by Calculated Risk on 11/19/2005 08:34:00 PM

Four articles on Housing and Employment.

From the NY Times: As the McMansions Go, So Goes Job Growth

THERE'S a growing consensus that the housing market is cooling off. ... ... in recent years, housing, real estate and the related industries have become a huge factor in another crucial economic area: employment growth.

After the brief and shallow recession of 2001, the resilient United States economy stubbornly failed to create payroll jobs at the rate of past recoveries. ... amid the gloom, the real estate sector shouldered the burden of job creation.

Asha Bangalore, an economist at Northern Trust in Chicago, tallied figures from the Bureau of Labor Statistics for sectors like construction, building material and garden supply stores. She found that from November 2001 to October 2005, housing and real estate accounted for a whopping 36 percent of private-sector payroll job growth. "In four years, 2.3 million private-sector jobs were created in the U.S., and 836,000 were related to the housing sector," she said.

...virtually all the labor associated with housing - the roofers, the investment bankers who securitize mortgages into bonds, the clerks at Home Depot - is based in the United States.

As a result of the boom, the economy is more concentrated on housing than ever before. "Residential investment as a share of gross domestic product is at the highest level in 50 years," said Jan Hatzius, senior economist at Goldman, Sachs.

Mark Zandi, chief economist at Economy.com, notes that real-estate-related industries accounted for 9.7 percent of total domestic employment in the second quarter of 2005, up from 9.0 percent in the fourth quarter of 2001. And in areas with the hottest markets, housing plays an even more important role. In California, 13.4 percent of jobs in the second quarter of 2005 were housing-related, versus 12.3 percent in the fourth quarter of 2001. In Las Vegas, the figure rose to 14.6 percent from 12.9 percent; in Panama City, Fla., it rose to 15.4 percent from 11.7 percent.

So what should we expect, now that housing appears to be cooling off?

... "Housing and the job markets are joined at the hip," Mr. Zandi said. "And if housing cools, so too will hiring and the job market more broadly, particularly in the more juiced-up housing markets."

If housing prices are flat in 2006 and residential investment falls 5 percent, there could be a direct loss of a few hundred thousand jobs related to real estate, Mr. Hatzius said. And the indirect effects will certainly be larger, Mr. Zandi said: "Housing is going to go from being a key contributor to the job engine to being a significant drag on job growth."

But there's some good news. Ms. Bangalore notes that while housing's contribution to job growth has declined in recent months, "other sectors are picking up the slack."

And now from the LA Times on California: State Posts Tepid Job Growth

Can [California] weather a softening housing market?

The real estate sector, including construction, mortgage finance and home sales, has been the state's single largest engine of job growth. Construction added 63,400 jobs in the last year, nearly double the 32,400 jobs added by the next-strongest category,
leisure and hospitality.

But amid rising mortgage rates, home price increases are stalling and sales activity is slowing. Homes are staying on the market longer, as sellers find it harder to get their asking prices. These factors could result in slowing job gains or even job losses like those that hit Orange-based Ameriquest Mortgage Co., which said Thursday it would cut 10% of its workforce nationwide.

And in Orange County, California, from the OC Register: O.C. Unemployment up as job growth slows

Construction employment in the county fell by 1,100 in October to 98,300 ... Financial activities, which include real estate, posted a slight increase of 100 jobs in October, but the number was unchanged from a year earlier at 132,500.

"We expected construction and financial activities to show gradual slowness in terms of job growth, and that's kicking in," said Esmael Adibi, an economist with Chapman University's A. Gary Anderson Center for Economic Research.
...
The figures released Friday don't reflect two big layoffs by Orange County companies this week.

On Thursday, ACC Capital Corp., the Orange-based parent of Ameriquest Mortgage, laid off 1,500 people nationwide. On Wednesday, Anaheim's Automotive Caliper Exchangeshut down, putting 300 people out of work. The impact of those layoffs should show up in November employment figures that EDD will release next month.

And finally, the Ameriquest announcement: Ameriquest parent cuts jobs

ACC Capital Holdings, the Orange-based parent of Ameriquest Mortgage Corp., said Thursday that it is laying off about 10 percent of its staff, or about 1,500 people nationwide.

"The mortgage industry is entering a challenging phase of rising interest rates," ACC Capital said in a statement. "In response to these changing market conditions, the ACC Capital Holdings family of companies is reducing its current workforce by
approximately 10 percent. In cyclical industries such as mortgage lending, periodic workforce reductions are not uncommon."