10:00 PM PDT on Wednesday, April 4, 2007 From Staff and Wire Reports NEW YORK - Job cuts in the housing industry jumped in the first quarter and almost matched the number of cuts in all of 2006, an outplacement consultancy said Wednesday. Challenger, Gray & Christmas Inc. reported that job cuts in housing, including real estate, construction and mortgage lending, soared 346 percent to 21,245 in the first quarter, compared with 4,764 job cuts in the same quarter last year. The first-quarter number barely trails the total number of jobs cuts in 2006 of 22,814. In 2005, the housing industry slashed only 13,656 jobs. Construction led the job cuts with 13,958, compared with only 115 in the fourth quarter of 2006. Mortgage lending rose to 6,138 from 3,497 the previous year. Only the real estate sector -- which includes commercial and residential real estate agencies -- saw a decline in jobs cuts to 1,149 from 1,152. In San Bernardino and Riverside counties, the damage from the housing slump appears minimal, according to the most recent report from the state Employment Development Department. Construction jobs were down in February in the Inland area from the same month in 2006, but only by 1 percent. Also, there are almost 2,000 more jobs in the financial and insurance sectors in Inland Southern California than there were a year earlier. "While many have predicted that the housing market has hit bottom, the situation seems only to worsen as home builders continue to report slumping orders," said John A. Challenger, chief executive of the outplacement firm. "Now we are seeing the impact hit traditional as well as subprime mortgage lenders, as demand for loans declines and the number of foreclosures skyrocket." Home builders have been hit hard as the once-booming housing market decelerates. Cancellations have risen, while first-quarter profits have plunged. Home builders have adjusted their outlooks for 2007. The Associated Press contributed to this report.
Bingo. The White Elephant in the room that real estate professionals aren't talking about. For all the QUALITY commercial projects that have been built in the last 5 years, there have been a large number of fundamentally flawed ones, built on flawed assumptions about continued housing growth (the rooftops that support shopping centers).
Of course. If you can't go HELOC anymore how can you buy $200 jeans from True Religion or eat $80 sushi in a storefront next to Blockbuster/Starbucks/Supercuts/Duane Reade/Publix/Subway/etc. The commercial stuff has been opened to serve a crowd of HELOC addicted mental cases in Suburbans who troll strip malls looking for some kind of wonderful. Florida and Southern California are the most disturbing examples...people who can't afford $800k houses but have them will soon be unable to afford $6 frappucinos.
It's worse than that. Go to an an area such as the outer, outer bands of Tuscon (approx 15-17 miles from the epicenter). There are commercial centers that have been built, back in 2004, when the housing market was on fire, and you can see the unfinished 'ring' of subdivisions surrounding the shopping center, that the developers assumed would fill in. All their projections for density, traffic, etc. were submarined when this housing growth subsided, and when the homes that were built have failed to sell, but remain empty.