May preliminary employment report positive – ETSU economist questions accuracy of local Q1 unemployment data

May’s local unemployment numbers are out and the overall preliminary picture is good even though unemployment rates are up and the number of people reporting they have jobs is down. But you might want to look at the most often quoted labor market metric through more critical lenses.

ETSU Economist Steb Hipple is questioning the accuracy of the monthly household survey, which is used to determine local unemployment rates. Dr. Hipple is also a research associate for the Bureau of Business and Economic Research. His comments came during an interview during a WETS Business Matters broadcast last week to discuss his Q1 labor market report. He made similar observations in that report which can be found by CLICKING HERE but the radio interview gives additional insights.

There are two primary labor market reports each month. The first is commonly known as the payroll survey, and it’s just that. It’s a survey of employers about how many people are working and in what jobs.  This survey is the larger of the two reports so it’s considered more accurate. But it’s not available on the county or city levels.

The second report is commonly known as the household survey. It focuses on localities, how many people are working and how many who are looking for a job. It’s the report that drives the monthly unemployment rate. The household survey is a smaller sample so its accuracy is at its best on the national level although it is reported on the county and city (above 25,000) level.

Locally the payroll survey and the household survey reported conflicting stories during the post-recession recovery years. The payroll report was showing job growth. The household survey was showing lower employment and lower unemployment rates as more people left the labor force. That continued through Q1 even after the Bureau of Labor Statistics’ most current revision of the numbers.

Dr.  Hipple told the hosts of Business Matters late last week, “You can’t have one survey going up and another going down and claim they’re observing the same phenomena.”  The data we have watched and payed the most attention to is the household survey, but it’s “telling a story that is apparently wrong.” Dr. Hipple said he does not see a problem with the household data on the national level. It’s the local level where he has an issue.  Dr. Hipple is a routine Business Matters guest to discuss his quarterly sales tax and labor market reports.

Which report does he think is telling the most accurate story about local labor markets and why?

“Right now I’m hanging my hat on the payroll data.”  That’s because retail sales affirm the growth in the payroll jobs data. Unfortunately the payroll report is only available on the MSA level. The household data – once you get below the national – level “is not robust, he said. It’s subject to extensive revisions.”

In theory both the payroll and household surveys are needed for a complete picture of the labor market. The payroll survey provides a gauge of monthly change in jobs on the MSA level, but it does not include agricultural jobs and omits some self-employment, part-time and contract jobs.

The household survey provides a broader picture of employment including agriculture and self-employment. Its focus is on the number of people employed and those looking for a job.

When you look at the data on a monthly base you can see the two reports beginning to sync. But each current monthly report is preliminary and is revised when the following month’s report is releases. Usually the revisions are slight.

Both the monthly jobs and employment data are showing growth in the three-county Johnson City MSA for February through May. The telling check will come with the final Q2 numbers. The preliminary report will be available in July. The household survey adjusted numbers will available in the August report.

With the exception of March, both the household and payroll survey in the four-county Kingsport-Bristol MSA were showing growth.

The easiest way to visualize those movements is by year-to-year percentage change on the monthly basis then adjusts for the revised household report each month.

WETS posts podcasts of Business Matters. Those can be found by CLICKING HERE. When this article was filed the podcast of the most recent program with Dr. Hipple had not been posted.

May’s payroll report coverage can be found by CLICKING HERE.

Tennessee’s unadjusted unemployment rate last month was 5.7%. The U.S. rate was 5.3%.

Here’s what the local May non adjusted household report on the unemployment rates looks like:

TRI-CITIES – 5.8%, up 0.5%.

JOHNSON CITY MSA – 6%, up 0.6%

KINGSPORT-BRISTOL MSA – 5.7%, up 0.5%

BRISTOL – 5.9%, up 0.6%

JOHNSON CITY – 6.1%, up 0.6%

KINGSPORT 6.1%, up 0.7%

 

How many Tri-Cities renters are “cost-burdened”

Housing is taking on a new edge with the media  with the release of Harvard’s Joint Center for Housing Studies report that say the number of “cost burdened” renters who spend at least 30% of their income on housing reached 20.8 million in the U.S. in 2013.

During the past year there have been several Northeast Tennessee Association of Realtors’ President Columns that cited the local numbers via the 2013 American Community Survey.

Here’s the local numbers according to the Census report:

.
Bristol, VA – 46.4%.
Bristol, TN – 51.3%.
Elizabethton, TN – 42%.
Erwin, TN – 45%.
Greeneville, TN – 52.1%.
Johnson City – 54.5%.
Kingsport – 49.3%.

