by Calculated Risk on 4/03/2009 09:11:00 AM

From the BLS report:

In March, the number of persons working part time for economic reasons (some-times referred to as involuntary part-time workers) climbed by 423,000 to 9.0 million.

Click on graph for larger image in new window.

Not only has the unemployment rate risen sharply to 8.5%, but the number of workers only able to find part time jobs (or have had their hours cut for economic reasons) is now at a record 9.0 million.

Of course the U.S. population is significantly larger today (about 305 million) than in the early '80s (about 228 million) when the number of part time workers almost reached 7 million. That is the equivalent of about 9.3 million today, so population adjusted this isn't quite a record - yet - but it is getting close.

And the rapid increase is stunning ...

by Calculated Risk on 4/03/2009 08:30:00 AM

From the BLS:

Nonfarm payroll employment continued to decline sharply in March (-663,000), and the unemployment rate rose from 8.1 to 8.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Since the recession began in December 2007, 5.1 million jobs have been lost, with almost two-thirds (3.3 million) of the decrease occurring in the last 5 months. In March, job losses were large and widespread across the major industry sectors.

Click on graph for larger image.

This graph shows the unemployment rate and the year over year change in employment vs. recessions.

Nonfarm payrolls decreased by 663,000 in March. January job losses were revised to
741,000. The economy has lost almost 3.3 million jobs over the last 5 months, and over 5 million jobs during the 15 consecutive months of job losses.

The unemployment rate rose to 8.5 percent; the highest level since 1983.

Year over year employment is strongly negative (there were 4.8 million fewer Americans employed in Mar 2009 than in Mar 2008). This is another extremely weak employment report ... more soon.

by Calculated Risk on 4/02/2009 09:09:00 PM

From the WSJ: Companies Sold Office Space at a Fast Pace

Companies struggling to cut costs dumped a near-record 25 million square feet of office space in the first quarter, driving vacancy up and rents down, according to data to be released today by Reis Inc.
...
The office vacancy rate nationwide rose to 15.2% from 14.5% in the previous quarter, and likely will surpass 19.3% over the next year, according to Reis, a New York firm that tracks commercial property. That would put the vacancy rate above the level during the real-estate bust of the early 1990s, the worst on record.

Click on graph for larger image in new window.

This graph shows the office vacancy rate starting 1991.

A little over one month ago, REIS was forecasting office vacancy rates would reach 17.6% in 2010. Now they are forecasting 19.3%!

by Calculated Risk on 4/02/2009 07:34:00 PM

From Ruth Simon and Michael Phillips at the WSJ: Homeowner-Aid Plan Caught in Second-Loan Spat

The Obama administration's $75 billion effort to help troubled homeowners avoid foreclosure has hit a stumbling block: a fight over how to aid borrowers who have more than one home loan.
...
One problem is that first and second mortgages are often owned by different parties and may be handled by different mortgage servicers, the companies that collect checks from the borrowers.

This refers to Part II of the Obama plan - under Part II the lender must bring the total monthly payments on mortgages to 38% of the borrowers gross income, and then the U.S. will match dollar for dollar from 38% down to 31% debt-to-income ratio for the borrower. But it was never clear what happens if the borrower had a 2nd mortgage. The only references in Part II to 2nd liens was in the Home Affordable Modification Program Housing Counselor Q&As:

What if the borrower has a second mortgage and would like to apply for a Home Affordable Modification?

Under the Home Affordable Modification program, junior lien holders will be required to subordinate to the modified loan. However, through the Home Affordable Modification an incentive payment of up to $1,000 is available to pay off junior lien holders. Servicers are eligible to receive an additional $500 incentive payment for efforts made to extinguish second liens on loans modified under this program.

That definitely isn't very clear, and most 2nd lien holders wouldn't want to take $1,000. As the WSJ notes:

Banks and other financial institutions own as much as 90% of the $1.08 trillion in home-equity loans and lines of credit in the marketplace ... Bank of America Corp., Wells Fargo & Co., J.P. Morgan Chase & Co. and Citigroup Inc. have the largest home-equity portfolios, SMR said.
...
"We are going to have to take a haircut on the second" lien, said one bank executive. "But we don't think we should get wiped out."

And here is one possibility being discussed:

One proposal would require lenders to cap monthly payments on second loans at a set percentage of the borrower's gross income. The lender would be expected to "eat the vast majority" of the cost, with the government subsidizing a small portion ...

Conflicting interests ... what a surprise.

by Calculated Risk on 4/02/2009 06:34:00 PM

From Amanda Fung at Crain's on New York: Big landlord takes hit on falling apt. rents (ht Jennifer)

Declining Manhattan rents are taking a toll on Equity Residential, a large real estate investment trust that owns 47 apartment buildings in the New York metropolitan area.
...
Since February alone, Equity Residential has lowered its Manhattan asking rents by an average of 13%, said Michael Levy, an analyst at Macquarie. That reduction came on top of a 15% cut over the previous year.

And in San Diego from Zach Fox at the NC Times: HOUSING: Rents falling as vacancies rise at major complexes

A handful of big local apartment complexes have cut rents in an attempt to fill empty units ...

Tradition, an apartment complex near the Aviara Golf Course in Carlsbad, has cut its asking rent for a three-bedroom apartment from $2,015 to $1,799 per month, said Kris Nelson, business manager for the complex.

Tradition has seen its vacancy rate rise from a fairly consistent 3 percent to 8 percent recently, Nelson said.
...
In Temecula, Somerset Apartments has seen its vacancy rate shoot up from 3 percent to 20 percent. Managers responded by slashing rents by 25 percent for two bedroom, two bath apartments ---- from $1,200 to $900 per month.