After
the wrenching ups and downs of real estate markets over the last ten years,
it's fair to ask where we are now. Home construction can give us a partial
answer. Back in the boom days before 2008, when sub-prime mortgages put an
extra 5 million people into a home, builders were putting up units as fast as
they could - about 2 million per year. It still wasn't enough, though, and home
prices kept climbing.
Then,
during with the recession, when many sub-prime loans ended in foreclosure, construction
plunged to little more than half a million units per year - and many builders
went out of business. In recent years activity picked up again and last year
1.3 million new homes were built.
For
the size of the US population, however, the average number of homes built per
year should be 1.8 million. We haven't seen that level since 2006. What this
means is that even though too many homes were built before 2008, we're now
facing a chronic shortage. Builders can't possibly scale up fast enough, so
we'll see demand greater than supply for years - and higher home prices.
Total
jobs in September were up 1.7 percent from last year, the same rate we've seen
for months. Jobs were up 2.2 percent in manufacturing, 0.4 percent in retail,
1.4 percent in finance, 2.8 percent in business services, 1.9 percent in
healthcare, and 1.7 percent at restaurants. As usual, government jobs were
almost flat.
The
increase in manufacturing jobs is encouraging, but it's business services
that's pulling the economy along. The lack of growth in retail jobs - online
shopping - looks like it's permanent.
