger markets, particularly in the South, are growing faster than the smaller markets, which is particularly good for new home construction. There are other, more local factors at play as well.
The following two charts show eight economies that have rapidly accelerated and decelerated over the last year.
Naples’ and Tampa’s resurgences are led by leisure and hospitality, education and health services, and transportation. Dallas and Fort Worth’s resurgences are led by high-paying professional business services jobs. Surprisingly, DC-adjacent Bethesda’s resurgence is led by government jobs, as well as professional business services.
Infrastructure investment is also a key to growth, as evidenced by the tremendous level of freeway construction in Dallas-Fort Worth, which is improving commutes and opening up areas for future growth.
California, and particularly Northern California, have fallen victim to California’s recent 3% top-tier increase in state income taxes. While it is difficult to document the impact of this policy change, numerous new home sales agents interviewed by our consulting staff in Nevada and Texas have credited strong sales with a surge in affluent buyers who are relocating from California.
It is also clear that being a state capital is a disadvantage, as Sacramento, Raleigh, Richmond, and other capitals like Austin are struggling in comparison to their neighbors.
Over the next six months, we expect markets with heavy mortgage operations, such as Dallas and Orange County, CA, to slow. What is interesting about this is that the recovery is varying significantly across the country. It is once again time to pay close attention to local dynamics.