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What real estate slump? May was hot for Southern California property jobs

June 26, 2023

The “Looking Glass” ponders economic and real estate trends through two distinct lenses: the optimist’s “glass half-full” and the pessimist’s “glass half-empty.”

Buzz: Real estate’s share of Southern California employment was 10% in May, but the industry’s hiring equaled 26% of all new jobs for the month.

Source: My trusty spreadsheet looked at state figures on property-linked employment in Los Angeles, Orange, Riverside and San Bernardino counties.

Debate: When will rising interest rates chill the local market for real estate jobs?

Glass half-full

May was a warming month for real estate hiring as well as the weather – which means a boost for outdoor work.

Southern California real estate bosses added 6,200 jobs in May – 77% faster than the seasonal norm – to 802,700. In pre-pandemic 2015-19, an average 3,500 jobs were added in May.

Meanwhile, across Southern California’s other industries, the 7.23 million workers were a 17,900 improvement in a month.

Local real estate’s outsized chunk of hiring can be tied to key property niches …

Construction: May’s big story was the 373,300 construction workers in various trades, up 5,200 for the month vs. an average May in 2015-19 with 2,660 jobs added.

Real estate services: 78,000 people were handling transactions in May, up 300 for the month vs. May’s average of 240.

Building services: 120,400 jobs in commercial property operations in May were up 900 for the month vs. May’s average of 240. Employment in this sector is up 3,800 over 12 months or a 3.3% gain. Workers returning to offices boosts this sector.

Building supplies: 53,600 sellers of equipment and materials – up 400 for the month vs. May’s average of 80.

And geographically speaking, two local markets were on the upswing …

Orange County: 230,000 real estate jobs – up 2,200 for the month vs. average May’s 1,260. Up 2,900 over 12 months, or a 1.3% one-year gain.

Inland Empire: 187,400 real estate jobs – up 4,100 for the month vs. average May’s 860. Up 3,300 over 12 months, or a 1.8% one-year gain.

Glass half-empty

Real estate work’s yearly growth looks sluggish.

Bosses in the four counties added only 3,000 positions over 12 months, a mere 0.4% gain. Compare that to non-real estate jobs – up 157,000 over 12 months, or 2.2% growth.

In the past year …

Construction jobs grew only by 500, or a 0.1% gain. That’s a warning signal.
Real estate services added 700 jobs or a 0.9% gain. High interest rates worry house hunters.
Building supply work fell 800, or a 1.5% drop – another hint that construction may be cooling.

And lending remains a mess with 177,400 local folks in various credit work – a drop of 600 for the month and off 1,200 over 12 months, or a 0.7% dip. It’s clearly the real estate jobs laggard, hammered by lofty mortgage rates. This niche remains 13,300 jobs below pre-pandemic levels.

Plus, Los Angeles County’s real estate work shrank – its 385,300 jobs were off 100 for the month vs. average May’s 1,380 increase. And L.A.’s off 3,200 over 12 months, a 0.8% one-year drop.

Bottom line

May’s swift hiring pace for real estate could be the industry playing catch-up to the surprisingly resilient job growth across the region. Not to mention, it’s likely real estate’s awakening from the slumber of project delays caused by a wet winter and spring.

But lethargic hiring by property bosses over 12 months is one cost of the past year’s steep jump in financing costs. The Federal Reserve’s attempts to cool an overheated U.S. economy with pricier money have chilled real estate’s job growth.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]

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