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The U.S. has seen its fair share of workers’ strikes within the last year. Employees from Starbucks, Amazon, Trader Joe’s, Los Angeles Unified School District, U.S. railroads and more all exercised their right to strike for better working conditions, pay and other employment improvements in recent months.

Such moves certainly have a direct impact on the specific industries and companies these employees serve, but they also have a ripple effect on other major industries in the U.S. economy, including real estate.

In the latest of these strikes, the Hollywood writers’ strike, which began on Tuesday, 11,500 members of the Writers Guild of America (WGA) are protesting the fact that writers’ pay rate has not kept up with the rapid technological changes that have been enacted in the entertainment industry with the streaming era.

During the strike, WGA members cannot meet or negotiate with studios, write or sell option material, revise existing work, start a new project, deliver or discuss work with studios.

As studios put a halt to operations while working to come to a resolution with the WGA, a number of other groups that support production of workers will also be impacted.

History also suggests that the WGA can hold out for a long stretch of time without work and pay. When the group last went on strike in 2007, the strike lasted 100 days, and the Los Angeles economy lost an estimated $2.1 billion.

From negative effects on the supply chain to confidence in the market, major union strikes like the WGA strike and others before it can have a palpable impact on the real estate industry.

Supply chain impacts

The national supply chain will not likely be a cause for concern with the WGA strike, but with the railroad workers’ strike that took place last fall, it was certainly top-of-mind for many industries.

Trains transport a significant portion of the nation’s packaged foods, grains, chemicals, new vehicles and lumber and raw materials. Had President Biden not been able to reach a strike deal last fall, real estate developers would have felt the pinch from materials delays to price hikes.

Following the years of dealing with these issues to an extreme during the pandemic, backsliding into supply chain issues again would have been an unwelcome challenge for the industry, particularly as it continues to battle with low inventory and builders work to meet demand.

Local economic impacts

Steven Thomas | Reports on Housing

The hit to local economies of those cities most severely impacted by the WGA strike — Los Angeles, New York, parts of New Mexico and Georgia — may also have ripple effects out onto real estate.

How long the strike lasts will also likely determine to what extent the impacts are felt. Workers who provide their services to film studios during production will also find themselves with significantly less work while production is halted, including caterers, carpenters, lumber yard workers, set decorators, lighting technicians, makeup artists and more.

“There’s a lot of people underneath the writers that this will affect — the production crew, the makeup artists — they’re all clamoring right now looking for work,” Steven Thomas, broker and chief economist of Reports on Housing, told Inman. “It’s been this way for a little bit of time because Hollywood scaled back their production in anticipation of this strike. So, it’ll be great once it all gets resolved, but … they’re just out of money until it resumes and they don’t get the income they’ve lost in the process of trying to reach a negotiation.”

Those with skills that are potentially transferrable to parts of the real estate industry may try to supplement their income with side work in real estate. It’s possible that a carpenter or set builder, for instance, who has experience working in construction would choose to work on a building site or get a gig installing kitchen cabinets while waiting out the strike.

Dr. Jessica Lautz | NAR

Members of the WGA or any other striking group in a different scenario who become strapped enough for cash and have trouble making mortgage, rent or other housing payments can also ultimately have an impact on a market’s competitiveness or inventory levels. In this case, the WGA had about $20 million available in its strike fund as of March 2022, which members can apply to receive, but it’s not guaranteed that applicants will be approved for funds.

Striking workers who were actively searching for a home may decide to pull out of the market if they no longer feel financially confident, and renters might even need to move in with family or friends to cut costs, depending on how long the strike continues.

“Any labor market strike could have a direct impact on the striking employees as a potential homebuyer may not want to make a large financial decision at that time,” Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors, said in an email to Inman.

Jordan Levine | CAR

“A hit like [the WGA strike] could have an impact on homebuyer demand and, thus, on competitiveness of the marketplace,” Jordan Levine, the California Association of Realtors’ chief economist, further elaborated in an email. “It could cause home sales to slow more than they have already, but because inventory is already so tight, it may show up as slower price growth rather than a falling number of transactions.”

Thomas clarified that any inventory that may be created out of the WGA strike — like owners selling, potential buyers bowing out of the market or otherwise — will be rapidly absorbed into the market because inventory is already so low.

Still, the overall stability of employment figures should help offset the hit to the entertainment industry, Levine added.

“Overall, unemployment is still relatively low and employment is still at or near all-time highs, so demand from other sectors not directly tied to the entertainment industry will continue in the absence of a bigger economic slowdown.”

Consumer confidence

Erin Sykes | Nest Seekers International

Even for those consumers who feel like they may not be directly impacted by a significant union workers’ strike, their general view of the market be swayed by such an event. In the wake of multiple bank failures in recent months, consumers may be especially sensitive to anything that disrupts the status quo right now.

“In real estate right now and the general economy, because we are so sensitive to everything, everyone is on hyper alert, waiting for the other shoe to drop,” Erin Sykes, chief economist for Nest Seekers International, told Inman. “So when something like the writers’ strike happens, it tends to just reaffirm the opinions of people who are bearish on the market. And then the people who are more bullish on the market just ignore it as noise.”

Of course, the actual state of the market is rarely so simple.

“The reality is somewhere in the middle,” Sykes continued. “It’s always in the gray space, not at either extreme. So, I think that’s what’s happening here. People that are already bearish on particularly Los Angeles and parts of New York or the city lifestyle in general, they’re using this as an example for their case.”

Email Lillian Dickerson

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