What are some of the key characteristics of a healthy housing system? And how can the success of these features be measured?
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Recent news on December job creation showed that 200,000 non-farm jobs were added in December 2011. Including December’s data, the economy is nearly one-third of the way to recovering the 8.8 million jobs that were lost during the recession (we’ve gained 2.7 million and have about 6.1 million more to go).
While the job gain of 200,000 is good news since it’s an improvement over average job creation in the recent period and adds workers collecting paychecks who can then spend money on things like housing, at this rate, it will take another two and a half years or so to get back to the number of payroll jobs on the books before the recession.
Naturally, more jobs should mean more home sales. However, that relationship does not always hold up if mortgage availability or consumer confidence move in a less favorable direction. In the past few years, jobs have been added and rates have been falling, but home sales have barely moved up. Consider that from the cyclical low point for jobs in America in early 2009 (3 years ago), the total net payroll job additions have been 2.7 million. But home sales in 2011 came in at 4.26 million — not that much different from the 4.34 million existing home sales figure in 2009 and the 4.19 million tally in 2010.
What was happening to consumer confidence over this time period? Despite the job creation, consumer confidence as measured by the Conference Board has been moving along sideways. The ticks, both upward and downward, to confidence look to have impacted the home sales in the same direction.
This time last year, the consumer confidence index reached 72 before sliding down. But towards the end of 2011 there was some revival in confidence, which presumably also brought about an upward trend to home sales. Let’s hope that consumer confidence this year does not replicate last year’s pattern of sliding down after a good start.
Joseph M. Ventrone is Vice President of the National Association of Realtors’ Regulatory and Industry Relations Department.
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