Wednesday, March 22, 2006

Signs of the times

Last summer when I would order an appraisal, it would take two weeks for the appraiser to inspect the property and then another few days to e-mail me the report. Last week I ordered an appraisal from the same appraiser and he was there the next day. I had the report that afternoon. I was even more surprised when he called the following day requesting payment for his services. Normally he would get paid when I do when the loan or sale closes but things have been a little slow recently and would I please mail him a check.
During the recent boom years in the real estate market, thousands of Americans flocked to jobs in the real estate industry. As the housing market slows, there will likely be a large number of people bailing out of their real estate jobs and other professions related to housing - appraisers, mortgage brokers and home construction workers. This could send shock waves through the job market and the economy.

Almost four out of every ten jobs created in the past four years were in housing-related fields. At the end of last year, a record 9.8 percent of U.S. workers were employed in the real estate industry, up from 8.2 percent a decade ago, according to Moody's Then last month, Washington Mutual said it would close 10 mortgage processing centers and let 2,500 employees go. In November, Ameriquest laid off 1,500.

There are few trends which could reduce the blow to the economy. Although residential construction is weakening, commercial building is picking up, thanks to demand for new roads, government office buildings and retail shops. The hurricanes last year damaged or destroyed 700,000 homes. Although it is unclear how many of those homes will be rebuilt, the rebuilding process will likely create jobs for years to come. According to the Mortgage Bankers Association, about 25 percent of outstanding mortgages in the fourth quarter were adjustable-rate mortgage. Many homeowners will likely want to refinance their mortgages to lock in a fixed rate as interest rates are expected to rise.


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