I just read a fascinating article from 24/7WallSt.com about housing recovery entitled “The Thirteen Housing Markets That Will Never Recover.” The facts presented, based on NAR home price data and Bureau of Labor Statistics unemployment data, present a convincing argument that any housing recovery is going to be a slow process. Here’s a link to the article: http://247wallst.com/2010/05/13/the-thirteen-housing-markets-that-will-never-recover/.
Despite government insistence that the economy is well on the way to recovery, the real story on unemployment paints quite a different picture – one that most Americans “feel”, but don’t really understand. Quoting from the article, “Government numbers for joblessness do not include part-time workers looking for full-time jobs or people who have become “unattached” from the work force. These additions would bring the national unemployment rate to 17.1%. That means that if a city has unemployment of 14%, joblessness could be closer to 21%.” Employment, of course, relates directly to housing purchases.
The basic premise is that in areas where home prices have dropped substantially, like 25% or more, and unemployment is greater than 10%, it is likely to be a very slow recovery in the housing market. Conversely, where housing prices have not dropped precipitously, and unemployment is low (relatively, anyway), there is at least a chance for housing prices to recover.
So, across the country the real unemployment rate averages at least 17%. So far this year 102 banks have failed. Last year 64 banks failed. The mortgage market is tight as a tick. The Fannie-Mae and Freddie-Mac debacle has not been fixed. Foreclosures are increasing, not decreasing. Businesses are afraid to hire because of economic uncertainty tied to the current Congress and administration. The just-announced GDP numbers are worse than expected for both 2009-2010. Just about any way you look at it, the numbers suggest that real economic recovery, including housing which is inevitably tied to jobs recovery, is a long way off.
But, I remain an optimist! The good news? Interest rates remain low. Housing inventory is high and prices are low. If you can afford to buy, this is the time. And fortunately, in this country, we, the people, have the opportunity to change our destiny every 2 years: remember in November!
