Talking about the Housing Market
One thing that I’ve noticed in my area is a lot of new homes and developments. Now, I live in a lower income area, so I’ve found this odd. As I look for my own home (I plan on buying a house within the year), the influx of unoccupied, new homes becomes more and more apparent. There are lots of empty houses in my large town that are looking for good owners that just can’t afford them.
And that problem is not only here. In February, the housing market plummeted to the lowest it has ever been; only 278,000 homes were bought during that month. To put that in perspective, in July of 2005 there were 1.4 million houses sold. Wow. Look at the discrepancy between those two numbers. 6 years ago, there were four and a half times as many homes sold. Four and a half times. That’s huge! And it’s a huge indicator of where our economy has gone.
This month, there were around 312,000 new homes sold. That was a little more than last year (about 2 percent more), but still, not as many as were estimated. There are two big reasons for this.
- Unemployment/underemployment rate is still high. When people aren’t getting paid, people aren’t going to buy. And a huge investment like a house usually requires a mortgage, which you can’t get if you don’t have a job with which to pay for said mortgage. So, the obvious issue here is to try and get more jobs, right? Problem is, the areas which the new homes are in are areas that have little to no job growth. There’s estimated to be about 200,000 new homes sitting vacant around the country, and with the current growth (well, lack thereof), it’s going to take at least 6 months to dump all of that.
- Foreclosures are still on the market. This is actually a bigger problem than the previous. Why would I go and buy a brand new home for $200,000 or more when I can get a home that’s currently owned by a bank for half the cost? Exactly. Those foreclosed homes, a lot of which are still quite nice, are more appealing to people who have the disposable income to buy a home.
So, what does this mean? Well, places that specialize in building homes (personal contractors and the like) are at a standstill in their building. If they aren’t selling homes, then why in the world would they build them? Real estate agents aren’t making as much (they make more off of new home sales), and a whole sector of consumers is getting less work. Less work equals less money, and less money equals less money in local economies. It’s very circular. And a mess, as always.
What can we do to fix it? Not much, really. Just like the rest of the economy, it’s going to take time to fix. As a possible debt ceiling lingers (next week, if things aren’t resolved), this market may become even more weighed down as loans become harder to obtain. But, all we can do is wait and see. Until tomorrow, spend smart, save smart!
