Latest Housing News
Two new reports from government agencies this week concerning the housing market. The Fed has a new policy of "transparency" and has made the first of what will be quarterly forecasts regarding the economy. The central bank predicts no recession in the foreseeable future but does think that GDP will grow by a paltry 1.6 percent in 2008.
Meanwhile the Census Bureau has issued a report that "housing starts" continue to slow and the number of new homes being built now is little more than half the level of two years ago. Housing starts is an oft quoted statistic on the evening news but quite frankly I think it is a little misleading as it is the "used home" market that really reflects the value of what for most of us is our biggest asset. But it is an indicator of the overall market, it is easy to track and news organizations are intrinsically lazy so that's what you're going to get.
In making their forecast the Fed mentioned that unemployment is holding steady which is what gives them the confidence to predict that the economy will not slide into a recession. Rather we are in a cyclical housing downturn (yes there were isolated "bubble" markets) that is being exacerbated by the problems in the mortgage market and then made to appear even worse by climbing oil prices and a hysterical news media driven by the explosion of 24 hour outlets and the need to report something.
There is some danger that tightening of credit could cause an even further drop in home prices but it appears that the Fed is doing what it can to keep that from happening. From the viewpoint of a real estate broker on the street it appears that we will continue to muddle along while the market corrects itself. There are many opportunities in a market like this and it continues to amaze me that Buyers who were only too willing to spend when prices were at their peak are pulling back now. The herd mentality appears to prevail over the theory of buy low.
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