Skip to comments.Housing Slump Threatens Jobs
Posted on 08/21/2006 5:40:55 PM PDT by ex-Texan
The economy's growth has never before been so driven by real estate. Now that engine is sputtering.
Jiany Massad isn't quite ready to throw in the towel on his fledgling career as a Miami real-estate tycoon. But if the local housing market continues to head south, the 30-year-old real-estate broker is already making alternate plans. "I might restart my old business," he says of a home decorating company that specialized in high-end window treatments. "At least it's real-estate-related."
With home sales down by nearly a third in Florida last quarter, thousands of those who hoped to cash in on the real-estate gold rush are now facing the cold reality of working in one of the country's most cyclical businesses. "Everyone's getting out," Massad says of colleagues who have already traded in their real-estate licenses for jobs in the jewelry trade and Internet sales.
Until recently, the housing industry was the biggest engine of job growth in the country, accounting for more than a third of all new jobs added to the economy since the boom began earlier in the decade. Housing-related employment now accounts for about 1 in every 10 jobs, a record, according to Moody's Economy.com. "We're more dependent on housing than at any time in the last 30 years," says chief economist Mark Zandi, "which could be a problem if the downturn becomes more pronounced."
Price slide. The latest housing industry numbers suggest that's exactly what's happening. Both existing-home sales and housing starts slowed sharply last month, especially in formerly hot areas like Florida and California. Meanwhile, more than two dozen metro areas reported outright price declines. In Boston, nearly half of all homes on the market had been reduced in price at least once, and more than a third have been marked down in San Diego and Phoenix, according to figures from ZipRealty.com. * * *
Trouble is, many areas that have enjoyed the biggest run-ups in real-estate values have also seen corresponding increases in housing-related jobs, leaving them especially vulnerable. That could create a vicious cycle as job losses in the housing sector begin to undermine the overall economy, leading to an even deeper downturn in housing. * * *
n Florida, where in some coastal areas housing now accounts for as many as 1 in 5 jobs, the number of real-estate agents alone has increased by more than 40 percent since 2001, to 305,000. Brokers' ranks have also surged in California, to more than half a million-about one for every home the California Association of Realtors expects to be sold this year. "The numbers just don't add up," says Vince Malta, CAR's president, who predicts a coming shakeout as less experienced agents find they can't earn enough to stay in the business.
Tightening. That process is already underway in other housing-related jobs, such as mortgage lending, title services, and appraisals. With the refinancing boom played out and mortgage applications near a four-year low, lenders like Washington Mutual have recently laid off thousands of workers, while some smaller operations have shut down completely. "It was quick, easy money, but then rates go up and it's over," says mortgage trainer Christopher Cruise, who recently visited one mortgage lending operation in Rockville, Md., that let all 71 of its loan officers go. "At the peak, all you needed was a voice and a telephone, and you were pretty much guaranteed six figures. But now you've got to suck it up, and some folks would rather just go lay on the beach and wait around for the next refi boom." * * *
For his part, Massad is trying to adjust his clientele, too. The founder of FloridaRealtyFinder.com had specialized in helping investors buy preconstruction condos. But with investors all but vanished from the Miami condo market, he has recently taken to walking his neighborhood to drum up residential sales. "A lot of other agents don't want to work that hard," he says. "But in six or nine months, they'll be out of business, and that'll just be less competition for me."
To read the full editoria, Click Here
Both existing-home sales and housing starts slowed sharply last month, especially in formerly hot areas like Florida and California. Meanwhile, more than two dozen metro areas reported outright price declines. In Boston, nearly half of all homes on the market had been reduced in price at least once, and more than a third have been marked down in San Diego and Phoenix * * * Trouble is, many areas that have enjoyed the biggest run-ups in real-estate values have also seen corresponding increases in housing-related jobs, leaving them especially vulnerable. That could create a vicious cycle as job losses in the housing sector begin to undermine the overall economy, leading to an even deeper downturn in housing. * * *
I'm only the messenger. I did not write the editorial. Take your complaints to U.S. News. How many jobs will be lost? Already, thousands of jobs have been lost in the mortgage industry. There may soon be thousands more. Realtors are already carping about 'hard times' on industry message boards. But the situation will get worse. Just wait until the 4th Quarter of 2006: By then over $ 4 trillion in ARM loans will begin to reset to current interest rates. Increased costs from a 2.5% loan to a 7.2% loan (plus costs) on a $ 400,000 home are daunting. The increase may average as much as $ 1,500 a month. Get ready to see foreclosures skyrocket.
