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wiseman · 23-05-10

Folks,

I'm starting this thread to discuss the impact of volatility in the Job market on the RE market.

Strong RE prices rely on confidence among buyers in reliable long-term, rising income coming from a growing Job market.

We saw in 2008 that, when the job market became shaky, RE became shaky as people put off decision to buy (for that matter all buying of expensive items became shaky - cars, TVs, etc).

There is rising evidence that the World (especially the Western World) is entering another period of volatility with continued weakness in economies, too much debt not being addressed correctly, unemployment remaining very high and rising further, millions more fresh graduates joining in the race each year and not finding jobs and all of this putting high pressure on all kinds of markets.

Now, finally, it has become clear that many countries and their local governments are facing high deficits and even bankruptcy and are acting to seriously reduce local budgets which implies millions of jobs being cut in the Govt sector. When we take into account that most of the job growth in the last 2 years occurred in the Govt sector, this implies that unemployment is set to rise even further. This is now being done in the UK (the next Greece) and in the US as states and provinces face bankruptcy as the links below show ...

300000 jobs in public sector face the axe
http://www.timesonline.co.uk/tol/new...cle7134040.ece

College grads flood job market
http://globaleconomicanalysis.blogsp...or-market.html

A very interesting point in the first article talks of IT Vendors like IBM and HP being asked to be ready to see cuts in spending of 20-30 %(that is a big number in $$$). This should also automatically impact outsourcing through rate cuts and even contracts being axed. There is talk about there being a material impact on some Indian IT companies (TCS has a strong presence in the UK) on revenues and profitability.

I have been of the opinion that another longish period (1-2 years) of job market uncertainty in India (cuts in number of jobs as well as salary) would see another slump in the RE market. Coupled with the precarious debt position among builders and many RE investors coming to market to sell, there should be a significant correction in prices in RE.

Why not everyone pitch in with their own opinions about this subject? This will give us a much better picture about the real impact of jobs on RE.

cheers

23-05-10	#1
wiseman Veteran Member Join Date: Jul 2008 Posts: 1,772 Thanks: 3 Thanked 99 Times in 54 Posts	Relationship between Jobs & RE ... Folks, I'm starting this thread to discuss the impact of volatility in the Job market on the RE market. Strong RE prices rely on confidence among buyers in reliable long-term, rising income coming from a growing Job market. We saw in 2008 that, when the job market became shaky, RE became shaky as people put off decision to buy (for that matter all buying of expensive items became shaky - cars, TVs, etc). There is rising evidence that the World (especially the Western World) is entering another period of volatility with continued weakness in economies, too much debt not being addressed correctly, unemployment remaining very high and rising further, millions more fresh graduates joining in the race each year and not finding jobs and all of this putting high pressure on all kinds of markets. Now, finally, it has become clear that many countries and their local governments are facing high deficits and even bankruptcy and are acting to seriously reduce local budgets which implies millions of jobs being cut in the Govt sector. When we take into account that most of the job growth in the last 2 years occurred in the Govt sector, this implies that unemployment is set to rise even further. This is now being done in the UK (the next Greece) and in the US as states and provinces face bankruptcy as the links below show ... 300000 jobs in public sector face the axe http://www.timesonline.co.uk/tol/new...cle7134040.ece College grads flood job market http://globaleconomicanalysis.blogsp...or-market.html A very interesting point in the first article talks of IT Vendors like IBM and HP being asked to be ready to see cuts in spending of 20-30 %(that is a big number in $$$). This should also automatically impact outsourcing through rate cuts and even contracts being axed. There is talk about there being a material impact on some Indian IT companies (TCS has a strong presence in the UK) on revenues and profitability. I have been of the opinion that another longish period (1-2 years) of job market uncertainty in India (cuts in number of jobs as well as salary) would see another slump in the RE market. Coupled with the precarious debt position among builders and many RE investors coming to market to sell, there should be a significant correction in prices in RE. Why not everyone pitch in with their own opinions about this subject? This will give us a much better picture about the real impact of jobs on RE. cheers Last edited by wiseman; 23-05-10 at 06:44 PM.