Tuesday, June 23, 2009

Housing market still deteriorating

More bad news - WSJ.com: "'Despite unprecedented federal efforts to jumpstart the economy and help homeowners keep up with their mortgage payments, home prices continued to fall and foreclosures continued to mount in most areas through the first quarter of 2009,' according to the executive summary of the State of the Nation's Housing annual report released by Harvard University's Joint Center for Housing Studies."
Stimulus or no, I can't see any economic recovery taking place until the housing market gets back on its feet.


Fred Pilot said...

Many observers agree with with you re the housing market recovery and its major role in consumer spending. But that raises the question of whether the US economy has grown overly dependent on the housing sector. Just as a viable sustainable economy cannot be based on taking in each other's laundry, nor can it be based on selling each other our homes, speculating on and leveraging their value.

Has housing historically played such a large role in the economy? And wasn't excess leverage in the housing market the key cause of the current economic downturn?

Evan McKenzie said...

The housing sector became a big part of the economy starting in 1946, and that role expanded over time. By the 1990s, with deindustrialization, housing was one of the few basic products still being manufactured in the US--because so far you can't ship it in from China (but soon that will be happening with modular construction). And every new house also has to be stocked with many other products as well. Every unit of new housing generates a tremendous amount of commerce and employment. When the dot com boom collapsed (a greatly overvalued product area), followed by 9/11 and the corporate scandals, housing became the only mainstay of the US economy. And then that collapsed, taking the financial sector with it, along with the equity nest egg of millions of Americans. I don't think there is another product that can replace it. Until housing prices start climbing again, the US economy will continue to decline. All this talk about health care reform saving the economy is ridiculous. The Obama administration should be more concerned about housing.

Beth said...

Watch out--maybe the feds will hear you and create a "single payer housing" program of some sort. :)

Evan McKenzie said...

Obama's idea of economic policy is to set up a government enterprise to compete with private enterprise and drive them out of business or force them to become tools of federal policy. GM will go after Ford, the government-owned banks will take on the private ones, and soon the government health insurance company will drive the private companies out of business except for rich people. So, why not reconstitute the nation's stock of public housing? Maybe that's a second term project.

Anonymous said...

If Obama gets a second term, kiss this country goodbye! It will be nothing more than the American Banana Republic, a third world country.