Monday, March 20, 2006

Brace for the ripple...

Looks like the slow down in the home market will be affecting the job market as well. Not surprisingly home sales have declined nationwide for the past five months. And as the housing market slows, so will the appeal for it. That means that the thousands of people that filled the real estate related jobs during the boom (appraisers, mortgage brokers, home construction workers, etc.) will have to find a new line of work. Almost 4 out of every 10 jobs created in the past four years were in housing related fields. The housing boom helped the economy out of the last recession. As of last year, 9.8% of American workers were employed in the real estate industry, that's a record up from 8.2% about 10 years ago. It's too early to tell how the industry will react, but they are already seeing signs of it. Washington Mutual will be closing 10 mortgage processing centers and fire 2,500 employees. Back in November Ameriquest laid off 1,500 people. Home sales are expected to fall 8% from last years record say some economists. On a positive note a Cheif economist @ JP Morgan says they "don't expect housing to completely collapse." They predict a few things that may help the impact to the economy. The commercial building market is experiencing an upswing. 768,000 people have jobs in this sector, the most in 3 years. Hurricanes last year destroyed or damaged over 700,000 homes on the gulf coast. 25% of the outstanding mortgages in the 4th quarter were adjustable rate mortages. That means that many homeowners will be refinancing in the months and years ahead to lock into a fixed rate mortage. We'll see....

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