ERIN HENRY
Broker/Manager, Royal LePage Real Estate Services Ltd. Brokerage
Erin Henry is an experienced Broker/Manager providing comprehensive real estate services to home buyers and sellers with over 30 years of dedication and expertise! erinhenry.ca
Whether you’re an investor, prospector, or first-time home buyer, you need to consider your preparedness in today’s correction conditions. Let’s take a closer look.
What is an unemployment rate? The unemployment rate is a measure of the proportion of workers in the labour force who do not currently have a job but are actively seeking employment. Those who do not have a job and are not actively looking are not part of the measure. The unemployment rate is only the sum of employed and the number of unemployed – not the entire population.
The government uses the data to compare previous, current and projected rates. By analyzing week-to-week, month to previous month or seasonally adjusted data, they can predict a possible decrease or increase in exit or entry into the labour force. In times of economic downturn such as inflation or corrections, the labour force generally declines. Human nature is to give up looking or slow down and are therefore not considered unemployed. Ultimately straining the government subsidy system. This is known as underemployment.
There are three categories of underemployment:
- Unemployed and actively looking for work
- Involuntary part-time workers (those who want full-time)
- Marginally attached – want to work but gave up
Together these three groups account for the digress in the unemployment rate. Underemployment is a significant economic indicator because of its ambiguity in terms of the utilization of the labour scale.
Another useful barometer of what is transpiring, is the employment to population ratio. It is a much broader analysis. It simply indicates the number of workers in total over the age of 16. It is a good measure because it gauges what is happening in certain occupation segments. It allows for a degree of preparedness in those fields. The difference between the unemployment rate and employment to population is this. The unemployment rate is affected by the size of the labour force. Its volatility relies heavily on whether or not people are actively looking for work. Whereas employment to population is unaffected by participation. It simply gives us a gauge on current market conditions and can warn us of potential rising inflation and other instability factors.
These factors weigh heavily into the government’s decision to adjust key interest rates.
ALL of which can affect the real estate industry. Toronto is integral in predicting what can happen in the rest of the country. CREA (Canadian Real Estate Association) reported there were 2,900 fewer jobs in August 2022 compared to July. In addition, a loss of 8,600 part-time jobs. What is the takeaway? Following these stats and barometers can help to make conscientious real estate decisions and according to CREA, it’s not all doom and gloom. There was an increase in full-time jobs in areas such as agriculture, construction, manufacturing, transportation/warehousing, the financial sector and business building. Ultimately, a strong workforce results in a strengthened real estate market.
