Initial weekly unemployment insurance claims continue to improve—or more precisely, they are getting worse at a slower rate. This graph shows year-over-year numbers. Ideally, we'd like the YoY numbers to be below zero for an extended period of time.
The government's job loss numbers show a continuing, but slowing, contraction in the job market. Remember, we need monthly job gains of 100,000-200,000 just to keep up with population growth.
For conspiracy theorists who don't believe the government's numbers, here are the monthly job loss numbers as measured by Automatic Data Processing, Inc.
Readers, how will these job numbers affect foreclosures and home prices?
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I think the primary driver for foreclosures are people who realize they're about $100k underwater and don't want to stay in a house for 10-20 years just to break even.
ReplyDeleteI have an acquaintance who bought 8 investment homes, and a 20-unit apartment complex. He stopped paying on the in August because he's so underwater. His plan is that he'll pocket the rents for the year it takes for the banks to do something. Then, the 2nd lien holders will write off the 2nds, and the 1st lien holders will forgive the delinquencies and he can resume his ownership on a new basis.
It's pretty disgusting. But, there were many disgusting things that brought us to this place.
Looking at the unemployment chart, I'd say job losses will contribute about 1/4 the effect it did over the past year.
"Readers, how will these job
ReplyDeletenumbers affect foreclosures and home prices?"
Depends. The majority of those losing their jobs are at the bottom of the totem pole - low educated low income types. Housing in these areas are getting crushed.
In high education high income housing - not as much as we would like to see.
The nice thing about the low income, low educated (and let us not forget the illegal immigrant) areas...
ReplyDeleteIs that all of them are losing their homes and getting weeded out of those areas. This allows the higher income and educated folks who can actually afford a starter home to buy in those areas. Its like recycling the trash to create a shiny new piece of electronics.
I guess that's why those "high income housing" just sit on the market for 2 or 3 years, being pulled off the market and put back on over and over again, without even a single showing.
I don't know how it will effect the foreclosures, but my anecdotal observation is that everyone I know keeps saying we're at the "bottom" of the housing market. Those who don't own have been looking seriously and those who do telling me "buy now or you'll miss out". This kind of sentiment along with the tax credit seems to have put alot of support in the market last few months and I don't think it can last in the face of the terrible economic headlines that keep coming. I feel like despite the housing crash, the same irrationality on housing has come right back. No one I know has ever said anything about fundamental measures like price/income or price/rent ratios. They just know they should buy cause its a good deal or something. In any case, I'm unable to understand the psychology of the housing market so come this summer I'm gonna really get out there and start looking too. I've reached the point where my desire to own a house where I can do what I want as far as renovations etc outweighs my desire to get the best price. I figure by the end of 2010 we gotta be getting close to the price bottom. I hope.
ReplyDeleteregarding the "low end" idea on job losses, I think the job losses are very widespread across the spectrum.
ReplyDeleteStill, the entire housing market right now is 1st time buyers using the silly tax credit, so the lower end income earners will be hard pressed to continue their frenetic buyin gpace. Of course who needs a job when you can get an FHA loan?
"I think the job losses are very widespread across the spectrum."
ReplyDeleteUhh no - its 3.9% for those with a bachelors degree or higher - read calculated risk for a full spectrum of charts and graphs on the subject.
"Still, the entire housing market right now is 1st time buyers using the silly tax credit, so the lower end income earners will be hard pressed to continue their frenetic buyin gpace."
Depends upon where you are looking. Here in DC - especially on the nothern virginia side of the potomac - everything up to the 900K category is selling the best it has in 4 years.
"especially on the nothern virginia side of the potomac"
ReplyDeleterealtytrac has about 40,000 foreclosure listings in reston, herndon and centreville.
unemployment benefits were extended along with the $8000 tax credit. this keeps the market from hitting bottom and recovering.
ReplyDelete"Uhh no - its 3.9% for those with a bachelors degree or higher - read calculated risk for a full spectrum of charts and graphs on the subject."
ReplyDeleteYup - take a look at the breakdown of job losses here in DC area (page 14)
http://www.cra-gmu.org/current-indicators/USandWashingtonAreaEconomiesOct31.pdf
Big losses are in construction and retail (i.e. low education, low pay jobs). On the flip side, DC is still GAINING jobs in (a) federal government (b) education & health services and (c) professional & business services (i.e. consultants & lawyers).
One of the many many reasons why immunington and immundria prices stay strong.
interesting.
ReplyDeletethanks for posting.