The Connection Between Jobless Rates and the Housing Markets

Authored by Diana Brown, Broker for Brown Bear Real Estate.
This article appeared in the Ferry County View Extra! edition.

At the risk of over simplifying, jobs mean income. It is only through utilization of this income that one can qualify for a mortgage loan most find necessary in order to purchase real property. The purchase of a home is most commonly the largest investment the majority of people will make in their lifetime. This makes the housing market a good barometer to measure the economic strength of you and I. It can also be stated that analyzing the retail market spending is another good barometer as when we see people buying boats, cars, recreational vehicles, or even department store revenue rise, people are demonstrating an ability to repay debt they often choose to take on in order to buy merchandise. Generally speaking, when we Americans spend money, we tend to do so when we feel our jobs (income) is secure. It is the reverse when we see the companies we work for down-sizing, anticipating lay-offs or even suggesting cut-backs of any kind. In that event, we are more inclined to make fewer purchases, especially those that are not immediately necessary. Job growth, especially within the private sector, always means good times are in store for all of us.

Let us look at some recent housing statistical information compiled largely by the Northwest Multiple Listing Service (NWMLS). It is the largest MLS in the northwest and is owned by its member real estate firms with over 22,000 contributing real estate Brokers. This MLS serves 22 counties within Washington State.

Statewide Brokers are reporting over 7,000 pending sales during February 2012 which was the highest volume since August 2011. This tally jumped 27.4% from 12 months ago with 20 of the 21 counties in MLS service area reporting double digit gains.

System wide asking prices are comparable to a year ago. Membership in MLS reported 3846 closed sales in February 2012, on average about 25% over the year ago total of 3080. Seller prices continued to slip but the decline was under 9% for the first time in nearly a year.

Mortgage interest rates continue to be in the 3.8% range which means the cost of money needed to borrow for home purchase is certainly the lowest I recall in my professional life time. This is a huge incentive to potential Buyers because often they can buy a home for less than they can rent. If that potential Buyer feels his job is secure (income) it is very likely they will look seriously at not only a home purchase, but any purchase.

Whenever possible, we all need to support small business growth as the jobs they create are the lifeline to our economic strength locally and nationwide. In short, when the job market shows growth many related industries will benefit, including the housing market.


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