Jobs and housing
By Matthew Goldstein
The jobs picture in the U.S. just got markedly worse based on the May unemployment report. And as long as job growth remains sluggish, anemic, pathetic–insert your own adjective–the housing market will remain in the dumps as well.
The only glimmer of good news is the nation isn’t shedding jobs–at least for now. But with the economy adding just 54,000 new jobs in May, that’s not nearly enough to work for all those recent college graduates hitting the labor market and the long-term unemployed who were early casualties of the financial crisis.
And the ugly truth is that until the jobs picture seriously improves the foreclosure crisis will show no signs of easing and may very well get worse.
Sure, faulty paperwork by banks, potentially illegal robo-signings of foreclosure notices, or even borrowers getting hit with springing ARMs have contributed mightily to the housing mess. And the nation’s banks haven’t helped things out by being reluctant to reduce the outstanding principle on mortgages–especially ones held by borrowers whose homes are now worth a lot less than the value of their loans.
But a principle reduction isn’t much of an answer for a homeowner without a job and who is in danger of seeing their unemployment checks expire. That is, unless a borrower’s loan was reduced to next to nothing. And that, of course, is not going to happen.