ECONOMY IS RECOVERING, YOU SAY? NOT SO FAST, SAYS THE HOUSING SECTOR
Posted by politicalpartypooper on August 10, 2009
I know that most Democrats are excited about the recent unemployment numbers, and they are rushing into taking that as a sign that the economy is in recovery mode.
I wouldn’t say that so fast. The one sector of our economy that is still in full recession is the housing sector. The new home building pace is sluggish when compared to a year ago, and home values continue to decline. As of December, 19.8% of mortgage holders nationwide had negative equity in their houses, according to a new report by loan-tracker First American CoreLogic. That was as of December. We are still waiting for news on the first two quarters of this year, but it’s bound to be worse.
So long as the housing sector continues to lose value, this economic recovery is a red herring. As home values continue to decrease, so will the number of people who owe more than their home is worth. That means less than zero equity. Not only does that make it difficult to sell or pay for, but it also affects the remodeling industry, which affects supply and demand in the building materials industry. We are at the tip of the iceberg in the housing sector. Give it another three months, and let’s see if housing starts keep going up, and if home values rise. Until they do, this recession will still grow.