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| A man leaves American Home Mortgage Investment in Melville, N.Y., which is cutting staff. David Karp/AP |
Layoffs spreading in the housing industry
The 21,000 job cuts this month are almost equal to the number for all of 2006.
from the August 23, 2007 edition
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"Everyone was panicking," recalls Mr. Gapp, a 33-year industry veteran of Rancho Cucamonga, Calif. "I said, 'Don't count us out. We'll be back.' That's my dream."
The layoffs sweeping the mortgage brokerage industry are not surprising to Wayne Archer, a professor of finance, insurance, and real estate at the University of Florida, Gainesville. "The business has always been extremely volatile," he says, adding that it has often attracted people with less than stellar credentials.
So far, in terms of actual numbers, the damage is not at the same level as the dotcom crash, when the layoffs helped drive the economy into a recession. "By way of contrast, this is a slow leak in a balloon," says Mr. Challenger.
But at the same time the industry has been laying off people, it has also been hiring them. In the past year, 120,000 jobs have been created, Mr. Brusca says.
In an e-mail, Jim Buckmaster, CEO of Craigslist, says online ads for both finance and real estate jobs recorded an all-time high last week.
Some of those hiring are hedge funds, commercial banks, private-equity groups, mutual funds, and even some mortgage companies, according to Doug Rickart, a division director in Minneapolis for Robert Half International. "A sector struggling does not mean the sector comes to a screeching halt," he says.
In fact, the real estate business has long been filled with entrepreneurs, and the current situation has just forced them to find new ways to make money. That's the case for Certified Termite Inspections in Sacramento, Calif.
"We're doing a lot of the foreclosure homes, so it's not as bad for us," says Jamie Rivera. "We've just switched which type of real estate business we're in."
For others, it means more time in the car. Appraiser John Simms of Peoria, Ariz., says he'll travel as far as Flagstaff, some 145 miles away. "The work is still there. It's just not as plentiful," he says.
For others, the downturn is really pinching their pockets. "Right now, I have no income," says Cole McNally, whose real estate photography business is in Auburn, Calif. "I've been advertising and putting fliers up. I've been pushing things on the Internet, [but] I've really seen no hits."
The layoffs remind some of the roller-coaster jobs situation on Wall Street. "When the market is down, you lay off the traders hired during the bull market. It's a normal boom-and-bust cycle for some industries," says Ken Goldstein, an economist at the Conference Board, a business research organization in New York.
In fact, many real estate veterans have steeled themselves for these times, buying big items in boom times only when they could pay cash. Younger workers see why. "I'm wiser now," says Orlowski. "When you reap, you save. When the harvest is plenty, you learn to live on less to weather you through these times."
Material from Reuters was used in this report.
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