Austin Jobs vs. Unemployment Rate - A Healthy Situation

First, if you didn't understand the Fed's diagram in my last blog, that outlined the sub-prime mortgage crisis, you have lots of company. The professionals who were buying these things for banks and other big institutions didn't understand the situation, either. That lack of understanding is why they have lost hundreds of billions of dollars and why we're in this mess.

Austin is very lucky. We have a strong job market, so far continuing to grow with low inflation. Imagine if we had a high unemployment rate and were losing jobs on top of having this mortgage problem. Job growth will continue to be the second most important factor in the real estate market after the morgage crisis. These figures include September 2007.

Understanding the Sub-Prime and Banking Crisis

Just in case you don't grasp the current sub-prime mortgage and financial market problems, here's a diagram from the Fed that illustrates the flow of money in the system that has been affected. If you understand conduits, collateralized debt obligations and this diagram, please let me know. You can explain this diagram to the rest of us.

If you don't understand it, you're normal.

More on Austin's Sept Stats & Where We're Headed

Here are some more thoughts and info on Austin's September housing stats.

The number of pending sales from one month is typically a good clue to the next month's closed sales. In the chart below, I've moved the pending numbers a month ahead, so the last entries show September's closed sales with September's pendings moved to October. Note that the previous month had considerably fewer closed sales than were pending from the month before. That's because many of the sales fell through, presumably because of unexpected financing problems.

If the same thing happened in October, with many sales not closing because of financing problems, we could see the fewest monthly closings in a couple of years. If October's sales number turns out to be only slightly lower than September's, we'll be seeing a healthier market.

One thing for sure, Austin has had a healthy market overall, so the problems here are almost entirely due to financing conditions. Many other places have to fight the battle of weak, overpriced markets, as well.