This is not a "gloom and doom" post. It is a "buying opportunity" post." [Want to nearn more?] National median real estate prices in 2007 will be about 10% - 20% lower. By 2008, many people will be able to pay cash for their dream home. For the naysayers out there: "Nothing going on here. Not in my neck of the woods. Lock your doors and windows. Time to move on."
My gosh, in central Texas the boom continues unabated. I've never seen anything like it. If someone in construction can't make it now, they need to find another profession.
My wife has worked in the title business over 30 years, it is phenominal and we're talking about new constuction. Of course, there will be the inevitable slow-down but this market ain't "crashing" here.
And I made an obscene fortune on Y2K. That went away, too, but I still make money.
All around the country homes were being built endlessly. Here in the swamps of Delaware we've got three new housing developments all built and ready to sell.
Every once in a while it's time to take a deep breath and sell out the inventory.
I'm really a bit sick of all this gloom and doom and hey, the Lamestream keeps finding doom and his brother gloom under every bed.
There is no bottoming out of the housing market. The market will take care of that. If people want homes and there are none after this small pause is over, MORE WILL BE BUILT!
Lots of people settle down to where they are this time of year what with school starting up right soon. Kids off to college, summer over...that kind of thing.
As for ARM mortgages and 7.5% interest rates, I recall Jimmy Carter and the infamous interest rates of 17% or higher. My own first mortgage was 8% and I could handle it.
Slow news....it's either Jonbenet Ramsey or doom and gloom.
I'm only the messenger, but interest rates on fixed rate mortgages have been going down for four weeks now, and they are going lower. The real estate correction is almost a year old now. The crash better hurry.
Yeah, I remember it as well. But my luxury home in Sacramento coast only $ 45,000. Not the same house costs over $ 650,000.I would rather pay 10% interest (my rate back then) than 7.2% interest now. The difference = $ 650,000 @ 7.2% and $ 45,000 @ 10% = $ 3,700 a month plus taxes and insurance.
Some people, like the media and vultures looking for foreclosures are positioned to profit from doom and gloom.
Nothing will stop these mortgage and real estate shills from hyping their real estate frauds! They want to continue their POZI SCHEME frauds for another ten years. Note that these Key Words are SIGNALS to others in the real estate and mortgage business to jump in and attack the messenger. Thus, they are HATE SPEECH motivated by pure greed:
ANDAGONYONME; ANGUISH; BROKENRECORD; DESPAIR; DESPONDENT; EXTEXANSUCKS; GLOOM; GRAPESOFWRATH; HELPME; ILUVWILLIEGREEN; IMTOMJOAD; MISERY; PIMP; RUNAWAYRUNAWAY; SKYISFALLING; SLITMYWRIST; SPAM; WILLIEGREENISMYHERO; WOEISME
It depends on what area of the country you're in. The Huntsville/northern Alabama area is booming. There's no housing slump here.
No big deal, right? Nada por nada. Time to move on.
Possibly the worst mortgage commercial ever -- "I'm her daddy:"
Scary tho think how developers have been able to burn out the housing market with way too much building in too short period of time. I can easily see why the housing market is in trouble.
Who vandalized my KEY WORDS and removed my post from the Editorials section?
If the housing bubble 'pops' there will be many more (unemployed americans) demanding that we put up a real fence and deport the illegals.
I'm a supporter of Michael Savage. He complains every day about border jumpers and terrorists sneaking into America. The Rush bots have taken over. Email your complaints to Rush. All I do is say what I see with my own eyes.
FOR THE LAST TIME, WILL YOU PLEASE STOP PROMOTING YOUR "NEWSPUNDIT" WEBSITE ON EVERY DAMNED POST YOU WRITE.
"Hey, what are you going to believe? What I tell you or what you see with your own eyes?"
One of the great lines spoken by John Wayne.
Way lower. I am a technical analyst, and I can tell you rates are going much lower than anyone expects over the next 18 months. How the real estate market reacts to this I have no idea.
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