The December jobs report speaks volumes about why the housing recovery is not as robust as it should be, given still historically low mortgage rates and still relatively low home prices. Specifically, the weak job participation rate, falling to the lowest level since 1978, according to the U.S. Bureau of Labor Statistics, explains why so many are barred from home ownership and why others in trouble on their mortgages are unable to save their homes.
More young adults are going back to work, with employment rising from below 75 percent earlier last year to just above it in December. Still, the number is well below where it should be. Wage growth also came in at just 1.8 percent for all of 2013, below the inflation rate, according to the BLS.
"Millennials have a long road ahead: The employment rate of 75.4 percent in December was closer to the low point during the recession, 73-74 percent, than to the pre-bubble normal, 78-80 percent," noted Jed Kolko, chief economist at Trulia.
First-time home buyers have been largely left out of today's housing recovery, especially given tight mortgage credit. They simply don't have the down payments or the credit scores necessary to qualify. This as new mortgage rules go into effect today that some say will institutionalize tight credit. These rules are designed to protect borrowers by ensuring that they can repay their loans, but some claim the rules are far too stringent.
"A healthy mortgage market includes a certain amount of foreclosures for reasons other than medical, job loss or divorce," said Jaret Seiberg of Guggenheim Partners in a note to investors. "Otherwise credit-worthy borrowers will be denied the ability to own homes."