Missing Housing's 'Good Effect' On The Economy [Housing Tracker]

Quote of the Day

"Things are not good, but they aren't really bad yet either.” - James Tarbox, director of career services at San Diego State University. Of the 23 campuses in the California State University system, half have had a decline in campus recruiting last semester. (NY Times via Seattle PI, June 1st)

Macro Effects of the Housing Slump

Positive Real Estate Changes In The Air. “There’s a rule of thumb that approximately 30% of the value of the purchase of a home, let’s say the home was purchased for $100,000, 30% over and above the purchase price is going to go into the economy, and that starts with the transaction itself,” said Nanci J. Rands, a Realtor with SKBK Sotheby’s and director of the Michigan Association of Realtors. “Money goes to pay the commissions, title insurance … movers, painters … the purchase of furniture — the list goes on and on and on. The purchase of the house is just the beginning — it begins the whole process … and has a good effect on the economy.” (CANDG News.com, June 4th)

Real Price Declines Swamping Nominal Home Price Trends: First American. “First American CoreLogic: Inflation may prove to have a strong bite on housing just yet. A look at data spanning 957 core-based statistical areas [CBSA] nationwide, part of the Loan Performance Housing Price Index series, found that an overwhelming number of metropolitan areas are feeling inflation’s growing pinch. Mark Fleming, chief economist for First American CoreLogic: “Two thirds of all states now show year-over-year real estate declines... Although only one-third of CBSAs are depreciating on a nominal basis, on an inflation adjusted basis, 90% of CBSAs are experiencing real price declines. Only 10% of CBSAs are experiencing real inflation-adjusted price increases.” (Housing Wire, June 2nd)

Graduates' Job Prospects Looking Up. “Job prospects this year have been better than career counselors and recent graduates had expected. Employers are still extending offers, just not as many as last year. Economists said the class of 2008 has been helped by employers concerned by the impending exodus of baby boomers from the work force. But they warn that the job market is going to get tougher as the full extent of the nation's financial problems emerges, and they predict a growing inequality in access to employment between elite and lower-achieving students. As a result of the tighter job market, applications to graduate schools and service-oriented programs abroad are expected to increase in the fall.” (NY Times via Seattle PI, June 1st)

Dear Readers: Read anything you liked on this subject and didn't see it here? Why not post a link or a quote from the article in our comments section. Share the wealth! - Ed.

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Comments

[billddrummer]

Judy,

The first article you referenced points up how important the housing industry is to the overall economy. It's not just the home itself that generates economic activity, but all the follow-on activities associated with a home purchase--appliance sales, home improvement purchases, furnishings, small things like mailboxes and shovels for first time homebuyers (I distinctly remember visiting Home Depot for the first time after buying my home, and learning how much additional stuff I needed to maintain it). The impact on the broad economy is vast. And if the housing bubble hadn't burst, would 'recession' have entered the lexicon at all?