HOUSING MARKETS, JOB MARKETS FATES TIES
Melissa Weinman
August 27, 2010
If the housing market and the job market are any indication, economic recovery is a slow journey.
The Labor Department reported that requests for unemployment benefits nationwide fell sharply last week - a hopeful sign the job market is improving. The drop in first-time claims to a seasonally adjusted 473,000 was the first decline in a month. Still, unemployment claims remain much higher than in a normal economy.
Signs are less promising in the housing market. The cumulative effects of unemployment and underemployment are still causing people to lose their homes in Northeast Georgia.
"The lingering unemployment and job loss is increasing the number of job loss foreclosures," said Frank Norton Jr. of the Norton Agency in Gainesville. "Much of the foreclosures we saw in 2007, 2008 and 2009 were builder and subprime-related foreclosures. We are now seeing more job loss foreclosures in this region.
"They may even be underemployed today and can no longer afford their mortgage."
About 9.9 percent of homeowners nationwide had missed at least one mortgage payment as of June 30, the Mortgage Bankers Association reported Thursday. That number, adjusted for seasonal factors, was barely down from a record high of more than 10 percent as of April 30. The number of Americans who are missing payments and falling into foreclosure has followed the trend in unemployment. The jobless rate has remained near double digits all year.
"Ultimately, the housing story, whether it is delinquencies, homes sales or housing starts, is an employment story," Jay Brinkmann, the Mortgage Bankers Association's top economist, said in a statement. "Only when we see a consistent increase in employment will we see an increase in sales and starts, and a sustained improvement in the delinquency numbers."
Norton said people in Hall County are still buying houses because they are able to take advantage of lower prices and interest rates.
"Our sales are still brisk as compared to 2008 and 2009," Norton said. "We're seeing maybe 40 percent of all houses are either foreclosures or stressed sales. We've seen an increased number of traditional sales over the last 90 days as people who want to sell have become very realistic about their sales price. It's still very much a buyer's market."
Foreclosures and distressed home sales have pressured home values and made it difficult for builders to compete with the low prices. Some potential sellers also have been discouraged from putting homes on the market. The recent drop in unemployment claims comes after a steep rise the previous three weeks that sent claims to their highest level in nine months. Even with last week's decline, the four-week average, a less volatile measure, rose to 486,750, the most since November 2009. Jobless claims fell steadily last year as the economy began expanding, dropping from a peak of 651,000 in March 2009 to about 460,000 at the start of this year. After fluctuating around that level for most of this year, claims started climbing again last month.
In a healthy economy, claims generally fall below 400,000. Norton said Northeast Georgia has been lucky to attract new jobs to the area.
"On the positive side is that Hall, Jackson and Forsyth (counties) are getting a disproportionate share of new businesses relocating into this area," Norton said. "Georgia State (University) has released that there's been about 5,000 new job announcements since Jan. 1 for businesses on the north side of Atlanta.
The Associated Press contributed to this report
http://www.gainesvilletimes.com/section/6/article/37112/
