Last week’s unemployment report sent shivers down the spines of traders. And why not? On every level, the jobs report was dreadful.
National unemployment rose to 9.5 percent, but in reality, it’s much higher. Real unemployment is perhaps even as high as 16 or 17 percent. The numbers include:
- There are those who are under-employed;
- Those who work part-time but would prefer a full-time job;
- Those who are so discouraged they’ve given up looking;
- Those who have gone back to school rather than face a whithering job hunt;
- And, others like small business owners or self-employed people who have gone bankrupt, lost their clients and/or revenue base, and are searching for something to do.
It’s this last category (which isn’t even part of the unemployment numbers) that concerns me most. Yesterday, I sat in for Clark Howard and did three hours of talk radio on WSB. I took a call from a real estate agent who says she listens to my Sunday morning radio show frequently. She wanted to let me know that while she didn’t do any business last year or even during the first part of this year, she’s starting to get calls from buyers.
Let’s rerun that: She hasn’t really done any business in 18 months. Join the club:
- My mother, Susanne, a top real estate agent in Chicago, hasn’t really done any business in 18 months. She’s working a lot, but not selling that much.
- Her partner, Barbara, hasn’t done much business in 18 months.
- Rick, a land broker who made a great living over the yeras selling big parcels of land to developers in the states around Lake Michigan, told me last week that his business started changing in 2007, that he doesn’t have any business now, and doesn’t see any business anywhere in the country.
- Mark, a landscape architect who with his partners helps developers plan out the use for the big parcels of land they buy with the help of folks like Rick, hasn’t really done much in at least 12 months - and doesn’t see anything new coming down the pike for 2010.
I know it’s a small sample, but I’d consider a real estate agent who hasn’t done much, if any, business in 18 months to be functionally unemployed. She isn’t bringing in revenue or contributing much, if anything, to the tax base. I know she doesn’t count in the “official” unemployment numbers, but she isn’t making the money she made two, five or even 10 years ago.
Here’s the question I’d like answered: How many other real estate agents, landscape architects, appraisers, professional home inspectors, contractors, sub-contractors, owners of building supply companies and the myriad of other professionals in the real estate industry have any business? Sure, there are a few in my mother’s real estate office who are doing well. There always are.
But nationally, things don’t look so good in the real estate industry. The National Association of Realtors reports it has lost 200,000 members since the start of the recession. What are all of those former self-employed real estate agents doing to put food on the table?
The big exception, of course, is the mortgage industry. It has taken somewhat of a hit, but homeowners are still trying to refinance or do loan modifications and first-time home buyers are out looking for deals. And, with the coming commercial real estate tsunami, millions of square feet will be foreclosed on by banks, and sold for pennies on the dollar. Some commercial real estate brokers will be busy.
Maybe it’s just me, but I don’t understand how we can turn the tide of real estate when 400,000 to 600,000 jobs are being lost each month. Jobs and real estate are tied together.
As always, I welcome your thoughts and comments.
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