Greater New Haven Area Economic Numbers at a Glance

[Editors note: It is our pleasure to introduce John E. Miller as a regular contributor to our blog. John is a 10 year real estate veteran and long-time contributor to several top real estate web sites and blogs. He is currently on the senior writing staff of ForeclosureDeals.com and we hope you enjoy his insightful posts each week. Welcome, John!]

Taking a Look at the Greater New Haven Economic Numbers

On the road to more jobs...?The health of the housing market in any given area is closely tied to the health of the economy in that area. In the Greater New Haven area, this is especially true. We can take a look at broad economic indicators for the region and use the most recent data to provide a bit of context for the housing market – especially when it comes to what the market may do in the near future.
 
As reported by the New Haven Register, July’s economic indicators show much of the same conditions of the last year: uncertainty, negative outlooks for the economy, and continued unemployment.
 
Specifically, total employment fell by 0.2% from July, 2010 to July of this year. The total labor force fell by 1.6%, with the unemployment rate staying roughly at 9.7%. Real disposable income only improved by 0.6% over the last year, and new housing permits for the area were down by 25%. For the nation as a whole, the U.S. consumer price index rose by 3.6%.
 
The only really positive indicator was consumer confidence, which improved by 31.7% over the last year but is for the New England area as a whole.
 
What do these numbers mean when it comes to the housing market?
 
Unemployment
 
We’ll start with the unemployment numbers. Unemployment impacts the housing market because, simply put, people who are out of work cannot build new houses, buy existing homes, or – in many cases – stay in their current homes. This results in a drop in housing values for an area that can be great for home buyers but bad news for those looking to sell their home.
 
Rising unemployment is always a bad sign for any economy and any area that depends on the economy, like the real estate market.
 
Consumer Price Index
 
Next up is the U.S. consumer price index (or CPI). Also known as the inflation gauge, CPI measures how expensive goods and services are in the United States. The higher the CPI, the more expensive it is to live (a.k.a. inflation). For housing, higher CPI roughly means that your home will appreciate at a higher rate over the course of your loan. In other words, buying before inflation could result in a sizable appreciation of your home in the future.
 
New Housing Permits
 
New Home Under ConstructionThe number of new housing permits is the final figure we’ll look at, and a 25% drop is not what one wants to see in a healthy real estate market. This means we have an overabundance of supply of existing homes, so people can find a suitable home without having to build their own. Right now, we are seeing a lot of areas with falling home values because there is a substantial inventory of homes in this area – approximately 8 months as was discussed on this blog earlier.
 
What does all of this mean?
 
You can expect a continued trend of falling prices in single-family homes as we’ve seen throughout the year. There’s no firm foundation for price support, because unemployment continues to remain stubbornly high and housing starts aren’t increasing and adding to average housing prices.
I do foresee, however, that rising inflation will make the price of non-disposable assets like homes rise higher than historical trends would suggest – good news for buyers.

The economic situation in the Greater New Haven area is similar in a lot of ways to many other parts of the country I’ve covered. It will take some time before the underlying economy for the state improves substantially, and when that occurs, expect housing prices to reverse their present trend and rise.  

About the Author:

John E. Miller is a Real Estate Professional who has spent the last 10 years writing for several magazines and online publications. Miller is a regular contributor to Businessinsider.com as well as being the team leader of Content Acquisition and Analysis of new business development for Foreclosure Deals, where he also serves as a real estate agent expert. 

 

Enhanced by Zemanta

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge

This site uses Akismet to reduce spam. Learn how your comment data is processed.