Look before you leap

Here’s some obvious advice that most of us forget from time to time. Before investing in any kind of asset – land, stock, bonds, commodities… know the background economy.

Now, this is easy for international or national assets, but regional or local require a bit more investigation.

For example, real estate. It’s good to know background economics of an area or neighborhood you might invest in. If not for people dropping out of the national labor force, the U.S. unemployment rate would be more than 11%. As it is, the rate is reported as around 8.9%.

In IFO’s own neck of the woods the unemployment rate is higher, at 10.2%, than the national, but some interesting variations are beginning to appear. The labor force has actually increased, even as the unemployment rate has declined.

The Oregon figures are for “non-farm employment.” It’s quite possible that the number of farm workers has shrunk. Nurseries and vineyards are trying to get by with fewer seasonal workers, and some wineries have closed.

What does this mean for real estate? Basically, houses aren’t moving. Even as home prices continue their downward slide throughout the state, family incomes are shrinking faster, or at least aren’t getting any better.

The famous “mancession,” more men and their high-paying, producting jobs are disappearing as women and their paper-pushing jobs are increasing. Some of those jobs pay well – the government jobs that require college degrees – but the number of people actually making stuff, new stuff that improves people’s lives, continues to shrink.

So, don’t look for an improvement in housing market, unless you are a buyer with cash.

Discussions of the features of the labor picture can be found at state labor bureaus, and sometimes the info is more enlightening that the national Bureau of Labor stats.


About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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