More on the Harvard Report can be found at http://www.businessinsider.com/paying-rent-could-become-even-more-of-a-nightmare-2015-6

Here a link to a comparison of rental costs vs. what homeowners pay for housing http://www.netar.us/news/tri-cities-housing-affordability-stands-up-well-against-price-increases/

 

Tri-Cities foreclosure, delinquent mortgage rates continue trending lower

Foreclosure and delinquent mortgage rates in the Kingsport-Bristol MSA were back to pre-recession levels in April. The foreclosure rate was actually slightly below 0.50%  – a rate many local real estate professionals consider normal.
April foreclosureRates in the Johnson City MSA continue trending lower, but are still slightly above pre-recession levels.

According to current CoreLogic reports the rate of Kingsport-Bristol foreclosures among outstanding mortgage loans was 0.48% in April. That’s a decrease of 0.18 points compared with April 2014.

The Kingsport-Bristol mortgage delinquency rate also decreased in April. According to CoreLogic data 2.67% of mortgage loans were 90 days or more delinquent compared with 3.18% for the same period last year.
April delinquent mortgageThe foreclosure rate in the Johnson City MSA was 0.58% in April 2015, down 0.03% from April 2014.

Delinquent mortgages were also down. According to report, 2.52% of mortgage loans were 90 days or more delinquent compared with 3% percent for the same period last year.

Foreclosure activity and delinquent mortgages in the Tri-Cities were lower than the national rates in April.

CoreLogic’s Mortgage Delinquency Rate measures the percentage of loans that are more than 90 days delinquent, including those in foreclosure and REO (real estate owned).

The Foreclosure Rate measures the percentage of loans in some stage of the foreclosure process. A foreclosure is defined by the legal process by which an owner’s right to a property is terminated, usually due to default. This  is based on the current stock, or inventory, of loans in the foreclosure process which offers a comprehensive view of foreclosure trends but not new foreclosure filings.

Clicking on the images below brings up a larger image.

April K-B

 

 

 

 

JC APRIL

Millennials warming up to idea of buying homes

Realtor.com, a leading provider of online real estate services operated by News Corp – a subsidiary Move, Inc., today said millennials have become more positive to taking the plunge into home ownership and are primed to gain market share in the second half of the year, based on the results of its consumer behavior survey of more than 12,000 respondents conducted from Jan. 1, 2015 to June 15, 2015.

Jonathan Smoke, chief economist for realtor.com, said an in-depth analysis of these survey findings during Wednesday’s Mortgage Availability for Millennials and Other First-Time Buyers panel discussion at the National Association of Real Estate Editors conference in Miami.

“Despite the slow indicators we saw earlier this year, 2015 is on pace to be one of the best years for housing since 2006 due to strong sales and higher than predicted home prices,” said Smoke. “Additionally, we’re observing an uptick in millennial traffic and sentiment that we expect will result in more first-time home buyer sales in the later part of the year.”

Smoke went on to explain that first-timers are especially critical when it comes to the health of the market. “Historically, they’re the largest demographic of home buyers and can have a dramatic impact on housing,” he said.

Since the beginning of the year, realtor.com has observed a slight increase in older millennials – between the ages of 25 and 34 years old – visiting its website and mobile applications with the goal of buying a home. In the first half of June, realtor.com® saw its share of traffic represented by older millennials looking for a home to purchase increase to 23 percent, as compared to 21 percent in January. In mid-June, it also observed its share of those looking for property to rent decrease to 20 percent, from 26 percent in January.

Another revealing metric is the number of millennials who intend to buy a home within the next three months. In mid-June, 65 percent of 25-34 year olds responding to the survey indicated that they intend to buy a home within three months, up from 54 percent in January. Additionally, older millennials and first-time buyers are very optimistic about buying. Both groups are slightly more likely than the average buyer to say that they are “very likely to purchase within the next 12 months.”

“Last year, first-time buyer market share decreased as the year progressed and dropped all the way to 27 percent in the summer, according to data from the National Association of Realtors,” stated Smoke. “This year, we’re seeing an increase in millennial demand that points to a strengthening first-time buyer demographic. As the economy continues to grow over the next few years, we can expect first-timers to return to a healthy level of 40 percent of the market. A return to that level would add approximately 15 percent to the number of total homes sold.”

In the first part of the year, millennials were held back by some significant market challenges and were especially impacted by the lack of affordable inventory. Forty-one percent of older millennial home buyers cited that they “have not yet found a house that meets their needs” as the biggest factor holding them back from a purchase. Other reasons included difficulty finding a good house within budget, not spending enough time looking, needing to improve credit score, lacking a down payment, and currently being in a lease.

Realtor.com survey data is based on a daily representative sample of site visitors. This analysis is based on responses from Jan. 1, 2015 through June 15, 2015, which totaled over 12,000.

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