Tag Archives: Unemployment

NAR Housing economic Outlook 2011-2012

The National Association of Realtors Economic Outlook is showing some interesting forecasts for 2012.  Keep in mind no one has a crystal ball, but the economists go ahead and make forecasts anyhow.  The great thing about economists is they are usually about as accurate as the weather forecasters, yet I continue to listen to the weather forecast anyhow…

As of October 2011, here is what the economists are currently forecasting for 2012.

It looks like they are forecasting very little change in the unemployment rate, nudging down to 8.6%.  I am particularly interested that they are forecasting the 30 year mortgage rate to inch upwards to 5% by the end of 2011.  Apparently they are not expecting much help from Operation Twist, which I think is accurate.


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Their forecast (above)on Existing Home Sales is showing a fairly steady growth through 2012.  While Housing starts and new construction sales are showing a big jump in the last 2 quarters of 2012.  This is showing % change from a year ago.

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The above chart is kind of frightening, take a look at the Real Disposable Income line.  I didn’t realize I had any disposable income and their forecast is showing it is going to get worse!  The GDP is showing a forecast of pretty flat growth and the CPI showing flattening mid 2012.  I would disagree with that, but I am no economist…  I would expect the CPI to increase steadily throughout 2012…

These graphs are just a couple snapshots from their Forecast.  For more information on their Economic Outlook, check out their data here.





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Chart of the Day: Housing Starts vs. Unemployed

Sometimes a Picture is worth a thousand words…  This one speaks volumes.

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Linked from Captain Capitalism


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Minneapolis/St.Paul MN, Twin Cities Unemployment Rate August 2011 – released 9/28/2011

The Metropolitan Area unemployment rates were released by the St Louis Federal Reserve this evening for August 2011.

We know the State of Minnesota held at 7.2% unemployment rate for August, but now we can see how our local real estate market is doing with the unemployment rate.

For August 1st, 2011 the unemployment for Minneapolis, St-Paul-Bloomington, MN-WI MSA  (aka The Twin Cities) took a pretty significant drop from 7.4% to 6.7%.   Unfortunately there is no information suggesting why that drop took place.  A couple of theories are: Minnesota added 5,800 jobs, a large number would be in the Twin Cities and that there was a spike in unemployment due to the State shutdown.  These were explanations given for the State unemployment figures, and I just figure they would hold true for the Twin Cities…

Headed the right direction!  Long ways to go to get back below 5%, not even to mention 2% like we saw in the late 1990’s.     This is a good reduction and we should be happy for small gains.  Let’s hope for many more reports this direction.

As regular readers, you already know that the number one thing hurting our real estate market is the lack of jobs.  That is why I am watching the unemployment rates.

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Operation Twist, and our housing market: Pretzel Logic


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 Here we go again.. 

Operation Twist has been launched by the Federal Reserve.  The idea is the Federal Reserve will buy long-term T-Bills, $400 billion worth.  The theory is it will lower the long-term interest rates.  This is also supposed to give banks cash balances.  Sounds good, except it has been tried in the past and did not work.

The term “Operation Twist” comes from the early 1960s, when the Fed tried something similar. (It’s named for the Chubby Checker hit.) It may have had a small effect — one recent studyfound that it drove down the interest rate on Treasury bonds by 0.15 percentage points. But the effect on mortgage rates was smaller, and the effect on corporate borrowing costs was tiny.

Read Article from NPR

One problem, okay one of many problems…  Mortgage Interest Rates are already at record low levels.  This is not the problem with the housing market.  The housing market is suffering because of the high unemployment and underemployment.  You may argue: it is because of the foreclosures!  Well, sure – why are people going into foreclosure??  Maybe because of job loss and under-employment??

 I don’t care if mortgage rates are 2% or 4%, if  you are unemployed you still won’t buy a house!  

Let’s phrase this differently, someone will buy a house at 12% interest rate if they have a job before someone buys a house at 3% interest rate that has no job.

How did the market respond to this news?  Take a look at the Dow Jones chart for the day and see if you can identify what time the news was announced:

Welcome to the Lost Decade

I do hope this works, but I am not optimistic on this strategy at all…

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MN Adds 5,800 jobs in August – Unemployment Rate unchanged

Ever wonder how you can add employment and yet the unemployment rate stays the same?  It always seems like “fuzzy” math to me…  But then again, I am no economist – I am only looking into the employment situation because this is the key factor holding the real estate market down.

Basically the report indicates Minnesota added 28,400 jobs in August, of which 22,600 were government workers going back to work after the State shutdown.  (wow.  that’s a big number!) 

According to their news release:  5,800 private sector jobs were created and we still hold at a 7.2% unemployment rate.

 …other sectors that gained jobs during the month were trade, transportation and utilities (up 4,100), construction (up 2,200), education and health services (up 1,400), manufacturing (up 1,200), and professional and business services (up 700).

The construction industry has added 7,500 jobs in the past four months, the first gain in jobs during the summer construction season since before the housing crash in 2006.

Job losses occurred in Minnesota last month in leisure and hospitality (down 3,300), financial activities (down 200), other services (down 200) and information (down 100). Mining and logging was unchanged.

Read Full Report from State of Minnesota DEED (Department of Employment and Economic Development)


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Households Doubling Up, this is the “pent-up demand” for housing.

The “pent-up demand” for housing is stuck right now with high unemployment.  If we can get jobs creation going, allowing the younger age group to move out and create new households, the housing market will start to hum along.

These “doubled-up” households are defined as those that include at least one “additional” adult – in other words, a person 18 or older who is not enrolled in school and is not the householder, spouse or cohabiting partner of the householder.

Young adults were especially hard-hit, with 5.9 million people ages 25 to 34 living in their parents’ household in 2011, up from 4.7 million before the recession. That left 14.2 percent of young adults living in their parents’ households in March 2011, up more than two percentage points over the period.

Read Full Census Article

This age group that is now stuck living with their parents is what the market needs back in the workforce and buying houses.  There is a potential for this to come down the pipeline in a wave, creating a shortage of housing believe it or not.  It all depends on how we pull out of this recession/or recovery.

For a good analysis of this Census  report, check out Calculated Risk 

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NAHB/First American Improving Markets Index (IMI) 9/07/2011

National Association of Home Builders

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The National Association of Home Builders has started a new data series called the NAHB/First American Improving Markets Index (IMI).  This is new so there is not a detailed history to get much perspective.  They did however identify 12 areas that are improving first.  These are as follows:

NAHB/First American Improving Markets Index (IMI) 9/07/2011

Unfortunately Minneapolis/St Paul didn’t make this first list…  I was curious about why these Cities are recovering.  Judging by the locations, most of them being in oil producing fields, I suspected employment was behind this.  So I pulled together the unemployment rates in the Cities highlighted.  This isn’t scientific, but of the 4 I looked up, they were all between3% and 6% unemployment rates.  Nationally we are around 9.1% and Minneapolis/St Paul is around 7.2%.

Unemployment Rates of 4 of the Cities listed on the IMI

Again, this isn’t “scientific” proof, but it sure supports the theory of correlation between housing and employment…

Marty Andrade wrote an interesting post about unemployment rates, he also broke it down to the Twin Cities level in the comments section.

I will continue to watch this and keep you updated.  This information may be of value, hard to tell right now with so little data available so far.

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