The Next Threat to the Housing Market

It's beginning to look like unemployment may be the next big threat to the housing market. Today's numbers were, once again, not good. 524,000 people lost their jobs in December for a total of 2.6 million in 2008. People without jobs can't buy houses, and people who fear losing their jobs don't buy much either.

The headlines say this is the worst since World War II, but that's a bit of an over-dramatization. It is true that this is the largest annual job loss since 1945 when 2.75 million people lost their jobs. However, in a growing country you can't just compare numbers like that without adjusting for the size of the workforce. The US population was less than half what it is now, so 2.75 million was a lot more back then.

The scary detail in these numbers is that 1.9 million of the 2.6 million total were lost in the last four months of the year. The job losses will likely get worse before they get better, and it could be a while if we're only four months into it.

Unemployment is really more of an indirect threat to our local real estate market. We don't have any good jobs to lose in Grants Pass. The people moving here, however, have to sell their old homes to someone, and that someone usually needs a job to afford that house. Great rates and low prices are all very nice, but they won't be enough to fix the market without jobs.