The housing boom beneficiary sectors are exerting a greater and greater drag on overall job growth, but employment outside of those sectors has been healthy enough to shake it off.
The construction, retail, and finance/real estate sectors, which I believe grew artificially and unsustainably bloated as a result of the region’s prolonged housing boom, have collectively shrunk 2.7 percent since January 2006. Over the past year, the construction industry lost 3,800 jobs or 4.2 percent, retail lost 2,500 jobs or 1.7 percent, and finance/real estate lost 2,400 jobs or 2.9 percent. (The sharp drop in retail empoyment, and to a lesser extent in construction employment, is seasonal — this is why I focus on the year-over-year changes).
Of all the charts you
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Of all the charts you post, this is one of my favorites. With a cursory glance, it looks like there is about a 4-month lag between the time that Construction jobs really began to decrease and when Retail, Everything Else, and Total Jobs began to decrease. Finance and RE jobs appear to decrease a couple months before construction jobs.
I imagine this lag is due to latent demand. Those that worked in RE and finance likely had some funds accrued from the RE bubble and could spend it on various things such as food, vehicle maintenance, etc.
My personal opinion is that this chart shows the future is not going to be pretty. If you look at the trend, each category is moving downward. Well, you say, that happened before in 2006. Yes, however that occurred in the middle of summer, well after the spring peak selling time came and went. Housing inventory was very high in the summer of 2006…and that is with increasing employment figures in nearly all categories (except Retail) from January to June.
Just imagine for a moment how things will go this year since employment is decreasing rather than increasing! A stronger economy, with strong employment figures, has been the biggest argument for those who feel that prices won't come down too much.
Weak employment figures, in my opinion, will be the final thrust that pushes San Diego housing prices down the hill. The real truth will lie in the figures from the next few months. If they continue downward or stagnate, look out.
Quote of the day from the LA
Quote of the day from the LA Times:
” “You almost can relate this to the aerospace industry, when they had those massive layoffs” after the end of the Cold War, said Jack Williams, president of the California Mortgage Brokers Assn. ”
tsk tsk, the president of the Mortgage brokers association shouldn’t be throwing the primary pillar of the RE soft landing under the bus like that…
Lender Layoffs
I’ve been working in the
I’ve been working in the construction loan industry since 1984 and have been through one major real estate downturn (early 1990’s). I vowed to never be fooled again in the next downturn. The only thing I can say is I calculated this most recent downturn to occur 2 to 3 years ago and would have bet my life on it.
I remember telling people the market is going to crash and it did’nt. Everyone thought I was crazy and I even began to believe I was crazy for even mentioning a real estate bust. The real estate market still has yet to crash but now the signs are real and thank goodness the bubble is slowly bursting.
Then I started thinking that maybe the real estate market will break through a down cycle all together since it’s gone on so long. Maybe the new web 2.0 internet boom is recycling once again to save the real estate market and economy.
Just maybe there is some validity to my logic. The reality is that honesty is always built into any market any economy at some point in any cycle. Things always balance out one way or another and the no free lunch theory should always be practiced. Earning will always be fundamental.
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