“It’s the economy, stupid”
What’s noteworthy is that we’ve got some groups other than the expected ones expecting to see improvement this year. The national Mortgage Bankers Association, for example, expects to see a slight increase in purchase originations this year even though the group anticipates a drop in overall mortgages due to fewer people refinancing as the interest rates on a 30-year mortgage go from current levels of under 5 percent to close to 6 percent by the end of December.
Yes, it’s very true that some of those anticipated sales are based on factors we’ve heard about time and time again – continued downward pressure on home prices, inventory levels guaranteeing plenty of houses to choose from and interest rates that are still very low. Still, one of the most important factors to consider when it comes to real estate markets is the unemployment rate.
Here’s the thing – interest rates can be outstanding and home prices may be declining, but people won’t buy houses if they’re not working or are worried about losing their jobs. Whenever people talk about improving housing markets, any discussion on those lines ought to include an analysis of whether unemployment rates are improving.
To quote former Arkansas Razorbacks coach Danny Ford, it doesn’t take a “scientific rocket” to figure out the relationship between housing markets and employment data. It’s not exactly a coincidence that housing markets started running out of steam about the same time unemployment rates started to rise.
And we’ve seen unemployment rates grow worse sense then and pull the rest of the economy right along with them. Ah, but the U.S. Bureau of Labor Statistics released some numbers for February that represent an improvement in the national unemployment rate.
The unemployment rate in February was 8.9 percent, down from 9.7 percent in the same month last year and down from 9.4 percent at the end of December. While an 8.9 percent unemployment rate is nothing to crow about, it does at least represent a decline and that’s a trend we all hope to see develop.
Another encouraging number from the Bureau of Labor Statistics’ February employment report is that the number of “discouraged workers” in February was 1.02 million – down 15.28 percent from 1.2 million a year ago. Discouraged workers, of course, are those unemployed people who have largely given up on trying to find a job. The more unemployed people who are hopeful of finding jobs, the better.
While it’s not the time to simply pump sunshine – particularly since even the most optimistic economists are more than a bit cautious when it comes to saying when a a recovery might start – we’ll take all the good news we can get these days. Hopefully, we’re seeing some trends develop that will lead us out of the current economic mess into a recovery.
Should the job picture improve, everything else will simply fall in
line. Let’s all hope that happens sooner rather than later.
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.