Which housing markets are most vulnerable during this downturn brought on by the COVID-19 pandemic? Based on current unemployment trends brought on by the outbreak, an analysis by the American Community Survey (ACS) sheds light on which states are likely to lag when the housing recovery takes hold.
The ACS study suggests that renters and young adults under the age of 34 are likely to face higher prolonged unemployment risks as a result of the coronavirus pandemic hitting the labor market. The labor market risks are also uneven across states, with state economies heavily reliant on leisure, entertainment, retail and personal services being most vulnerable. Although recent job losses because of the coronavirus shutdown are astounding and widespread across industries, the expectations of how fast the return to normalcy will take are quite different for the hardest hit sectors.
Entertainment (including accommodation and restaurant businesses), retail (except grocery and building material), personal services and transportation (air, train, water and sightseeing transportation) are among the hardest hit sectors that are likely to experience lingering elevated levels of unemployment. If this premise is correct, states with economies heavily reliant on leisure, entertainment, retail and personal services are particularly vulnerable. Nearly one-quarter – 23.5% — of the U.S. labor force (including self-employed) were working in these high unemployment risk sectors in 2018.
Although the labor force in most states have similar shares of most vulnerable jobs, the workforce in Nevada, Florida and Hawaii face much higher prolonged unemployment risks. As of 2018, a staggering 39% of Nevada’s labor force was in high unemployment risk industries, including more than 23% in entertainment. Hawaii and Florida had 30% and 28% of their respective workforces in these industries, including 16% and 12% in entertainment.
At the other end of the spectrum are the District of Columbia and states such as North Dakota and Wisconsin, with shares of workforce in high unemployment risk industries below the national average – 17%, 19% and 20%, respectively. Similarly, Virginia, Nebraska, Vermont, Connecticut, Maryland, Massachusetts and Iowa have shares under 21%.
NAHB economist Natalia Siniavskaia provides more analysis in this Eye on Housing blog post.