More of the Housing Slump Means More Empty Pockets
- Sep 13, 2007
Earlier this week and late last week, we touched on some of the New Yorkers who are being inconvenienced — and even possibly priced out of the city — due to the rising rental rates.
Even though residential construction is doing well in the area, there is still a rental housing supply shortage. And as more people clamor for less apartments, prices are skyrocketing.
As a result, some reports put the amount many New Yorkers are paying in rent as 50 percent of their salary. Ouch.
Yet New Yorkers aren’t the only ones feeling the sting of housing costs. While the rest of the country may not be trying desperately to pay high rents (although homeowners dealing with rising mortgage rates can probably feel their pain, as the kids like to say), the current housing slump has had a rough effect on many citizens’ livelihood.
Some groups struggling financially as a result:
- Illegal Immigrants. The housing decline has greatly affected illegal immigrants this year. Reduced painting, tile laying and roof building jobs have caused immigrants to reduce the amount they send home — causing the first year-over-year monthly declines in remittances to Mexico in 12 years, according to Banco de Mexico.
The Houston Chronicle recently reported that only 64 percent of Mexican migrants sent money home in the first half of 2007, compared with 71 percent last year, according to a study released Aug. 8 by the Inter-American Development Bank’s Multilateral Investment Fund.
- Construction workers. In Massachusetts, the housing market decline created thousands of construction-related job losses across the state — but multifamily, office and other construction projects have helped meter the impact, according to the Boston Herald. In California, the state Employment Development Department reported that
unemployment rose a tenth of a percent in July to 5.3 percent. Construction was cited as the cause: And given 7,800 were lost in a month in California, that’s a correct assumption.
And, the Sacramento Bee reported, the housing decline-related issues — such as construction layoffs — are having an effect on the economy: California retail employment dropped by 3,800 in July, which the Bee attributed in part to consumers cutting back on spending because of housing-related
- Since we’re talking retail, it should be noted that the retail industry hasn’t had it easy, either. Although August’s industry numbers were slightly (and unexpectedly) up, some retailers still posted losses. Kohl’s Corp. and J.C. Penney Co. Inc. had lower monthly sales
of 0.6 and 4 percent, respectively, according to Women’s Wear Daily.
Kohl’s has 68,500, according to Fortune. JC Penney has 151,000. Potential layoffs at either company are likely to effect the economy. (However, since both stores rebounded with higher quarter sales in August, that’s hopefully not going to happen.)
Increased interest rates, reduced work and inconsistent consumer spending is cramping the economy. And, like the New York rental market, it’s a question of supply and demand — too many houses in supply and not enough demand to buy or build more.
The outcome is touching so many parts of our economy and affecting so many industries. Is this really still a situation we’re going to wait out?