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Economic Job Trends And Real Estate

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Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
The question is, will there truly be an economic recovery to make a real estate upturn this time? The reason is that I'm not real sure that the economic engine is truly there this time.

In the 70's the downturn was due to the collapse of the "rust belt" manufacturing companies. In the early 80's, in Texas, oil price declines pushed things down, then the FED/FDIC rules pushed Texas into a recession. However, it rebounded with tech industries. Now, the loss of jobs nationwide has been a mixture of the last major manufacturing companies closing coupled with the dot.com/telecom bust.

The thing is, much of the economic growth of the last 10 years has been tech-related. Chips, software, systems design and systems support. It appears however, that these jobs are going overseas. Chip makers are moving their plants to third-world companies (less environmental conrols, minimal regulations, and salaries at less than 10% of U.S. levels). Tech support, systems design and software programming is being moved to Singapore and India (10-20% of U.S. salaries, not to mention not having to pay the benefits required of the U.S.). Manufacturing is essentially history. Net manufacturing jobs are declining in the U.S. While Nissan and Toyota are building new plants, the Big Three are closing plants, as well as other manufacturing companies (textiles, glassware, etc).

Couple this with the influx of H1-B aliens and illegal aliens. There are too many people for too few jobs. This is reflected in the fact that the recent drop in the unemployment level is due to people giving up on finding jobs, not people re-entering the employment market.

So, I'm somewhat pessimistic that there will be a true economic recovery nationwide. There will be pockets of recovery, but I forecast a much longer recession. This may well push down housing prices significantly.

ROger
 
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