02 September 2010

Jobs Essential To Future Housing Market

Every Thursday the chief economist of the National Association of Realtors' reviews data he deems critical to the future housing and real state markets.

His focus is not about home prices or interest rates. What the economist finds highly important is a report reflecting new jobless claims. He views the country's employment situation as an essential factor to stabilizing the U.S. housing and real estate sectors.

"We need jobs; jobs (are) the key thing," said Lawerance Yun, the chief economist of nation's realty market. He lectured to the Economic Club of Traverse City on Friday as a guest speaker of the Traverse Area Association of Realtors.

Yun warned that an array of issues are influencing the current housing market. The challenges range from high foreclosure rates to strick lending and credit risk management practices to an over-abundance of unsold properties.

In a positive light, he also noted the country's housing market as well as overall economy is capable of a quick rebound if the job market improves. In addition, as more corporations start to invest in large sums of cash they have earned over the recession, the economic conditions can grow even stronger.

"We still have a very long way to get to full employment," said Yun, who projected up to five years before the country's jobless rates taper to pre-recession levels.

In his speech, Yun targeted the significant fall-off in the country's real estate sales in July but claimed it was not an unexpected turn of events. As the tax credit for federal homebuyers reached its expiration, interested investors flocked to their local home buyers agency to finalize purchases by late June. It wasn't unusual to see home sales drop the following month, he said.

"It's not a 'sky-is-falling' scenario," Yun said.

He projects a "pause" in sales that will continue into September but mentioned real estate sales in the fourth-quarter will be the underlying predictor of the future housing industry. If fourth-quarter real estate sales are consistent with the number in previous years, he expects the overall market for homes will continue to stabilize.

One Raleigh real estate agent, Ann Davis, who works exclusively for a buyer's only agency, has already seen improvements in sales as an emerging influx of families and individuals migrate to North Carolina for career opportunities.

"It is culmination of being in a location that is higher in demand as well as providing niche home buying services that your typical Raleigh real estate agency does not offer," Davis said. She is hopeful that sales will continue to thrive.

Yen warned listeners during his speech in Traverse City that if sales figures are measurably lower in the upcoming months, the country's economy may be headed for a "double-dip" recession.

"If the fourth quarter matches up with the prior fourth quarters, I think the worst is over," he said.

Yun pinpointed other areas of the country's economy in his talk. He touched on the spectrum of opinions regarding where the economy is headed, with some economists foreseeing risks of inflation as others are more worried about prices growing stagnant.

Positive signs do however exist in the housing market. Default rates on recent real estate and home sales have improved, and precise loan origination software has enabled lending practices to minimizing the instances in which interested buyers are purchasing homes that are far more expensive than they can afford. Such tools have also improved credit risk analysis efforts which also contribute to the financial mix of the housing market.

"I think we have to return to the old-fashioned American way ... stay within your budget," Yun said.

As for Ms. Davis and her Raleigh home buyers agency, her future sales figures will a solid source for nationwide projections. She is going to be the one to watch, for Ann is already at the forefront of the emerging real estate market trends.

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