a:25:{s:9:"weblog_id";s:1:"4";s:8:"entry_id";s:0:"";s:6:"sticky";s:0:"";s:14:"allow_comments";s:1:"n";s:16:"allow_trackbacks";s:1:"n";s:10:"entry_date";s:19:"2010-12-14 06:53 AM";s:15:"expiration_date";s:0:"";s:23:"comment_expiration_date";s:0:"";s:8:"category";a:1:{i:0;s:1:"4";}s:9:"author_id";s:1:"4";s:6:"status";s:4:"open";s:14:"trackback_urls";s:0:"";s:18:"versioning_enabled";s:1:"y";s:5:"title";s:74:"Analyst Pegs Skilled Construction Workers As \"New Long-Term Unemployed\" ";s:9:"url_title";s:69:"analyst_pegs_skilled_construction_workers_as_new_long_term_unemployed";s:6:"submit";s:6:"Submit";s:11:"field_id_26";s:73:"Analyst Pegs Skilled Construction Workers As \"New Long-Term Unemployed\"";s:11:"field_ft_26";s:4:"none";s:11:"field_id_31";s:0:"";s:11:"field_id_44";s:297:"\"When I hear \'structural unemployment,\' I think about the electrician, the carpenter, and the bricklayer, because they will not be put back to work any time soon. The drivers for construction just aren\'t there,\" said Scott Colbert, senior vice president and chief economist for Commerce Bank.";s:11:"field_ft_44";s:4:"none";s:11:"field_id_28";s:28:"skilled, workers, unemployed";s:11:"field_ft_28";s:4:"none";s:11:"field_id_29";s:3131:"<p>\"When I hear \'structural unemployment,\' I think about the electrician, the carpenter, and the bricklayer, because they will not be put back to work any time soon. The drivers for construction just aren\'t there,\" said Scott Colbert, senior vice president and chief economist for Commerce Bank.</p>
<p>The biggest missing driver is demand for new homes.</p>
<p>Colbert presented his economic outlook at Commerce Bank\'s annual Economic Breakfast on December 8.</p>
<p>\"Housing is more affordable than ever,\" Colbert said, \"but the inventory of existing homes on the market is out of control.\"</p>
<p>Colbert said that in a typical healthy economy, about two million homes a year change hands in the national housing market. This housing market is neither typical nor healthy, however.</p>
<p>As much as home values have fallen, Colbert predicts they have lower to go. \"Prices could fall another six percent before we start seeing the market clear out,\" he said. The prospect of continuing falling prices is one factor that restrains home buying.</p>
<p>For first time homebuyers, the prospect of paying less in a year is an incentive for waiting. For others, the loss of equity in their current home may mean the loss of what was going to be their downpayment for a new home.</p>
<p>Currently, there are about four million existing homes for sale across the country, and another two million in the \"shadow market\" moving through foreclosure, he said.</p>
<p>\"It took two years to reduce the inventory of unsold homes by half-a-million. At that rate, it could take eight years to work through the backlog of existing unsold homes,\" he said.</p>
<p>\"That is why there is no building and that is why values are down,\" he added.</p>
<p>The situation is different for commercial properties, but the outcome for construction is similar.</p>
<p>Colbert dismisses predictions of a commercial real estate debt crisis that will rival the mortgage crisis. \"That is already being worked out,\" he said. Defaults on commercial loans peaked during the summer at Commerce Bank and have been trending down since, he said.</p>
<p>It is all about cash, he said. \"Even though property values are down by 40 percent, when properties are leased and generating cash, banks will rollover the loan,\" he said. So a property\'s capitalization rate (net operating income divided by the purchase price) is half of what an owner and bank had originally expected, \"cash is still cash,\" Colbert said.</p>
<p>The roots of the current economic crisis are the consumer and business borrowing that took place between 2001 and 2008. Economic growth during that period was most financed with debt, which means growth was pulled forward from future years, from now, he said.</p>
<p>As a result, he expects slow job growth, so much so that unemployment could still be eight percent or higher in two years.</p>
<p>Still, the economy is recovering, he said. It is just that we are in the first stages of a long \"de-leveraging process,\" a process of returning debt to more sustainable levels, that could take a decade to complete.</p>
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