I’ve been saying that New Mexico normally does better during economic downturns then the rest of the country. In fact, according to Lee Reynis, director of UNM’s Bureau of Business and Economic Research, “We have almost never had a recession here…. Rarely does employment growth turn negative.” If we were to follow the rest of the country into a recession, it would be the first time since the 1950’s.

One other note: foreclosures in New Mexico were down 26% in 2007 vs. 2006. Just four other states followed our example: Oklahoma, Pennsylvania, South Carolina and Utah. At the other end of the spectrum: Texas, Colorado, Arizona and Nevada were among the top 10 in foreclosures.

I said quite some time ago that we always seem to ‘muddle’ through. You are looking at a typical NM muddle .

Unemployment for December continued to be very low in New Mexico and Albuquerque: 3.5% & 3.7% respectively. Both are a small ‘uptick’ from November but still well below the national average of 5.0%

New home permits were down a very large 60% from December to December. That is a big drop, of course but I consider it good news for everyone but the builders themselves. On the outskirts of Albuquerque and Rio Rancho the builders’ excess inventory is slowing up individual home sales. When their inventory is sold off, then the re-sale market will come alive again in those areas.

And, speaking of inventory, that is the key to forecasts about when the market will turn around. Depending on the source, that will occur in the second or third quarter as confidence returns and inventory shrinks.

Check out They Lied to Us for the bottom line on who did what during the credit debacle. Bottom line for me: the financial people were simply making too much money to pay attention. Does anyone remember Alfred E. Newman of Mad Magazine? His signature comment was, “What, me worry?”

OK — if our local economy continues to be in good shape (income up, unemployment down and foreclosures moderate to low) why is that not reflected in the real estate market?

Caution about the economy?
Fear of buying at close to the top of the market?
Lack of mortgage programs?
Too many choices?

Something else?

Let me know your thoughts….

- and so do rates in Albuquerque.

After the Federal Reserve lowered its funds rate by .75%, mortgage loans were at 5.625% in Albuquerque. That is almost as low as the historically low rate of 5.5% from a couple of years ago.

So, with a strong local economy and very low interest rates, we’ll see if buyers come back into the market.

Fast on the heels of the announcement about SCHOTT SOLAR building a plant in Albuquerque’s Mesa del Sol development comes another — and bigger — announcement.
FIDELITY INVESTMENTS will build an operations center in the same development. The facility should be completed in late ‘08 and employ about 1,250 people. Even better, the expected salary range for most of the positions will be in the $37-65,000 range.

Three recent events highlight the ‘now you see ‘em, now you don’t’ aspect of job announcements:
Almost certainly real: SCHOTT SOLAR will build a solar energy production facility in Mesa del Sol on the south edge of Albuquerque. Beyond construction jobs the company will employ 350 people at its first phase.
Probably real: ECLIPSE AVIATION, with a total work force of about 1,600, plans to hire an additional 700 people this year.
We’ll see: TESLA MOTORS is once again saying it will build an assembly plant for its electric sedan on Albuquerque’s West Side.

If ‘all politics is local’ is true, that is probably because all economies are local.

While the national economy continues to slide, the Albuquerque region (including Rio Rancho) continues to avoid the worst. November unemployment stands at 3.0% How many other areas of the country do you think would like to see that figure?

Ben Bernanke, the chairman of the Federal Reserve, said today, “We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risk.”

Sound like another rate cut in the offing to you? The next policy meeting is Jan. 29 and 30.

Stocks are down sharply from the first of the year on consistently bad national economic news. KB Home posted a large loss for its 4th Quarter. Next up, almost certainly, is another drop in interest rates to start ‘cooking’ the economy. (What politician wants to enter an election cycle during an economic downturn, to say nothing of a recession??)

So, no surprise that the market anticipates that event. According to FANNIE MAE, mortgage rates have reached their lowest point since 2005. As of Jan. 7th the average for a fixed-rate 30-year loan was 5.7%.