Housing’s Impact on Jobs Seen Spreading
Falling home prices in some markets and rising defaults on subprime mortgages have raised concerns that housing problems may spread to mainstream lenders, hurt consumer confidence and affect the broader economy. Job cuts in real estate and construction rose in the first two months of the year compared with a year ago, according to the outplacement firm Challenger, Gray & Christmas. U.S. construction companies announced 10,000 job cuts in January and February, more than in all of 2005 and 2006 combined. About 45,000 jobs were lost last month among specialty contractors, according to the Bureau of Labor Statistics, which attributed part of the drop to winter weather. Bernard Markstein, NAHB’s director of forecasting, said that layoffs don’t immediately follow slumps, since many builders try to hold on to their skilled workers, or shift them to nonresidential sites, where prospects are brighter. The full impact hasn’t been seen yet, he said. “We expect further declines in employment within the construction industry because nonresidential construction and remodeling is not going to pick up all of the reduction.” (www.reuters.com)
Reuters (3/30/07); Nick Zieminski
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Effects of Slow Housing Market Are Widespread
Economists in South Florida are talking about a new cost-consciousness among consumers who had relied heavily upon their houses for their net worth and are now watching the housing market slow down. That new consumer psychology is rippling through the region’s economy and is already hurting some of its biggest companies, including industries as varied as car dealerships, cruise lines and shippers. In February, although prices remained relatively flat, sales of existing single-family homes were down 31% in Miami-Dade and 20% in Broward compared to a year ago, according to the Florida Association of Realtors®. The condo numbers were worse, and inventory has nearly doubled. Until now, City Furniture President Keith Koenig had never seen a decrease in business year-over-year since he and his brother founded the chain in 1994. “This is the best market in the country, but it’s down a little this year, and that is the first time I have ever said that,” said Koenig. The South Florida-based furniture retailer’s 19 stores saw about 10% slower sales in January and February compared to last year. “The consumer is being careful with the dollar.” Last year, 16% of the new car purchases in Florida were made with home equity loans, said Art Spinella, president of Oregon-based market research firm CNW Research. That compares to 9% in 2000. Florida and California have been hurt the most in terms of auto sales, said Spinella, and the No. 1 reason for the decline in auto sales in California is its housing market. In Florida, it’s “in large part” due to housing. (www.miamiherald.com)
Miami Herald (1/2/07); Niala Boodhoo
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Average Seattle Worker Can’t Afford to Live Here
Many in Seattle agree that the time has come to do something about the fact that those with decent jobs can’t afford homes here. Last year, the typical single person in Seattle earned enough to buy a home just under $200,000, while the typical family of four had enough to pay just over $280,000, according to the U.S. Department of Housing and Urban Development. The median prices, on the other hand, were about $450,000 for a house and $290,000 for a condo. While rents are more affordable, many median-income workers choose to buy and commute rather than rent. Just 49% of people who work in Seattle live in the city. The percentage is highest among those with the lowest incomes, who qualify for housing help and are unlikely to afford to buy in or outside the city. Employers agree that housing costs are becoming an issue when hiring. Companies have a harder time attracting and keeping workers and may even move where employees can afford homes. “Jobs follow workers,” John McIlwain, a senior Urban Land Institute fellow, warned recently. (www.seattlepi.nwsource.com)
Seattle Post-Intelligencer (4/2/07); Aubrey Cohen
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Atlanta Housing Market Remains Positive
Even in the midst of a worrisome national slump in home sales, metro Atlanta’s relatively dynamic housing market makes the city a mecca for home builders, who are finding a good supply of first-time buyers, inexpensive land and affordable homes — something of an anomaly. Unlike most metro areas around the country, Atlanta supports a panoply of home builders who jockey aggressively for buyers of starter homes under $250,000, which account for a majority of home sales here. David Ellis, executive vice president of the Greater Atlanta Home Builders Association, said the top 10 builders in metro Atlanta control about 18% of the new-home market, compared to other cities where the market share of top companies is much higher. In Orlando, Fla., the top 10 builders command almost 50% of the market and the top builder controls almost 12%, according to the latest figures from NAHB. Atlanta-based Beazer homes, the nation’s ninth largest public home builder, doesn’t even appear on the list of the metro area’s top 10 builders, while regional companies such as John Wieland and Neighborhoods and McCar Homes do. Steve Palm of Smart Numbers, a database that provides information to home builders, called Atlanta’s home market “extremely fragmented,” with the builder with the top market share having only about 3%. The bulk of metro Atlanta’s new single-family, detached homes sold for $250,000 or less in 2006. Of about 40,000 such houses built last year, about 23,500 fell into the starter-home price range. However, demand has fallen behind in the market and the backlog of unsold houses now averages more than eight months. (www.ajc.com)
Atlanta Journal-Constitution (4/1/07); Julie B. Hairston and Michael E. Kanell
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Housing Crisis Knocks Loudly in Michigan
Within a square mile of Janet Laitis’ house in the Detroit bedroom community of Dearborn Heights, Mich. more than half the 96 homes on the market are foreclosed properties, a common situation in pockets of the industrial Midwest, where a record number of people are missing their mortgage payments and losing their homes. While lax lending policies have been blamed for the unfolding home-mortgage crisis across the country, the distress in the Midwest has been exacerbated by a severe drop in manufacturing jobs as the U.S. automobile industry shrinks. Michigan has lost 305,000 jobs since 2001. Economists estimate that 40% of the cuts came from automakers and their suppliers. About 65,000 people moved out of Michigan from July 2005 to July 2006, the U.S. Census Bureau reported. In the last three months of 2006, Michigan was the only state in the nation where home prices fell, dropping 0.4% from the same time in 2005. For most of the past year, Michigan has ranked among the three states with the highest percentage of late mortgage payments and foreclosures, surveys by the Mortgage Bankers Association show. In the fourth quarter, it came in third, behind Ohio and Indiana, with 2.39% of its loans in foreclosure. (www.washingtonpost.com)
Washington Post (3/31/07); Dina ElBoghdady
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Smart Houses Get Slow Grades
According to focus-group research released last month by the NAHB Research Center, technology-enabled houses appeal to very few builders because they believe smart houses are too complicated, too expansive and cause more problems than they are worth. Perhaps that’s why only one in three builders offers “structured wiring” as a standard feature or an option, according to NAHB. Based on eight focus-group sessions in September in Dallas and Chicago, including production as well as customer builders, researchers found that the term “smart” meant different things to different participants. Some thought it meant houses with alarm systems and home theaters. Others believed it meant homes where everything is possible, and some said they were houses that “control and befuddle residents.” For the most part, they maintained that wholly integrated, technologically intelligent houses cost substantially more than traditional houses. And some were concerned about the reliability of whole-house technology or that it was too involved and would lead to more “callbacks” from buyers experiencing problems. (www.chicagotribune.com)
Chicago Tribune (3/18/07); Lew Sichelman
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