Southern California Real Estate Hiring Takes a Hit: Jobs Plummet Amid High Interest Rates

Photo bySan Gabriel Valley Tribune

Real Estate Employment Slows to a Crawl as Fed’s High Rates Bite

In a landscape marked by significant upheaval, Southern California's real estate job market has hit a notable slowdown. July 2024 saw a sharp decline in property-related hiring, as the industry contends with the Federal Reserve’s stringent interest rates designed to temper an overheated economy.

The numbers paint a stark picture: real estate employment across Los Angeles, Orange, Riverside, San Bernardino, and San Diego counties reached 920,700 in July. While this figure represents a 4,500-job increase from June, it falls short of the 8,700 average July additions recorded since 2010. The current pace of hiring is noticeably sluggish, reflecting a broader trend of reduced growth.

Over the past year, real estate jobs in the region grew by 10,400—a significant slowdown compared to the 17,000 jobs added on average annually since the Great Recession. This represents a 39% decrease in the hiring pace. Additionally, July’s job count is 10,400 below the post-2009 peak achieved in July 2022, just as the Fed’s rate hikes began.

While the overall job market in Southern California shows some resilience—with 8.59 million workers and a net gain of 142,300 jobs over the past year—the real estate sector's performance contrasts sharply. It’s evident that real estate’s impact on local employment remains substantial, making up 9.7% of jobs in July and contributing 7% of all new local jobs this year.

Key Employment Sectors in Real Estate

Here’s how various niches within the real estate sector fared:

• Trade Construction Specialists: Employed 317,400 individuals—up 2,700 from June and showing a 0.9% annual gain. However, this sector remains 2,300 jobs below its peak from October 2023.
• Project Construction: With 154,700 workers—the highest since 2009—this sector added 1,100 jobs in July and 3,300 over the past year, marking a 2.2% gain. Yet, this remains below the average July increase of 1,480 jobs.
• Lending: At 104,100 jobs, this sector remained flat month-over-month but saw a 1.9% decline over the year. It’s 40,800 jobs short of its post-Recession high in December 2012.
• Real Estate Services: This sector employed 143,600 individuals, reflecting a 1,100-job increase in July and a 1.1% annual gain. However, it remains 3,600 jobs below its peak from December 2022.
• Building Supplies: At 62,200 jobs, this sector experienced a 0.6% decline over both the month and year, remaining 5,400 jobs below its peak in June 2021.
• Building Services: Holding steady at 138,700 jobs—a post-Recession high—this sector saw a 4% annual gain but remained flat for the month.

Regional Breakdown

• Los Angeles County: With 348,800 real estate jobs—up 1,500 from June and 4,200 from a year ago—real estate represents 7.7% of all LA jobs. However, this is 6,600 jobs below the post-Recession high from February 2020.
• Orange County: The county saw 217,700 real estate jobs—an increase of 800 from June and 2,700 over the year—making up 12.8% of all local jobs. Jobs are 12,700 below the post-Recession high from August 2018.
• Inland Empire: This region employed 184,500 in real estate, up 1,200 from June and 800 from the previous year. Real estate jobs account for 10.9% of local employment, though this figure is 1,600 jobs below its peak from October 2023.
• San Diego County: At a post-2009 high of 169,700 real estate jobs—up 1,000 from June and 2,700 over the year—real estate constitutes 10.9% of all jobs in the county. Despite the increase, this remains lower than the average July gains of previous years.

As Southern California navigates this challenging period, the real estate sector’s response to shifting economic forces will be crucial in shaping its future employment landscape. The industry must adapt swiftly to high interest rates and evolving market conditions to stabilize and grow its workforce.