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Friday, April 21, 2006

Construction Buoys State Job Market

Here's a pair of mostly glowing articles about just how stupendous our state's job market is, and how much better it's getting every day.

The roaring construction and aerospace industries helped Washington add 7,900 jobs last month, pushing the statewide unemployment rate back down to 4.6 percent.

That matched January's jobless rate, before an influx of new job-seekers bumped it up to 4.8 percent in February. The last time the state's jobless rate was this low was November 1999.

"Washington employers hired workers at a near-frantic pace in March," said Greg Weeks, director of the state Employment Security Department's work force-data branch. "A lot of industries were growing. This is a very hot labor market."
However, the Seattle metro area is still about 5,800 payroll jobs shy of its December 2000 peak.

The state's construction industry continued to hit above its weight. Construction accounts for less than 7 percent of the state's payroll jobs but generated more than a quarter of the new jobs added last month.

However, most observers expect high prices and rising interest rates will cool the nation's — and region's — housing boom.
I'm certainly not going to say that having more jobs available is a bad thing. However, these jobs that are being added hardly seem like the kinds of jobs that are going to afford people houses in King County. Actually, a large amount of the new jobs continue to be in providing houses:
The construction industry reported the strongest growth, adding 2,100 jobs in March. New construction jobs statewide reflect the "surprising persistence" of the housing boom, Weeks said. Construction jobs increased by 3,600 in January and by 2,400 in February.

"As an economist, I keep thinking the rise in interest rates will have an impact on the housing market, and I'm wrong," he [Weeks] said.
Oh, I don't think you're wrong Mr. Weeks. I think the market is just making one last gasp before the frenzy finally dies. By the time construction is completed on all these houses and condos that these thousands of new jobs are building, I think we will be experiencing a very different market.

(Drew DeSilver, Seattle Times, 04.19.2006)
(Dan Richman, Seattle P-I, 04.19.2006)


matt said...

Can anybody say "Fat, Dumb, and Happy" about the state economists? Like a scientist that's claimed to have invented a perpetual motion machine but doesn't do the math enough to figure it violates the laws of physics... just marvels at the phenomena like it was mana from heaven...

The unfortunate part of this is the state is starting to get used to this artificial tax base created from the housing bubble and when the show's over, and all those unemployed construction workers line up for unemployment benefits and there's a run on the rainy-day fund in the state, what then?

S Crow said...

Jim Jubak, CNBC & MNS-Money analyst, in today's article, has a good analysis about interest rates, it's impacts and "why it's going to continue marching up"...regardless of this weeks DOW increase.

See it here

Anonymous said...

As someone who isn't an economist, I have to wonder how someone who *is* an economist could assume that "rising interest rates" would automatically result in the direct increase in mortgage rates...

Could someone please hire a state economist who knows that loan rates are more closely tied to the T-bill yield (which only recently started to rise) than the reserve's short-term rates?


Anonymous said...

The article said that mortgages were tied to LONG term interest rates, not short.

I believe it also said that the Fed has no control over the long term rates.

Anonymous said...

Adjustable rate mortgages are tied to an index, usually based on 1-2 and 5 year treasuries, Helocs are tied to the prime rate (or libor) and fixed rate mortgages are tied to the 10 year bond.

Fed only controls the prime rate, but incluences the shorter term rates more than long term.

meshugy said...

Here are some graphs of King/Snohomish County Sales and inventory data:


Inventory Graph

Price Graph

Inventory graphs are interpreted as follows: The blue line represents total housing inventory as listed in The green line depicts the total number of homes sold in the previous month. The red line depicts the total number of homes added to the market in the previous thirty days.

Price graphs represent asking prices and should be interpreted as follows: The red line represents the 75th percentile. Seventy five percent of home sellers are asking for less than this amount, and only twenty five percent are asking for more. The purple line represents the median asking price. Half of those selling homes are asking for more and half for less than this price. The blue line represents the 25th percentile. Twenty five percent have an asking price which is less than this amount.

Looks like inventory hasn't changed much over the past few months, put prices have been edging up slighty.

meshugy said...

This Site reports this data on the Seattle Housing Market:

Median Price for 4/21/06: $424,990

Inventory for 4/21/06: 3,382

That's 9.5% INCREASE in price over the last 7 months and a 13.8 percent DECREASE in!

See the full report Here.

meshugy said...

One caveat....the price stats are based on "asking price" not "selling price." So over/under bidding is not factored in.

Still interesting though...

There's no other way you could get weekly stats like that.

biliruben said...

Good stuff, Meshugy. I've been following that site for months.

Their are two problems, however.

The one you already mentioned is that they are tracking asking, not selling price. Useful, if used cautiously.

The other is that there is seasonality to inventory, and I don't feel comfortable comparing April to October, unless you adjust for that seasonal trend.

I think inventory is up a bit if you compare to April 05.

meshugy said...

Hi Bili....actually the March NWMLS data said that listings were down 2.75% YOY.

Anonymous said...

Inventory in seattle city is up approximately 11% since late march. 1700 vs 1890 units. WIth sales volume falling, the inventory situation for buyers could improve over the next few months.

Anonymous said...


You are right, the graph portrays asking, not selling price.

And as has been noted in several places on this blog, and can be verified by anyone who bothers to check county tax records, most properties are selling UNDER asking price. Very few are being bid up.

And now we wait for your few examples of the properties in your immediate neighborhood that sold over asking.

I'm sure they will follow shortly.

Anonymous said...

Anon 10:49-

I've also noticed inventory going up since Easter. And very little selling.
If the trend continues, we could see the pile-up starting soon.

I check the inventory numbers on 12 Seattle neighborhoods through the week. Normally, they've each had a lot of up and down activity with a good amount of sell-off on Saturdays.

This week the numbers went up up up each day and only 2 neighborhoods decreased today- by just one property each!

That's a pretty solid "hold" pattern. The next few weeks will be interesting for us number-watchers.