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A Housing Fix or a Jobs Fix? Chicken or Egg?

couple in front of houseNow that health care reform is being given the slow morphine drip which can be characterized as assisted suicide or euthanasia Washington has turned its attention to jobs, jobs, jobs. It seems that everyone has gotten on the bandwagon about the unemployment situation (still in double digits) since there seems to be a “populist” uprising in the country. At least, it seems like everybody.  Personally, I’m a “wait-and-see” kinda guy when it comes to the “‘Just Say No’ to Everything” party that seems hellbent on making sure that nothing happens.  Will they really try to work with Democrats to fashion some kind of program that will help get Americans back to work?

My guess is that the Republicans see continued posturing and bellicose rhetoric as a path to majorities in both houses of Congress and, possibly, the White House.  That may be.  What they forget is that if powers shifts because of these tactics, Democrats will adapt them if they ever become the “loyal opposition”.

Jobs First or Housing?

In a recent post here on AG, Lani Rosales noted the lack of attention housing got in President Obama’s State of the Union address. Lani may be on to something but I’m thinking it may be the other way around.  Jobs will create the income necessary for people to buy homes which, in turn, will spur new home building which, in turn, will create more jobs.  It may actually be a kind of nice upward spiral.  Unfortunately, since employment is a lagging indicator we don’t see the proof of job growth until the recovery is well underway.

That doesn’t address the current issues of massive foreclosures and the huge glut of short sales on the market.  Perhaps with jobs people could make their mortgage payments. This would reduce inventory which would stabilize prices and, perhaps, create demand.  Absent a good jobs program to get people back to work, my guess is that no amount of loan modifications or re-financing will really solve the housing problem.

I agree that there should be a way for people to re-finance out of ARMs and Interest Only loans and other “exotic mortgages”.  To be honest, I’m not sure how that can be done with any great efficiency or that it would really be helpful.

It’s really a perplexing challenge.  In my mind, though, people tend to feel a lot better about themselves and the prospects for the future when they have a job and some income to take care of some of the basics like food and shelter. Once that’s taken care of the rest will follow right along.

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Written By

“Loves sunrise walks on the beach, quaint B & Bs, former Barbie® boyfriend..." Ken is a sole practitioner and Realtor Extraordinaire in the beautiful MD Suburbs of DC. When he's not spouting off on Agent Genius he holds court from his home office in Glenn Dale, MD or the office for RE/MAX Advantage Realty in Fulton, MD...and always on the MD Suburbs of DC Blog



  1. ross therrien

    January 31, 2010 at 10:28 am

    Great article and makes perfect sense. Too bad so many repubs, in my area just don’t get it.

  2. Greg Cooper

    January 31, 2010 at 11:01 am

    Ken…..I think recoveries must see job stabilization and growth for housing to stabilize. What are your feelings about specific tax incentives for small businesses as they hire new employees?

    • Ken Montville

      January 31, 2010 at 11:10 am

      Hey, Greg … . It depends on how the incentives are used. If they’re just used to offset the cost of compensation they probably won’t work for very long. If it helps to create incentives for employee health care benefits, it’ll be a big plus. Of course, younger employees probably don’t care that much about health care since they’re invulnerable and employers prefer younger workers because they work for less.

      How about tax incentives for American made products/services which would have a far reaching employment effect? Fat chance.

  3. Dean Ouellette

    February 1, 2010 at 8:43 am

    We need to become a mobile society again. I think we need to fix the housing market to fix the job market. We need to make it easier for people to be mobile again, to make it so they can pick up and travel to the new job if they need to. Now it is difficult because we do not have a mobile workforce who can quickly sell their home and just up and leave for a new job.

    • Ken Montville

      February 1, 2010 at 9:32 am

      Interesting concept, Dean. I’m wondering what that might do for things like stable neighborhoods, schools and the like. I’m also thinking that for people with a traditional FHA or VA mortgage there isn’t really enough equity based on traditional amortization schedules to be able to sell and “break even” after a short period of ownership. We were a highly mobile society once, though.

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