Comments on: Residential Housing Slump Affecting National Economy http://www.therealestatebloggers.com/2007/04/28/residential-housing-slump-affecting-national-economy/ Real Estate Blog, Mortgage, and Development News Sat, 20 Mar 2010 11:25:08 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: Fastrealestate http://www.therealestatebloggers.com/2007/04/28/residential-housing-slump-affecting-national-economy/comment-page-1/#comment-41538 Fastrealestate Sun, 29 Apr 2007 04:34:17 +0000 http://www.therealestatebloggers.com/2007/04/28/residential-housing-slump-affecting-national-economy/#comment-41538 I am sure the worst is yet to come! The point made above about the equity spend is very valid, also when consumers smell a down turn they stop spending and so the cycle continues. In Australia there is a very similar situation although we run behind the US things that happen in the US always seem to ripple outwards. People should be smart and spot the warning signs. I am sure the worst is yet to come! The point made above about the equity spend is very valid, also when consumers smell a down turn they stop spending and so the cycle continues. In Australia there is a very similar situation although we run behind the US things that happen in the US always seem to ripple outwards. People should be smart and spot the warning signs.

]]> By: Marc Brinitzer http://www.therealestatebloggers.com/2007/04/28/residential-housing-slump-affecting-national-economy/comment-page-1/#comment-41491 Marc Brinitzer Sat, 28 Apr 2007 16:54:13 +0000 http://www.therealestatebloggers.com/2007/04/28/residential-housing-slump-affecting-national-economy/#comment-41491 Consumers have propped up the economy, but that is coming to halt here in my area. When home owners have spent the equity created during the runup and new home owners bought without down payments, there is no more equity to spend. The national savings rate went to -1% in 2006. Where is all this money coming from? The biggest reason the real estate slump hasn't hit employment harder is that the first wave of layoffs hit illegal workers from Central America--primarily Mexico--first. They were never on the rolls, and they don't file for unemployment when they move on. This can be seen in the sharp reduction in "remittances"--money sent home by illegal workers. Annual remittances to Latin America total nearly $70 billion. So this first wave of unemployment, while nearly invisible here, threatens to destabilize the economies of those countries early in the process. Consumers have propped up the economy, but that is coming to halt here in my area. When home owners have spent the equity created during the runup and new home owners bought without down payments, there is no more equity to spend. The national savings rate went to -1% in 2006. Where is all this money coming from?

The biggest reason the real estate slump hasn’t hit employment harder is that the first wave of layoffs hit illegal workers from Central America–primarily Mexico–first. They were never on the rolls, and they don’t file for unemployment when they move on.

This can be seen in the sharp reduction in “remittances”–money sent home by illegal workers. Annual remittances to Latin America total nearly $70 billion. So this first wave of unemployment, while nearly invisible here, threatens to destabilize the economies of those countries early in the process.

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