Housing Prices Sink as Consumers Mixed on Jobs, Economy

Dec 28, 2010
This article is part of a series called News & Trends.

Even as American consumers were opening their wallets, they were telling The Conference Board they just weren’t very optimistic about 2011. The organization’s Consumer Confidence Index declined in December to 52.5 from November’s revised 54.3.

According to Bloomberg News, the decline was greater than the most pessimistic forecast of the economists it surveyed.

Some analysts viewed the decline with more than a little skepticism, considering the surprisingly robust sales numbers that are starting to come in.

MasterCard Advisors’ SpendingPulse reported that consumer holiday spending on everything but cars was up 5.5 percent over last year. The total for the 50-day period ending Dec. 24th was $584 billion, making it the strongest holiday season since 2005.

The University of Michigan/Thomson Reuters consumer confidence survey showed improvement in December, though most of the measures were close to where they were at the end of last year. Only the Current Conditions Index showed marked improvement, rising 9.4 percent over where it stood last year. Still, the report said, “Consumer confidence improved in December to its best level in six months and its second highest level since the start of 2008.”

Much of the difference in the two confidence surveys can be traced to opinions on jobs. The Conference Board found consumers more pessimistic in December about future job prospects. Those saying jobs are “hard to get” rose to 46.8 percent from 46.3 percent in November. But the Michigan survey reported, “Consumers reported much more favorable news about recent changes in the job situation, and more frequently expected the unemployment rate to decline during the year ahead.”

Meanwhile, the closely watched S&P/Case-Shiller 20-city composite home-price index said housing prices dropped 1.3 percent in October, for an annualized decline of .8 percent.  The decline was larger than the average in a survey of economists with six cities — Atlanta, Charlotte, Miami, Portland, Seattle, and Tampa — at their lowest levels since the bottom began falling out of the market.

“The double dip is almost here,” warned David M. Blitzer, chairman of the index committee at Standard & Poor’s. “There is no good news in October’s report. Home prices across the country continue to fall.”

The continuing decline in home prices has ramifications for recruiters who already have had offers turned down by candidates with underwater houses. Jason Warner discussed the impact of no equity and negative equity home ownership on candidates as recently as November, noting that “‘Go Local’ has become the strategy du jour.”

Challenger, Gray & Christmas, the global outplacement firm, reported that just 6.9 percent of job seekers who found jobs in the third quarter of 2010 relocated. In the same quarter in 2009, 13.4 percent relocated.

“The relocation rate has been low for four consecutive quarters,” the firm said, “averaging just 7.3 percent since the fourth quarter of 2009. The 6.9 percent figure in the quarter ending September 30 was the lowest ever recorded by the firm, which began its tracking in 1986.”

In a LinkedIn discussion on relocation a few months ago, Rob Dromgoole summed the situation up this way:

“2007 = high house values, relocation was much easier.

2010 = much more difficult due to low real estate values. Can you sell a role if someone loses money in a move? That’s tough.”

This article is part of a series called News & Trends.