Excellent WSJ Article
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So what comes first jobs or housing demands? This Wall Street Journal article addresses housing as potentially taking the U.S. out of this jobless recovery. Rather, the article concludes, it will be jobs that take housing out of their doldrums. Key points:
- Even if home prices rise an anticipated 4 percent today (Case-Schiller), they still will remain 30 percent below 2006 peak levels
- 1 in 4 homeowners are underwater on their homes owing more than the house is worth
- A cheap interest rate policy is ironic since it was copious quantities of cheap money that helped create the housing bubble in the first place
- Construction layoffs alone have accounted for 27 percent of the loss in jobs as we overbuilt housing in many markets (from 2000 to 2009 while the country added 15.89 new dwelling units we lost almost 1 million jobs—and we need to create 1.25 to 1.5 new jobs per new dwelling units) So it will take a significant surge in jobs to absorb the excess of housing
- If other real estate related jobs are included (landscapers, sales agents, lenders and architects, then the real estate segment accounts for one-in-three job losses.
It’s all about jobs. Period. Sorry about being repetitious—but it’s all about jobs.