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How will Micron's announcement impact the local housing market?

With today's announcement of the 15% job reductions over 2 years at Micron (Idaho's largest private employer) how will that impact the local real estate market?

I am fortunate that I will be having dinner with the #2 economist for the National Association of Realtors tonight, so I will personally ask him that question and let you know what he says.

I was glad to hear Governor Otter say that the Department of Commerce and the Labor Dept are taking a proactive approach of contacting companies thinking about relocating to Boise to let them know that we may have more skilled labor coming to the market.

I think most of the impact will be the areas closest to Micron; however that market has been stronger than other parts of the market because southeast Boise didn't get overbuilt like Meridian, Eagle and Star.

The fact that these people will get severence packages and be phased over 2 years will minimize the impact too.

Let me know your thoughts.

Posted by Jim Paulson at 10/9/2008 4:07 PM

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Comments (4)

Re:How will Micron's announcement impact the local housing market?

I talked to the economist and he said he would research it more and provide a bit more insight at our general membership meeting in the morning.

He did say however that not much research is available on the impact on job loss as most studies are on job creation. One figure on job creating that I have heard in the past is a 3.2 multiplier. In other words, one new job creates 3.2 more. Tonight, he said that when a job is "exported" it typically impacts 2 more. Jobs don't disappear as fast as they are created since people will readjust, start new businesses or regroup somehow to stay once they are local.

More to come Friday on this.

Jim

Posted by Jim Paulson on 10/10/2008 12:54 AM

Re:How will Micron's announcement impact the local housing market?

#2, Jim please give us more updates...try wine/beer to get the good details

Posted by emdeplam on 10/10/2008 1:10 AM

Re:How will Micron's announcement impact the local housing market?

I was hoping to get additional specifics at the seminar this AM; however Dr. Jed Smith said that before he could comment specifically, he would have to research and do some computer modeling.

A few key points he made was that he felt we were really close to the turn around point of the housing market because inventory is shrinking, we aren't adding in new inventory very fast (new construction slowdown), and interest rates projects to stay low and that we have corrected many of the things that lead up to this. He said home sales nationwide are well below their unrealistic peak but stabilizing now.

A lot of the problem before was the excess money in the market which allowed for the sub-prime market going from $295 million in 2001 to $882 million (nearly tripled) in 2004, to $1.138 Trillion in 2005. It started back down in 2006 to $1.051 Trillion. By 2007 it had already dropped to $466 million. He said that even though the sub-prime market only accounted for 9% of the lending market, it accounted for 53% of the foreclosures!

Another great point he made was that we still haven't seen any runs on the Hedge Funds.

In conclusion, he said he felt we were pretty close to the bottom based on the "known" factors, but this is a unique time that he said is best compared to the 1907 market. We still don't know the "unknown" factors that still may be lurking around the corner (inflation?, hedge fund impacts, consumer confidence, international markets, etc.) When things like this happen, he said, we tend to "overshoot" the target so there are profits waiting for those that time the bottom correctly.

Posted by Jim Paulson on 10/10/2008 1:20 PM

Re:How will Micron's announcement impact the local housing market?

thanks

Posted by emdeplam on 10/10/2008 2:04 PM

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