Sunday, September 5, 2010
Housing's new nightmare
Despite the feeling that the recession is coming to an ending, the economy keeps getting worse, along with the housing market, which initially caused this crash. Late mortgage payments have increased since the last quarter from 3.31% to 3.51% of people paying late. Economists argue that the housing situation will only get better when unemployment lowers. The two being inextricably linked to one another. Without jobs, people cannot pay their mortgages. As the help from the government has worn off, the housing market has fallen again. This makes me question whether there is anything that can permanently lift the economy out of its current hole.
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I think a possible answer to your question lies in an opinion of economists that you referenced. Most surely, with unemployment rates decreasing, people will likely be able to start paying off their mortgages and furthermore begin paying their payments on time. Don't necessarily think this alone will allow the economy to climb out of it's "hole" but surely won't hurt.
ReplyDeleteI feel that many factors keep the economy in its current situation and they are all interrelated so while the housing market does not help the recession, it is not the only factor hurting it.
ReplyDeleteblaming the current recession on the housing market alone is an oversimplification of the problem. while it certainly contributed to the current economic turmoil, recovery in the housing market alone will not solve the problem.
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ReplyDeleteOnly an increase in the employment rate can help improve the housing market as a it really does take 'a paycheck to make a mortgage payment'. However, mortgage rates are right now the lowest they have been since 1971 and still the housing market is suffering. There is an excess supply of houses and the demand is weakening. For starters, there should be no further construction for new houses because that would only weaken the market as more houses are supplied with the same tiny demand.
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