Jobless Claims March 24 2012 Down and Investors Scoop Up Homes In 2011:
The number of Americans seeking initial jobless claims fell last week. Initial jobless claims dropped to the lowest level in nearly four years which supported claims the unemployment picture in the U.S. labor market is improving. For the week ended March 24, 2012, initial jobless claims fell 5,000 to 359,000 which is the lowest level since April 2008 and the trend in jobs growth is in tact.
The new initial jobless claims numbers weren’t “blockbuster” for the last 2 weeks which kept some traders from believing the growth story in the U.S. is improving but new information about housing did provide some bright spots.
Housing May Have Found A Floor In 2011?
Investors are back in the housing market in a big way dolling out cash for homes. We saw early evidence investors were back earlier this month (See Existing Home Sales Fall In February 2012 0.9 Percent)
According to the National Association of Realtors, investors bought 1.23 million homes in 2011 which is an increase of 65 percent from the prior year. Fifty percent of these purchases were of distressed properties such as short sales, and foreclosures where the house is sold for less than the value of the mortgage. Less distressed homes on the market will improve the market for housing significantly and home prices could stabilize as the total inventory declines.
The improvements in housing and the jobs market helped the first quarter of 2012 bring in average returns that were the best since 1998. Investors coming back to the real estate market and scooping up distressed properties is a good sign the housing market is near a bottom. Investors also plan to buy more homes according to the NAR report and this suggests low mortgage rates as well as optimism about the future is guiding homebuyer sentiment for those with cash on the sidelines.
We believe the next gains in jobless claims won’t be as marginal as the last 2 weeks and summer hiring could get started early. Expect college grads to get more hiring offers especially in the tech, internet and finance sector as they continue to expand.