From NJBiz:
This Economic Train Is Stuck in the Station
Economic growth in New Jersey is slowly grinding to a halt, according to a seasonal study put out by the Federal Deposit Insurance Corp. (FDIC) that points to an easing of job growth and a slackening of home sales.
New Jersey’s employment growth dwindled in the first half of 2006, reaching only 0.9 percent in the second quarter, according to FDIC figures. This lagged the nation’s 1.4 percent job-growth average. During the summer, New Jersey’s job growth rate hovered at 0.7 percent. The state’s job slowdown is most acute in the north, a fact the FDIC attributed to losses in manufacturing positions and job weakness in the health, telecommunications and pharmaceutical sectors.On the real estate side, New Jersey sales of existing single-family homes, condos and co-ops declined for the third consecutive quarter, according to the FDIC. Home sales dropped roughly16 percent in the second quarter compared with the same period last year, the sharpest single-quarter decline since 1991. Although still higher than the U.S. average, New Jersey’s rate of home-price appreciation fell 12.4 percent in the second quarter to reach its lowest level in two years.
The slowdown in home sales may be carrying over to the job market. Jobs connected to residential and commercial real estate are now contributing less to overall job growth, generating only 16 percent of the state’s net new jobs between the second quarter of 2002 and the same period this year. By contrast, the real estate sector accounts for 20 percent of the net new jobs nationally.
There’s also bad new for homeowners with adjustable rate mortgages and for less-creditworthy homebuyers in general. The FDIC say such borrowers may suffer “payment shock” if their mortgages are reset to higher interest rates. The foreclosure rate on New Jersey’s sub-prime adjustable-rate mortgages is rising, climbing to 1.78 percent in the second quarter from 1.19 percent in the second quarter last year, according to the Mortgage Banker Association.
FDIC state profile for NJ can be found here:
New Jersey State Profile – Fall 2006
Job growth varies across the state (see Chart 1). Gains in the leisure, financial, and other service sectors have contributed to strong growth in Central and Southern New Jersey.1 Stagnant job growth in Northern New Jersey during the past two years reflects continuing manufacturing job losses and weakness in the professional, health, and telecommunications sectors. In addition, pharmaceutical companies continue to trim payrolls.
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Sales of existing single-family homes, condos, and co-ops in New Jersey declined for the third consecutive quarter, while the rate of home price appreciation is slowing (see Chart 2). Home sales dropped 16 percent in second quarter 2006 from a year ago, the sharpest quarterly decline since 1991.
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A slowing housing sector may dampen statewide job growth. However, jobs related to residential and commercial real estate has contributed less to job growth, generating 16 percent of net new jobs in the state between second quarters 2002 and 2006 compared with 20 percent for the nation.
“Jobs connected to residential and commercial real estate are now contributing less to overall job growth, generating only 16 percent of the state’s net new jobs between the second quarter of 2002 and the same period this year”
Clot,
There goes your commercial RE theory regarding job creation.
There is some additional info on the office market..
In the absence of new completions, the office vacancy rate in Newark has stabilized and was 13.8 percent in second quarter 2006 compared to 14.6 percent a year ago (see Chart 3). Characteristic of a soft market, rental rates
in Newark have declined during the past year.5