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By Luke Mullins
When you buy a new home, you're not just moving into a different neighborhood. You're injecting a dose of adrenaline into the heart of the American labor market. Think about it: Building a home requires architects to design plans, workers to hammer nails, and manufacturers to provide everything from lumber to bulldozing equipment. Purchasing a previously owned home also provides an employment jolt. By the time you sign the closing documents, you'll have created demand for real estate agents, lawyers, appraisers, inspectors, and mortgage lenders. And once you move in, you'll probably make a few more purchases, helping to support jobs for makers of carpets, home appliances, furniture, and other goods. "Look at it as a spider web," says Mike Larson of
During the first half of the decade -- when Americans purchased homes at a frantic pace -- this arrangement worked out beautifully for job seekers. From 2001 to 2006, total mortgage industry employment surged by 83 percent, to nearly 500,000 positions. The tally of Realtors jumped by 66 percent, to roughly 1.3 million, and home-building employment increased by nearly a third, to more than 3.4 million. But as the boom turned to epic bust, real estate-related jobs evaporated even faster than they had appeared. The 1.3 million residential construction positions cut since February of 2006, for instance, represent about 22 percent of the entire net job reduction that occurred during this period. "We are at a low point with respect to employment in housing-related activity," says Mark Zandi, chief economist for Moody's Economy.com.
Despite this bloodletting, jobs related to real estate are expected to slowly re-emerge this year as the housing market flickers back to life. IHS Global Insight projects that housing starts will nearly triple by 2012, to about 1.6 million units annually, and total home sales will increase 29 percent, to almost 6.5 million. "People have to live somewhere," says IHS economist Patrick Newport. (It could be three to five years, how- ever, before employment reaches pre- bubble levels.) But these new jobs won't be identical to those that preceded them, as shifting demands are already forcing workers in housing-related fields to develop new skills. Here's a look at the changing job descriptions for workers in three specific subsectors: home construction, real estate sales, and mortgage origination.
In January, executives at
The decision to devote more resources to so-called green building was driven by changing consumer demands, says Tony Callahan,
Since the real estate market will remain saturated with cheap foreclosures for some time, it may take a while for builders to begin hiring in earnest. Jobs in a related field, however, might materialize sooner, says Lawrence Katz, a labor economist at
To survive the downturn and grow business as the market recovers, real estate agents should take steps to become "an expert in a specific aspect of the business," says Rick Davidson, the president and CEO of Century 21. Today's real estate market presents a number of opportunities for brokers to carve out their niche. With more than 2 million distressed home transactions last year and 2.4 million expected in 2010, real estate agents with the ability to shepherd buyers or sellers through short sales and foreclosures can capitalize on the market's upheaval. But distressed transactions are often complicated by differing state laws and practical hurdles. To provide agents with the tools they need to handle such sales, the
Increasing demand for green home features has created another area of specialty for real estate agents. NAR has developed an education program tailored specifically to buying and selling high-efficiency homes. "The demand for green building and environmentally sensitive home features is growing," says NAR's Michelle Wardlaw.
In 2005, nearly a third of all mortgage loans were originated by independent brokers before they were sold to banks or investors. But after the housing bubble popped and delinquencies surged, big mortgage banks began to back away from the broker origination model. Since 2005, the share of home loans originated by brokers has been cut by more than half, to about 14 percent. And the trend isn't expected to reverse anytime soon, says Guy Cecala, publisher of Inside Mortgage Finance.
Instead, the bulk of lending jobs over the next several years will be at larger companies, like retail banks, Cecala says, although smaller community banks and credit unions may also increase their mortgage staffs a bit. And with banks still saddled with piles of delinquent loans, lenders are expected to keep their standards tight for some time -- extending financing only on conservative terms like 20 percent down payments and FICO scores of 720 or above.
At the same time, the
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