1 unit - $603,750 2 - $772,900 3 – $934,250 4 - $1,161,050
First, note the 2009 conforming loan limits for 1-4 residential owner and non-owner residences for Santa Barbara County. Los Angeles and Ventura Counties’ conforming limits are higher. Conforming interest rates are back to their 2003 lows, while jumbo rates are much higher because that secondary market is still frozen. I predict this boost in loan limits should give a tremendous boost to real estate sales and values next year.
And, it is now official. The National Bureau of Economic Research (NBER) has pronounced December 2007 as the start of this recession. It was an easy call that I made several columns ago, since most of their indicators began to decline in November 2007. But the NBER folk being overly cautious, waited until now to be sure it wasn’t a temporary decline in business activity.
When will it ‘officially’ end? The NBER’s Business Cycle Dating Committee probably won’t tell us for at least another year. My prediction is that we will see an uptick in business activity beginning in the New Year. That doesn’t mean we will feel it right away. Usually the last to pick up in a recovery is the job market. It took almost 2 years into the 2001 recovery for jobs to grow again.
There is more good news. A new generation is coming of age that could give a boost to economic growth over the next 5-10 years, and which could mitigate fears that baby boomers might bankrupt social security/Medicare when they begin to retire in 2010. They are being called the Millenium Generation, formerly the echo boomers or children of the baby boomers who were born from 1980 to 1996. And, get this, they number some 90 million!
At least 40 percent of them are now 18 or older, according to demographers, a group even bigger even than their baby boomer parents. And precisely because they haven’t lost 50 percent in the stock market meltdown, they will be the leading edge of an economic recovery, according to a recent CBS Marketwatch article.
“They’re educated, technologically savvy, inspired, driven to succeed personally but also concerned for the greater good,” said CBS Maketwatch’s Jonathan Burton. Also, they are part of the under-thirty cohort, more than two-thirds of which voted for President-elect Obama.
What will create their affluence? Job seekers can call their own shots in the next 4 years, according to demographers. More than 200,000 per month entered the job market during the baby boomers era, whereas just 73,000 per month are projected to enter the work force through 2012. And since job creation won’t slow during that time, it will mean a huge shortage of workers. Much of the labor shortfall will be made up with more efficient technology, increasing labor productivity, and so higher worker wages and benefits.
Hence the reason for the incoming Obama administration’s focus on job creation. Nobel laureate economist Joseph Stiglitz even believes that Obama’s 2.5 million job creation goal over two years is too small. Dr. Stiglitz would like to see a job creation goal of 5 million.
We have already lost approximately 1 million of the meager 5 million jobs created over the past 8 years, as we said in last week’s column. So this is a huge and worthwhile goal. Those who want to check the NBER data can look up the info on its website for themselves—www.nber.org.
© Harlan Green 2008