This post is a bit long, but has relevant information on today's economy here in the PNW. The information is for the PNW Region and includes Real Estate stats. Hope you find it worth a look.
The Gardner Report
Second Quarter 2010, Volume X
Macro & Regional Economics
Last quarter I said that “Signs of Stability” was my key phrase relative to the economy, as well as our region’s housing market, and that appears to continue to be the case. It is clear that we are making progress, albeit at somewhat of a snail’s pace!
Local employment conditions continue to improve and I am glad to state that, on a year-over-year basis, there was just one county, Jefferson, which saw an increase in its unemployment rate. The greatest improvement was found in Cowlitz County, where the rate dropped from 12.9 to 11.9 percent. Other noticeable improvements were found in Whatcom, Kitsap, Lewis and Pierce counties, all of which saw their unemployment rates drop by 0.7 percent.
Of course, reductions in the overall unemployment rate do not tell the whole story. In fact, declining unemployment rates can have little, if any, relevance to employment gains on a year-over-year basis; in many cases individuals either quit looking for work or dropped off the pay rolls as their benefits expired. That being said, when comparing this quarter’s figures to those of last quarter, I found that, across the board, our state gained jobs in the second quarter. This was led, not surprisingly, by King County, whose pay rolls grew by over 25,000 jobs. Pierce County was second, with growth of 5,200 jobs; other gains in the region were far more modest, but gains all the same.
It remains my anticipation that this recent growth pattern will continue into the second half of this year. I do not expect to see drastic improvement, as businesses both large and small remain wary of hiring in the current uncertain economic environment. How will this affect our real estate market? Well, the most pronounced effect will be on the new construction sector that relies on job growth and new household creation to fill their homes. On the resale front, we are certainly affected by new employees moving into our region, but more important is the security of existing employment and its effect on the decision making of buyers. If they are comfortable in their own situations, it makes the important decisions relative to buying a house just a little bit easier.
Conclusions
Mortgage rates remain at all-time lows and are defying, for the time being, my forecast for them to rise this year. This is due to a flight to the relative safety of the dollar by many European nations. That being said, I see this pace of debt purchase slowing, and that will certainly add upward pressure to rates.
Overall, I would say that this quarter’s report card is a solid ‘C’. I can see improvement over the past quarter, but we are not out of the woods yet. Foreclosures in our state are still elevated and that is applying pressure to prices. Transactions are up nicely, but pending sales have slowed dramatically following expiration of the tax credit, and the next quarter will tell us how much future demand we have stolen.
If you would like a copy of the full report, let me know and I'll get it to you.
About Matthew Gardner
Mr. Gardner is a land use economist and principal with Gardner Economics and is considered by many to be one of the foremost real estate analysts in the Pacific Northwest. In addition to managing his consulting practice, Mr. Gardner is a member of the Pacific Real Estate Institute; sits as a trustee for the Washington State Center for Real Estate Research; the Urban Land Institutes Technical Assistance Panel; and represents the Master Builders Association as an in-house economist.
He has appeared on CNN, NBC and NPR news services to discuss real estate issues, and is regularly cited in the Wall Street Journal and all local media.
Shared by permission of author Economist, Matthew Gardner
Local employment conditions continue to improve and I am glad to state that, on a year-over-year basis, there was just one county, Jefferson, which saw an increase in its unemployment rate. The greatest improvement was found in Cowlitz County, where the rate dropped from 12.9 to 11.9 percent. Other noticeable improvements were found in Whatcom, Kitsap, Lewis and Pierce counties, all of which saw their unemployment rates drop by 0.7 percent.
Of course, reductions in the overall unemployment rate do not tell the whole story. In fact, declining unemployment rates can have little, if any, relevance to employment gains on a year-over-year basis; in many cases individuals either quit looking for work or dropped off the pay rolls as their benefits expired. That being said, when comparing this quarter’s figures to those of last quarter, I found that, across the board, our state gained jobs in the second quarter. This was led, not surprisingly, by King County, whose pay rolls grew by over 25,000 jobs. Pierce County was second, with growth of 5,200 jobs; other gains in the region were far more modest, but gains all the same.
It remains my anticipation that this recent growth pattern will continue into the second half of this year. I do not expect to see drastic improvement, as businesses both large and small remain wary of hiring in the current uncertain economic environment. How will this affect our real estate market? Well, the most pronounced effect will be on the new construction sector that relies on job growth and new household creation to fill their homes. On the resale front, we are certainly affected by new employees moving into our region, but more important is the security of existing employment and its effect on the decision making of buyers. If they are comfortable in their own situations, it makes the important decisions relative to buying a house just a little bit easier.
Conclusions
Mortgage rates remain at all-time lows and are defying, for the time being, my forecast for them to rise this year. This is due to a flight to the relative safety of the dollar by many European nations. That being said, I see this pace of debt purchase slowing, and that will certainly add upward pressure to rates.
Overall, I would say that this quarter’s report card is a solid ‘C’. I can see improvement over the past quarter, but we are not out of the woods yet. Foreclosures in our state are still elevated and that is applying pressure to prices. Transactions are up nicely, but pending sales have slowed dramatically following expiration of the tax credit, and the next quarter will tell us how much future demand we have stolen.
If you would like a copy of the full report, let me know and I'll get it to you.
About Matthew Gardner
Mr. Gardner is a land use economist and principal with Gardner Economics and is considered by many to be one of the foremost real estate analysts in the Pacific Northwest. In addition to managing his consulting practice, Mr. Gardner is a member of the Pacific Real Estate Institute; sits as a trustee for the Washington State Center for Real Estate Research; the Urban Land Institutes Technical Assistance Panel; and represents the Master Builders Association as an in-house economist.
He has appeared on CNN, NBC and NPR news services to discuss real estate issues, and is regularly cited in the Wall Street Journal and all local media.
Shared by permission of author Economist, Matthew Gardner
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