By AnnaMaria Andriotis
November’s drop in unemployment could be a boon for job seekers. But home sellers shouldn’t get excited by the news just yet, experts say.
Throughout the real estate downturn, experts have said that a real housing recovery would occur once unemployment dropped significantly and people could afford to buy a home. But this drop may not be big enough to spur home sales. While the unemployment rate fell to 8.6% from 9% in October — the lowest it’s been since March 2009 – that’s not meaningful enough for a housing recovery, says Jack McCabe, an independent housing analyst in Deerfield Beach, Fla.
To be sure, it is a move in the right direction. If unemployment keeps dropping for the next four to six months, that would mean there are more full-time jobs being created that will allow employees to buy homes, says McCabe.
But as of now, sellers shouldn’t expect more home buyers knocking on their door. That’s because a bulk of the new jobs that helped lower the unemployment rate could be temporary for the holiday season, says McCabe, and those employees can’t qualify for a mortgage. And even for full-time employees, their confidence will need to increase for the housing recovery to pick up, says David Blitzer, managing director and chairman of the Standard & Poor’s Index Committee. Employees will have to gain enough confidence in the stability of their jobs and the economy before they decide to buy a home and commit to a mortgage for 15 or 30 years, he says, adding that this level of confidence isn’t present yet.
And, analysts say foreclosures and a large inventory of unsold homes are likely to continue hurting home values next year — one more reason sellers shouldn’t be quick to get their hopes up just yet.