The auto industry suffered a steep decline at the onset of recession in 2008.  Autos and light truck sales fell from 17 million to 10 million.  But the latest sales data of 14.5 million annualized vehicle sales in August is encouraging.  The strong recovery in sales has also help boost prices of new vehicles, which is good news for car makers though not good for consumers.

Given that autos are typically the second-most expensive purchase item after a home purchase for most consumers, it is worth tracking whether consumers are becoming confident enough to buy a high-priced product that often requires financing.  A fairly robust recovery in auto sales may therefore portend a solid home sales recovery.  So far, auto sales are up by more than 30 percent from the low point in 2009, while home sales are up only by 10 percent.  Auto prices up by 10 percent from the cyclical low point while home prices are up by mid-single digits.  Though housing is trailing autos in the strength of recovery this could also mean that housing have a much more room for further sustained expansion.      

On additional point to note related to auto sales is jobs and home prices.  Some states have done reasonably well in the past decade, such as North Dakota and Texas.  But Michigan was bleeding badly due in part to the collapse in auto sales.  Now, thanks to auto sales rebound, jobs have been added in Michigan for three straight years.  The improving job trend will lead to solid housing demand in the Wolverine State.  That in turn will start get home prices to move higher.

“Never give up” is a popular motivational saying and appropriate in many situations.  However, one area where giving up and quitting would be good is in regards to labor market mobility.  Quitting a job is often a sign that better opportunities are cropping up elsewhere.  After all, America is the land of opportunity and new businesses get created and succeed.  Apple and Google would not be what they are today if current employees had not quit their prior jobs to work there.

When the fire rate rises (an involuntary action), home sales fall, but when the quit rate rises (a voluntary action), home sales rise.  Fortunately the quit rate is slowly making a comeback even though ‘quitting’ still remains well below the level commensurate with healthy economic conditions.

One sector where more workers are needed or will be needed in the upcoming years is in the construction sector as homebuilders ramp up production.  Fortunately for homebuilders, construction workers are not quitting.

Finally as an interesting observation, there is a frequently-run TV/radio commercial in the Washington D.C. region where a parrot says “I can’t take it anymore, I can’t take it anymore,” in evident repeat of a statement by the bird’s owner after coming home from work.  Given that Washington has a higher than normal proportion of government employees, perhaps many of the dissatisfied government workers somehow cannot take any more of the lousy and uninspiring government work environment.  Interestingly though, the quit rate among government employees is significantly lower than the private sector.  Whereas government employees comprise 16 percent of all workers, the quits by government employees make up only 6 percent of all quits.  The conclusion to be drawn is that government employees may not like their jobs but would never actually quit because of the nice pension staring at them in a few years.

There are many advantages to living in a neighborhood known nationwide as the Chernobyl of American real estate.  Movie directors like our barren, graffiti-decorated streets for post-Apocalypse scenes and zombie movies. You can park anywhere and so many stores keep closing that there are sales galore.  You never have to worry about irresponsible neighbors who borrow things and forget to return them.  Except for the occasional teen-age all-night rave party in a rotting foreclosure, there’s lots of peace and quiet around the clock.

In my town of Mirage Mills nearly everybody bought their homes with funny mortgages that had funny names like Optional Arms and Legs, the Low Down No Down, No Worries No Docs and the popular Alt-A Plan B Cellblock C.

By 2008, they were all in foreclosure and my wife and I had the whole place pretty much to ourselves until ten days ago when three new young families moved in within earshot.  They were the first newcomers in years.  At first I resented losing our serenity, but then I realized the significance of what I was witnessing and I stopped feeling selfish.  A comatose neighborhood was coming back to life.  These were the pioneers, the first to see the potential of rebuilding Mirage Mills and turning it into the bustling, happy place it once was.  Best of all, it wouldn’t be long before other families followed them and home values, especially mine, would percolate upwards like clockwork just the way they used to.  The magic of homeownership was at work right before my eyes.

It took me a week to get up the gumption to knock on the door of the nearest newcomer.  The door was answered by a short man in his twenties who looked distracted.  Inside I could hear two young children playing.

“Sorry,” he said.  “I don’t want any.”

“Oh, I’m not selling anything,” I smiled.  “Just here to introduce myself and welcome you to the neighborhood.  And by the way, do you think I could borrow a can of lawnmower gas?”

“Don’t have any.  Don’t cut the grass.”

“Oh, really?  I see.  Well, you know I could also use an eight foot ladder if you have one to spare. ”

“Don’t have one of those either.  Anything breaks, I just call to get it fixed.”