Ripples

Star Tribune Sat, 29 Mar 2008 18:44:27 GMT
New-home slump casts big shadow over state

Minnesota home-builder employment bounced back early in recent recessions. This time? Maybe not. ... This time around, Minnesota home builders have few incentives to be heroes in the job market in the face of a brake on sales that started almost two years ago, said Pam Perri Weaver, executive vice president for the Builders Association of Minnesota. "Never have they been in an environment where interest rates are 5.5 percent and residential home building is not rising," Weaver said. Said state economist Tom Stinson: "Even though interest rates are low by historical standards, you still have to convince people to borrow money to buy an asset that may be going to continue to decrease in value for a year or more." By some measures, home building represents a small part of the state job market. Direct employment in home construction represents a tiny sliver of a Minnesota job market that numbers nearly 3 million. The average of 14,280 workers pouring concrete, swinging hammers, stringing wires and laying pipes in new Minnesota homes last year represent only one of every 205 workers in the state. Yet home builders now are at the epicenter of an industry with widespread economic reverberations. "This is a sector that, all of a sudden, has enormous leverage on the rest of the economy," Stinson said. "It's affecting the free flow of credit," he said. "Not just credit for housing but credit for all kinds of activities."

[[keywords: Housing;Living;Metro;]]