My Mortgage Blog

I’ve noted several times that any good economic news reported on by the financial press usually ends with a caveat—something like, “but don’t uncork the champagne just yet.” Etc.

Along comes the employment report we’ve been waiting for, after having watched the unemployment insurance claims numbers decline fairly steadily (especially the four-week moving average, which probably tells the most accurate story) for a few months now. And here’s how Jess Jiang in NPR’s Planet Money reported the greatly improved numbers:

“The jobs report…is good. Very good. The economy added about 200,000 jobs last month, and about 1.6 million jobs last year. And the unemployment rate fell to its lowest level in almost three years.

“But don't plan that parade just yet. People are still struggling to find jobs. Before the recession, the unemployment rate was around 5 percent. The number from this month: 8.5 percent.”

Fair enough, but it doesn’t take a Ph.D. in psychology to realize that this reporting leaves the reader with a dim view of the employment situation. And it is as if we need to throw a wet blanket over our responses to genuinely good news simply because the good news failed to take the data back to full-recovery levels.

So…. Let me suggest that we uncork a few bottles of bubbly—champagne, apple cider fizz, whatever—and savor this rare moment. What we have here is a genuinely viable set of numbers from the jobs report. No, the market hasn’t fully recovered—nor do these numbers tell us that the market WILL recover in a few weeks. It will still take time. But, if these numbers can be maintained, fully recovery WILL come.

The reporting in the financial news almost universally laments the fact that workers are finding it especially difficult to get jobs they really want. Though that doesn’t sound unusual for this stage of a recovery, it also portends the shifts our workforce is likely to go through in the coming years. The nature of jobs is changing—even jobs such as real estate professionals and mortgage loan officers.

Nothing new there. How much do the activities and responsibilities of today’s mortgage loan officer differ from what they looked like, say, five years ago? It’s rather amazing, no?

A key here is that many of the lingering problems in lending, financing, buying and selling real estate are systemic. They’re pretty much a part of how the industry operates, and that won’t last.

We need roughly 150,000 to 200,000 new jobs each month or better—and we got that this month. We need the employment rate back below 7%--and we got 8.5% this past month, which is a very nice jump in the right direction. And we need distress property sales to be handled, built into the system, resolved—whatever we can do that will neither hurt the industry nor mess with the future stability of the economy.

There is, by the way, an observation that keeps bubbling up among Occupy Wall Street types: When the huge investment banks ran into tremendous fiscal viability problems, we all chipped in, so to speak, and bailed them out. When hundreds of thousands of generally middle-class Americans discovered that their homes were underwater and they stood in danger of losing them, they were not bailed out; they were told they’d handled their money unwisely. That is going to come back and bite the banks on the tails in the coming few years, I suspect. And the result will be changes in the way lenders are regulated, in the way loans are written, and in the ways people are qualified when they borrow.

So the good news is that—as of this moment, at least—the overall economy (especially the jobs market and the real estate sector) seem to be headed in a positive direction. Be aware, though, that the more viable the big lenders become, the more pressure they will feel to bring their lending practices into line with the needs of homebuyers and homeowners in 2012.

We will want to play this season of change light on our feet! But remember—that means we WILL play in this economy. The marketplace, truly, is improving.