February 20, 2020

JF1997: Markets With The Most Job Growth in 2019| Syndication School with Theo Hicks


Theo Hicks shares the top states and cities with High Job Growth Markets in 2019. The information in this report is important to you because more jobs equal more demand for rentals. Listen to see if you are in one of the top job growth markets, and if you are, please let us know how this has impacted your business.

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“We also like to end our emails with some sort of market-related update whether specific to the neighborhood, city, or state-specific, so if you’re investing in the market that I mentioned today then this is great information you can include in your emails” – Theo Hicks

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Joe Fairless: There needed to be a resource on apartment syndication that not only talked about each aspect of the syndication process, but how to actually do each of the things, and go into it in detail… And we thought “Hey, why not make it free, too?” That’s why we launched Syndication School.

Theo Hicks will go through a particular aspect of apartment syndication on today’s episode, and get into the details of how to do that particular thing. Enjoy this episode, and for more on apartment syndication and how to do things, go to apartmentsyndication.com, or to learn more about the Apartment Syndication School, go to syndicationschool.com, so you can listen to all the previous episodes.

Theo Hicks: Hi, Best Ever listeners, and welcome back to another episode of the Syndication School series, a free resource focused on the how-to’s of apartment syndication. As always, I’m your host, Theo Hicks.

Each week we air two Syndication School podcast episodes – they’re also available on YouTube in video form – and these focus on a specific aspect of the apartment syndication investment strategy. For the majority of these episodes and overall series we offer free resources for you to download. These are PDFtemplates, Excel calculator templates, PowerPoint presentation templates, something that accompanies the episode that will help you on your apartment syndication journey.

This week we are going to do our second-ever Best Ever market report. This time we are going to focus on the markets with the most job growth in 2019. If you wanna check out the first market report that we did, it was last week, or if you’re listening to this in the future, about six or seven podcast episodes ago. We focused on the markets with the most rent growth.

So rent growth, job growth other economic factors are indications of the demand for real estate in a market. And since we are apartment syndicators, we care about the demand for real estate in particular, and we care about the demand for rentals. So it’s pretty obvious, but people need jobs in order to pay for their overall living expenses… And the largest living expense that people have is their homes. I think on average people spend around 30% of their income on their home or renting expense. So the more people that have jobs in a particular market means the more potential customers for you as an apartment investor. More potential renters, more people who have the ability to pay their rent on time and be high-quality tenants.

So each month, the Bureau of Labor Statistics releases a whole slew of economic news releases. If you wanna check those out, go to BLS.gov and go to their News section. I’ll include a link to their main page, with all of their monthly and quarterly and annual economic press releases… But the one we’re gonna focus on today is the one that focuses on the labor force growth in the metropolitan statistical areas, as well as the unemployment. Those are included in one news release. Basically, in this release it’ll have a few paragraphs just talking about some of the major highlights of the report, and then at the bottom they’ll actually have a full data table that has all 50 states, and the labor numbers and unemployment numbers. Then below each of those states they’ll have the MSAs (metropolitan statistical areas). I’m gonna say MSAs moving forward, instead of saying metropolitan statistical areas… They have the MSAs for each of those different markets below there.

So it’s very easy to just copy and paste that data table into Excel, and then you can filter it and see which states or MSAs have the most total jobs, most job growth, most number of new jobs added, and then unemployment numbers and change.

Here I want to focus on some interesting highlights from this report. The report I’m focusing on is from December 2018 to December 2019, so it covers basically  all of 2019, and we can see which markets had the most job growth. And again, more jobs equals more demand for rentals.

So the first thing that was interesting was the top two states for the total number of jobs added was 1) Texas, 2) Florida. And again, similar to what I talked about in the first market report about rent growth, just like that, you’ve got the markets that Joe invests in – Texas and Florida – topping this list as well.

Let’s go to the top ten states… Number one was Texas; they added 250,000+ new jobs. Florida was 178,000 at number two. Number three was New Jersey at 164,000. Washington was number four, at 140,000… But that was interesting, Washington state… Virginia – number five at 133,000. Tennessee – number six, at 113,000. North Carolina – number seven, at 112,000. Maryland – number eight, at 103,000. And Pennsylvania and Arizona was basically the same, at 102,000, for nine and ten.

But again, top two states – Texas and Florida. Texas is the only state that added over 200,000 jobs over the last 12 months, basically covering 2019.

For the unemployment numbers, all of those top ten markets, with the exception of Tennessee and Pennsylvania, saw a reduction in unemployment, so that’s another positive sign. So you wanna see the number of jobs going up, but you also wanna make sure that the total number of unemployed population is also going down. Those are a comparison of the unemployment rate for December 2018 to 2019.

The greatest reduction was actually in Washington, of 0.9%. Florida also had a pretty large reduction of 0.8%. Then the ones that went up was Pennsylvania, which went up 0.7%, and then Tennessee went up 0.1%. So if you’re investing in any of those top ten states, then you are in a market that’s experiencing a lot of job growth, as well as most of them are enjoying a reduction in the unemployment. But the majority of states and a majority of markets also saw a reduction in unemployment.

