December 26, 2019

The US economy is more and more concentrated in a very few very large urban centers, and not just because of the tech boom. Despite the fact that the internet now allows individuals and businesses to operate from almost anywhere, they’re choosing instead to locate where the services are: in big markets. Over the last five years, 60 percent of new jobs were created in just 30 urban centers where 40 percent of the population lives.

For real estate, this means high demand – and high prices – in a few big markets, and a slow pace of construction in a lot of smaller ones. The concentration of demand probably explains why new home construction has lagged behind the economy even while the need for more housing has been high: it’s difficult to build in the big markets because they’re already almost full.

Jobs in November were up 1.5 percent from last year, a small improvement over recent months. Jobs were up 2.6 percent in healthcare, 2.6 percent at restaurants, 2 percent in business services, 1.4 percent in finance, 0.6 percent in both government and manufacturing, and flat in retail.

Business services and healthcare are the biggest parts of the economy (as far as jobs go) and seem to have stabilized in recent months. If so, the economy can continue at this pace in 2020.