Tuesday, January 24, 2012

REAL ESTATE | Bottom-Fishing

Jan. 24, 2012–The state unemployment numbers for December, released today, show some numbers significantly lower than one year ago. Six states that have unemployment rates above the national average showed changes in their unemployment rates of 1.2 percentage points or higher. See Table C at www.bls.gov, today's press release.


States with above-average unemployment and statistically significant unemployment-rate changes,  Dec. 2011 vs. Dec. 2010. Ranked by change in unemployment.

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                                |    Rate   | Over-the-year 
             State              |  December |   change(p)
                                |  2011(p)  |               
-----------------------------------------------------------
Nevada .........................|    12.6   |      -2.3     
Florida ........................|     9.9   |      -2.1     
Michigan .......................|     9.3   |      -1.8     
South Carolina .................|     9.5   |      -1.4     
California .....................|    11.1   |      -1.4     
Kentucky .......................|     9.1   |      -1.2     
-----------------------------------------------------------
   p = preliminary. Data are seasonally adjusted.

If one were bottom-fishing for real estate bargains based on state averages, these states would be worth investigating because a substantial drop in unemployment is by itself a highly favorable economic indicator.

However, where unemployment rates are still in double digits, as in Nevada and California, recovery is further away. 

California, Florida and Nevada were (along with Arizona) hit especially hard by a decline is housing prices. Michigan was affected more by the downturn in the auto industry.

Naturally, state averages are just a first step in an analysis. Within a large state, indicators can vary widely. County data, for example, show that California's Silicon Valley (Santa Clara County) is recovering faster than the state as a whole.