Leave Us Alone -- Please!

A long-running joke in this state is that many people (including some post offices around the country!) seem to think we are actually a part of Mexico. The latest unemployment figures for the state and Albuquerque/Rio Rancho make that look like a good idea.

We are still in far better shape than most. But, the economic sectors of our economy most closely tied to the national economy are the ones that are doing the worst. Manufacturing, financial and professional/business services are all underperforming.

• The state's unemployment rate in August was 4.6% -- up from 3.4% last year.
• Job growth stands at .06% -- an increase of 4,700 jobs from a year ago.

• Albuquerque/Rio Rancho's unemployment rate was 4.7% -- up from 3.4% last year.
• Over the year, employment has declined .2% -- a loss of 600 jobs. That is the first net loss we have suffered since 2002. Some of the winners and losers:
  
• Construction lost 800 jobs.
• Professional & business services lost 800 jobs.
• Leisure and hospitality lost 400 jobs.
  
• Government services added 1,200 jobs.
• Education and health services added 1,100.
• Information (where movie jobs are slotted) added 400 jobs.
  

Heading for the Basement

The door slammed - hard - on home construction in the Albuquerque/Rio Rancho area in August.

• A mere 76 permits were pulled in the metro market. That contrasts sharply with August of '07 when 272 permits were obtained.
• The drop from July of '08 was just as dramatic... 196 permits were pulled last month.
  

Congratulations - Part II...

How do you like owning the financial sector of the United States? Before you get too cheerful about that, remember you are going to pay a lot for something that is worth very little....

How much? Current 'worst case' scenarios are up to a trillion dollars. But, I think we have already reached that figure and then some. Fannie and Freddie guarantee more than $5 trillion and we own them. And now, of course, we are guaranteeing up to another $700 billion.

Where will you and I get the money. Print it, of course. And the last time I checked that was called inflation: Big time.

Congratulations...!!

...you (and I and every other person in the U.S.) now own a very, very large chunk of Wall Street's financial sector:

• Bear Stearns (We guarantee $30 billion)
• IndyMac (FDIC insurance kicks in as bank fails)
• Fannie Mae and Freddie Mac (government takeover... no matter what the spin)
• AIG (same)

Cost to you and I and everyone else... depends on who is counting, of course, but if the tab is less than a couple of trillion(!) dollars I am going to be elated. And, very surprised....

Fannie and Freddie and You and I

Following the 'take over' of the two mortgage giants, rates have fallen off the table. All the Fed's previous rate cuts are now acting on mortgage rates. That was the intention when the cuts were announced, of course. Rates did not fall due to fears of ongoing instability in the credit markets. (Which of course did happen.)
Now that we have stepped in to bail out Fannie and Freddie, we may see lower rates for awhile. Hey -- why not? We (all of us taxpayers) will be paying for the carnage... we might as well get something out of it.

We'll see...

Forbes Magazine has been a consistent booster of Albuquerque and the latest comment from that direction is no exception. Job growth is projected to be 1.6% through 2012 (no mention of when that will start) and housing starts are going to be on the upswing by 2009.

Flatlining

As I've been saying for months, we have missed the excesses of the subprime debacle. But our market is still very sluggish and there is a simple reason. Job growth is lousy. Unemployment remains below the national average but inches up every month. And job growth is essentially non-existent.

• NM unemployment was 4.1% in July -- up from 3.9% in June
• Albuquerque's figures are similar. 4.2% -- up from 4.0%
• Job growth state wide is just .9% for the past year and most of the gains are in the energy intensive area of Farmington.
• By contrast, Albuquerque's job growth for the past year is just about zero (.3%).

By far the biggest problem with our real estate market is a high inventory. No way are we going to reduce that with flat job growth.

Another Reason to Love New Mexico

I've been saying that our market looks pretty good to a lot of others. How would you like to be selling in any of these:

• -28.4% Las Vegas, NV
  -28.3% Miami, FL
  -26.5% Phoenix, AZ
  -24.5% Los Angeles, CA
  -23.2% San Diego, CA***
  -22.9% San Francisco, CA
  -20.2% Tampa, FL
  -17.4% Detroit, MI
  -15.4% Washington, DC
  -14.8% Minneapolis, MN

The above are the markets with the sharpest declines over the past 12 months. Not a Top-10 list to join!

Just Before the 'Fall'

Albuquerque's market was just beginning to cool off in the middle of last year. And, we were a few months from the financial markets melt down. So, looking at year-to-year for the 2nd quarter is interesting. It provides a pretty clear picture of the damage to our market caused by national events. All of the following compare April-June of 2008 vs. 2007:

• Average price: (3.09%)
• Sold properties: (27.83%)
• New listings: (25.67%)
• Days on Market: 71.79%

So, everything is negative but one -- Average Days on Market. But what remains remarkable to me is that in the current horrible national environment, Albuquerque performed the way it always has and avoided the excesses so apparent in other areas. (Would anyone like to try and sell a house in Phoenix?)

Good News in Low Numbers

Housing starts continue to decline in Albuquerque/Rio Rancho. And, except for the builders and their tradespeople, that is good news. A major difficulty with our market at the moment is too much inventory so fewer new homes can only help.

• Permits issued for the metro area (189 in June) were down 15.6% from May.
• By contrast, June of '07 saw 605 permits issued.