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I think it is time to take off the gloves  for a minute. I just read an article by AP Writer Alex Veiga that created the impression that the coming housing slowdown will cost the United States 800,000 jobs. And he may be right in the numbers but I think this whole situation is terribly overblown.

I live in Atlanta. We have 1750 NEW SUBDIVISIONS BEING BUILT RIGHT NOW! That is right, 1750. We have people who are hired to build homes that were selling fasteners a year ago. I know this for a fact as one of them is a friend of mine. 80–90% of the people working in construction in Atlanta are not what citizens of the United States. They are illegals who are hired by businesses that will then subcontract to a sub-contractor who then works for a builder. If INS comes around, everyone has deniability except for the initial sub-contractor, but he shuts the business down and starts a new one the next week.

So yes there will be unemployment, but the workers who are working right now are itinerant and filling a short term need due to the huge demand. When the employment situation changes, and there is not enough work, most of these people will return to their country. That is why the Bush proposal of offering work permits makes so much sense.

We tend to watch the news, read the papers, and listen to the talking heads too much. Yes, some parts of the country will see a softening of the market. But that softening is bringing it back to normal levels. The housing market is not in its natural state when we have homes selling in a week. The normal state for home sales is 2–4 months.

So stop panicking. Take a deep breath. As long as you did not by at the very top of the market, you will be fine. The 5 year trend two years from now will still show you having double digit appreciation for your home. And then the demand will increase with improved income and the real estate engine will keep chugging along.

We have a very flexible labor pool that will grow and contract with our needs. A slowdown will allow the suppliers to get caught up and prices to regulate a bit. Plywood may be affordable again. If the country stays at this torrid pace, housing will not be affordable, and we will have people sitting on fake equity.

I will have a post up soon on the effect that housing price spikes are having on different regions of the country, and how a slowdown will if fact help these economies. But take a deep breathe. It is not so bad.

Related posts:

1. Why Not To Panic When A College Professor Plays Chicken Little
2. The Chicken Little Pundits Rebuttal or The Housing Bubble Bloggers Retort
3. New Chief Economist Not Concerned Over Housing Bubble
4. Housing Slowdown Worse in Midwest than California?
5. KB Homes Expects Slowdown in 2006 Homes