When 7.2% unemployment looks good
When does 7.2 percent unemployment look good in Maryland? When it marks the end of -- or at least a pause in -- a rapidly worsening job situation. August was the fourth straight month of 7.2 percent, according to new Labor Department estimates. The rate ratcheted up to that point from 4.5 percent a year ago.
There's been a lot of chatter about the "R" word this week because Federal Reserve Chairman Ben Bernanke, in a Q&A after a speech, said he thinks the recession is likely over. A majority of you disagree -- or at least 60 percent of you who took the poll that was part of Friday's live chat.
I took a look at Bernanke's remarks, and they're hardly "happy days are here again." He cautions that job growth probably won't be any great shakes next year, saying that most forecasters think the "pace of growth in 2010 will be moderate, less than you might expect given the depth of the recession":
And the arithmetic is that unless the economy grows, you know, significantly faster than its longer term growth rate, it’ll be relatively slow in creating jobs over and above those needed to employ people coming into the labor force, and therefore, the unemployment rate would tend to come down quite slowly. So that’s a risk, that’s a possibility.
The health of the housing market is influenced by the ease with which people can get and keep jobs. (Obviously there's a housing connection, or I wouldn't be blogging about it.)
But sometimes it's the loss of a job that prompts someone to buy a house.
Louis Gagliano, a Baltimore County resident who lost a business analyst job, said it's been very difficult finding a company ready to hire. He's had several interviews of the "you're the one we want if we grow down the road" variety.
In the meantime, he bought a home in Baltimore's Highlandtown neighborhood and is rehabbing it to sell. He dipped into his savings and tapped his 401(k) to finance the project.
He figures it will be ready for sale in October, three months after he acquired it and about a year after the wave of layoffs at his company.
"We're working like crazy," Gagliano said.
I can think of several other locals who got into real estate investing after a layoff. Would you? Or is it more risk than you'd be comfortable taking?
Sign up for the At Home newsletter 
Comments
Jamie,
As president of the Mid-Atlantic Real Estate Investors Association (MAREIA), I've seen people take up real estate investing for many reasons.
However the two reasons I hear most often are control of one's time and financial security.
As people realize that they cannot count on any type of job security, they look for ways to make money that depend more directly on their own efforts and less on the way a company is run by its managers and owners or the ups and downs of the economy.
For those willing to put in the time to learn the right way to invest, real estate turns out to be the ideal path. It allows a person to succeed (or fail) on the basis of their drive, determination and knowledge.
Best of all, a career in real estate gives people the chance to work at home with generally flexible hours. I have seen numerous individuals and couples who are able to spend more time with their families as a result of their real estate investments.
All that being said, while I consider real estate one of the simplest things to learn, it is not always easy or without pitfalls. Nor is it for everyone.
The best way to get started is to read books, spend time browsing online real estate bulletin boards, talk with other investors (at your local REIA) and get a solid education in the basics before quitting your day job. If a person has been laid off, I would still suggest investing the time to see if real estate investing makes sense for them before plunging in and risking their savings or retirement funds.
There are far too many "get rich quick" pitches that lure people into paying tens of thousands of dollars for "education" when the information and support to get started can be had for much, much less--in some cases for as little as a few hundred dollars. There is no need or reason to spend your life's savings to get started in real estate investing.
In a bit of shameless self-promotion, I can’t resist letting everyone know that MAREIA and Capital Area REIA are putting on a huge conference October 1-4 called the Building Wealth Expo. While it will cover a number of ways to generate income, this multi-day event at the Westin BWI will mostly be centered on real estate investment opportunities. For more information, check out the website: www.BuildingWealthExpo.com
Posted by: Alan Chantker | September 19, 2009 8:04 AM
During the boom 2001-2007, I know alot of folks who left their normal jobs to get into real estate, rehabs, etc. And, alot of those folks are now back to normal jobs (if they an find them). If I got laidoff today and I had the means to finance a rehab, I would. Not going to make the crazy profits from years past but probably enough to cover the loss of income (hopefully). After the telecomm crash of 2002 and my job loss, I bought and renovated 3 houses in Baltimore, living in them and selling after two years. I basically was a bum and used 3-4 years as a pseudo sabbatical. Now back in a proper job and buying new construction next month. My rehab days are behind me.
Posted by: ASH | September 19, 2009 8:54 AM
Oh my. I truly wish him well, but...
unless Mr. Gagliano is one of the very few with genuine trade skill and enough enough understanding of the construction process, let alone the redvelopment legalities and marketing pitfalls, later anecdotes about success will really have to be critiqued carefully.
Again, I do wish him well.
Posted by: MrRational | September 19, 2009 9:18 AM