More Reality vs. Perception

New Mexico’s seasonally adjusted unemployment rate was 3.2 percent in February 2008, little changed from January’s record low of 3.1 percent. The national unemployment rate, currently 4.8 percent, remains higher than New Mexico’s. A year ago, the state’s unemployment rate stood at 3.8 percent.
Albuquerque’s seasonally adjusted unemployment rate was 3.3 percent in February, unchanged from January’s rate. Over the year, unemployment in the area has decreased three tenths of a percentage point from 3.6 percent.
So, why are we having so much difficulty with the housing market? Go figure....

Waiting On Data

Still waiting on the February statistics from our association. I won't be surprised if we had less activity than in January. Every bit of news has been negative during the last few weeks and one of the lessons of the Albuquerque/Rio Rancho market is that for the first time this market is following the national market. And, fundamental to the problems with the economy is that NO one understands all the root causes of the meltdown -- and that is what is injecting an extra level of caution. A good quote from yesterday's financial articles: "Bubbles lead to busts. Busts lead to panics. And panics can lead to long, deep economic downturns, which is why the Fed has been taking unprecedented actions to restore confidence." (NY Times 3/19)

Albuquerque Unemployment Rate

Once again, the difference between perception and reality is glaring. With the market in such bad shape you would think we had rising unemployment. In fact, January's rate was 3.3% -- down from 3.4% in December. One year ago, the rate was 3.8%. Go figure....

Seriously Good News

With all the turmoil in the credit markets and loan programs disappearing overnight, the government backed mortgages have become critically important.

Today, FHA limits were raised for the Albuquerque/Rio Rancho area to $271,050. And, of course, FHA loans require only a 3% down payment. Keeping in mind that our average price is just about $220-230,000 on any given month, that will mean a lot of stability and less funds needed to close for a very big proportion of the local market.

Politics vs. ideology

Politics (in this case defined as 'keeping your job') will shortly move the Bush administration to intervene in the markets. That may normally be a non-starter for conservatives... but, hey, this is an election year. So, the Fed chairman, Ben Bernanke, is suddenly calling for bankers to reduce mortgages for those in trouble and the administration raised limits on the volume of mortgages that can be Federally insured.
None of this is necessary in the Albuquerque/Rio Rancho area particularly -- except that anything that reduces the perception that the sky is falling will be welcome. More and more, I am convinced that this market - even though the local economy is sound -- will not recover while every economic indicator is down.