Something is interesting too, moving on to the markets – a lot of the big markets actually experienced more job growth, more total number of new jobs added that a lot of states. So the number one MSA, with the most number of new jobs, was the Washington-Arlington-Alexandria MSA. It added a total of 106,000 jobs. So only seven states – North Carolina, Tennessee, Virginia, Washington, New Jersey, Florida and Texas actually added more jobs in that 12-month period than Washington.

And then similarly, number two MSA was Dallas-Fort Worth-Arlington, and the total number of jobs added in that MSA was greater than all states except for those top ten states. So the total number of jobs added in Dallas-Fort Worth-Arlington was greater than the number of jobs added in 40 states as a whole, including all MSAs and all non-MSAs.

The same applies to Phoenix-Mesa-Scottsdale, which was number three, and Seattle-Tacoma-Bellevue, which was number four.

Then the number tenth, just because I like top ten lists – the number tenth market was the Orlando-Kissimmee-Stanford, and that market added more jobs than about 34 of the states as a whole. That’s pretty impressive, that you’ve got a total number of jobs added to MSAs that are greater than the numbers added in a state, making it seem like those MSAs are many states themselves.

The unemployment numbers are a little different, because most of the MSAs and most of the states experience a reduction in the unemployment, and all the unemployment rates are hovering around 2,5% to 3,5%, with some minor exceptions.

Now, something else – because obviously, the total number of jobs added is just an absolute number… Let’s take a look at the percent change in the jobs. Looking at this, the first major MSA that comes up would be West Des Moines, who experienced a 5% growth. They went from 354,000 to 370,000.

The next large(ish) one would be the Nashville market. It experienced a growth of approximately 4%. Then the next one after that would be Richmond, with 3.75%, and then we’ve got Baltimore at 3.6%, and then we’ve got Phoenix at 3.3%. So a lot of smaller MSAs were able to see a job growth of greater than 3%.

Why is this important? I’ve already mentioned the fact that people need jobs to pay for it, but this is also very relevant information that you can include in your investor updates. As I mentioned in the Syndication School series about the ongoing communication process with your investors, in those emails you include things like occupancy rates, and month-over-month changes in occupancy rate, you wanna include information on the number of new units you’ve renovated since the last month, any changes in the rental premiums you’re demanding… Ideally, you’re at least meeting your rental premium projections; ideally you’re exceeding them.

Then we also include things like capital expenditure project updates, as well as updates on any community engagement events that are being hosted… But we also like to end our emails with some sort of market-related update, whether it’s specific to the neighborhood, or the city, or something that’s state-specific. So if you’re investing in any of the markets that I mentioned today, then this is great information that you can include in your emails.

So you can go to the BLS.gov website, download these reports on a monthly basis – or on a quarterly basis – determine where your market ranks on the list… Obviously it helps you stay up to date on the economic growth (or maybe decline) of your market, but it also gives you relevant information to include in your investor email.

For example, if you’re investing in the state of Texas, then in your next email update to your investors you can include the fact that the state of Texas was the number one state in the country for total number of new jobs added. And it is the only state that added more than 250,000 jobs in 2019.

Then if you are investing in Dallas-Fort Worth-Arlington area, for example, then you can say that the specific market that we’re investing in is number two in the country for MSAs and the number of new jobs. Then if you’re investing in Houston, that’s also ranked very high. It’s actually ranked number five on the list for total number of new jobs added.

If you’re investing in maybe a little bit of a smaller market, then maybe the total number of new jobs might not be the most relevant factor to use… So you can focus on the percent change. So if I’m investing in a market like Austin, then I can say that the job growth was 2.5%. So it’s not necessarily in the top ten, but it has experienced a very large job growth overall, just because the market itself might be a little smaller. Or Des Moines, as I said earlier, was number one for percent growth for a large(ish) MSA.

There’s lots of different things you can do with this data, and this is just one report that the BLS has. There’s countless other reports on there that you can focus on to pull data from, to reinforce the strength of your market with your investors.

So again, I’ll have a link to a page where all of the reports are. You can also see on that page if they have an Archive link, so you can look at archived historical data. So if you’re focusing more on doing market research to see maybe which market to expand to, or you’re focusing on what market to pick in the first place, then the historical data might be a little bit more relevant, because you can track longer-term changes, as opposed to just one-year at a time.

So I’ll make sure I include that link in there, and I definitely recommend checking that out and downloading the data into Excel and then manipulating it with filters and things like that to determine which data best supports your market.

Thanks for listening. Make sure you check out some of the other Syndication School series about the how-to’s of apartment syndications, and check out all the free documents we have available on there as well. All of that is at SyndicationSchool.com.

Again, thank you for listening, and I will talk to you soon.

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