Two sets of data show unoptimistic results
When the job market picks up, expect the housing sector to follow. But we’re a bit worried at the trend where the number of jobs available is exactly going. First, the Labor Department released the latest figures that revealed, “The number of unemployed persons increased by 563,000 to 13.7 million in April, and the unemployment rate rose to 8.9 percent. Over the past 12 months, the number of unemployed persons has risen by 6.0 million, and the unemployment rate has grown by 3.9 percentage points.” It’s also evident in the report that 13 cities in California have unemployment rates above 15 percent. The hardest hit is El Centro, CA, where 26.9 percent of the labor pool has lost their jobs.
On the other hand, Automatic Data Processing, a payroll processing firm, states in its ADP National Employment Report, “Monthly employment losses in April and May averaged 539,000. This is a notable improvement over the first three months of the year, when monthly losses averaged 691,000. Nevertheless, despite some recent indications that economic activity is stabilizing, employment,
which usually trails overall economic activity, is likely to decline for at least several more months, although perhaps not as rapidly as during the last six months. In May, construction employment dropped 108,000. This was its twenty-eighth consecutive monthly decline, and brings the total decline in construction jobs since the peak in January 2007 to 1,345,000. Employment in the financial services sector dropped 32,000, the eighteenth consecutive monthly decline.”
So at this rate, how should we position the property market in the coming months?
Expect foreclosures to increase especially in California, Florida and Detroit.
Unless the Federal Tax Credit program penetrates the first-time homebuyer market considerably, new home sales would still be lackluster.
Construction firms would still have reduced projects and even lower business confidence level among professionals.