It was just a matter of time.

Well it is now official--the woes of the housing industry have spilled over and affected the employment rate in 4,000 negative ways. The Labor Department reported a decrease in job creations for the month of August 2007 and the unemployment rate went up to 4.6. This was the first time employment had shrunk since August of 2003. A gain of 125,000 jobs was expected for last month, but instead we had a loss of 4,000 jobs. This decrease in job creations has been linked directly with the high forecosure rates seen throughout the country.

The decrease in job growth primarily occured in the following sectors: residential construction (loss of 22,000), manufacturing (loss of 46,000), and financial services (loss of 19,000 from its peak in Feb. 2007).

It was a just a matter of time. When you have the following coctail mix: a slow real estate market, tighter lending guidelines, subprime borrowers unable to refinance or sell their homes, and tens of thousands of people laid off, you are bound to have serious economic repercussions.

First of all a slow real estate market signals plenty of inventory--some of which are short sales and foreclosures competing with perfectly priced homes. Even though there may be buyers wanting to purchase these properties nowadays the guidelines have become stricter with too many hurdles for potential homebuyers to jump.

Add to the mix the typical subprime borrower who got a 2 to 3 year adjustable rate mortgage (ARM) in 2005, when the market went belly-up, and is now looking to refinance it because the payments have become unbearable but has less than perfect credit scores and no equity! And to top it all off, you have tens of thousands unemployed. What do you have? A recession?

Many wonder how long the wait will be till we're out of this mess. My guess: 2 to 3 years from 2005. Maybe longer. But one thing I do know--by the end of 2008 beginning of 2009 all the subprime borrowers who got a loan in 2005 should have refinanced it, sold their homes, or unfortunately gone to foreclosure.