Link of the Day
CoStar Group is a comprehensive commercial real estate information site. The site has a weekly column on layoffs and facility closures. I check it out weekly for information about layoffs or closures at homebuilders, lenders or financial institutions, but it covers a variety of industries nationwide. Gives good color on employment figures.
Quotes of the Day
“We’re no longer the economic locomotive of the Northeast. We’ve slipped to the caboose.” - James Hughes, a leading New Jersey economist and dean of Rutgers University’s Bloustein School,
“I have no intention of ever buying anything, ever. I don’t think I could if I wanted to.” - Robert Dahmen, a technology manager for a car manufacturer, whose boat was repossessed after he fell behind on payments.
“I don’t want to understate the importance of mobility within the economy. The reality is, a lot of people are either upside down on their homes or locked in, so people are waiting for the economy to be in a better position. Falling prices have a liquidity effect, as well as a real effect, on consumers.” - Jeremy Aguero, a principal at the Las Vegas research firm of Applied Analysis.
Macro Effects of the Housing Slump
Dark Job Forecast For NY Financial Industry. NY: “The city’s Independent Budget Office estimates the city will lose 33,300 financial jobs through Q2’09… The loss of more than 33,000 financial jobs would be a 17% reduction in the city’s highest-paid workforce and would be steepest drop since 2001-2003, when 40,000 securities industry employees lost their jobs… But because the city relies so heavily on the financial sector… The IBO now sees a decline of 59,400 jobs between the city’s most recent employment peak in Q1’08 and… Q2’09. [It] estimates that tax revenue will be flat this year compared with 2007, and then fall by 5.2% to $35.8 billion in 2009 before growing modestly in 2010.”
Fed: Delinquency Rates Rose Sharply in Q1. “The Federal Reserve reports that delinquency rates rose sharply in Q1 in all categories - except agricultural loans (higher food prices helps)… Delinquency rates at commercial banks: Credit card delinquency rates are at 4.86%, about the same level as the peak of '01 recession. Credit card delinquencies peaked at 5.45% in the '91 recession.”
“We’re No Longer The Economic Locomotive Of The Northeast. ” James Hughes, a leading New Jersey economist and dean of Rutgers University’s Bloustein School: With the homeownership rate falling, more people will need to rent their apartments… The real estate price decline will be “a multiyear phenomenon,” Hughes said… New Jersey went through the last expansion without the employment growth typical of the good times, about 74,000 new jobs a year… Instead, from 2004-2006, the state averaged just 23,000 new jobs per year. Last year, New Jersey added just 3,700 jobs and erased all of those in Q1’08, Hughes said.”
The Foreclosure 'Blob' And Why A Bailout Won't Work. “WSJ: The underlying mortgage mess [is] a relatively simple, regional problem: Too many people made bad bets on the future of residential real estate in remote southwestern suburbs. Think Palmdale, Inland Empire, newer parts of Sacramento, San Diego, Phoenix and Vegas. WSJ’s Holman Jenkins Jr.: “Many of these homebuyers are underwater not just because they bought more house than their incomes could support, and not just because prices are falling. They were also betting on commute patterns and demographic expectations that are proving invalid.””
Dismal Year Is Forecast for Car Sales. “Several [car] industry forecasters have sharply cut their projections for new-vehicle sales to less than 15.5 million this year, and abandoned rosy predictions for a rebound in H2’08. The gloomy outlook —reflecting credit turmoil, the housing crisis and the softening economy — will probably lead to more production cuts by car companies. But the good news for buyers is that they can expect better deals to draw them into the showroom. The broader economic woes prompted the marketing firm J. D. Power & Associates to cut its annual forecast to 14.95 million vehicles, from 15.7 million — the lowest sales level since 1995.”
Tumbling Home Prices Seen. “Money magazine ranked Las Vegas No. 5 in the country for projected value losses through May 2009, with an expected drop of 18.3%... The nation as a whole should see price falloffs of 9.7%... An 18.3% drop in home prices could further stall a local economy already posting slower consumer spending, with Clark County’s taxable sales off 3.1% in February when compared with February 2007. Las Vegas research firm Applied Analysis: Every 1% in lost single-family home values prunes $800 million in wealth from Southern Nevada’s households. Include condominiums and townhomes, and locals’ assets drop nearly $1 billion for every 1% slide in prices.”
Economic Tide Is Rising for Repo Man. “From 2000-2006… during the long housing boom… retail sales for the recreational boating industry rose by more than 40%, to $39.5 billion, while the average loan amount more than tripled to $141,000. Last year, as real estate faltered… The number of boats sold fell 8%. Many boats are fuel hogs, and rising gasoline and diesel prices meant a weekend jaunt could cost hundreds or even thousands of dollars. Owners found they could not sell a boat for what they owed and could not refinance either. The solution for some is simply to stop paying…This year, [repo man] Jeff Henderson, is repossessing nearly a boat a day,
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