Real estate recovery after the crisis
Many people have compared the current financial crisis to the Great Depression. The situation is indeed serious, but it is questionable whether things are or not so serious. The current unemployment rate of 7.2% marked a high fifteen years. However, during the Great Depression that rose from 9% to almost 30%. We have learned from the mistakes of previous generations and financial instruments that we now have to occur as a direct result of hard times during the 1930′s. One of the keys to help the economy under President Roosevelt was massive government spending, mainly on the bust of war also the country’s infrastructure.
The new administrations also have big plans for government spending to a package of unprecedented economic stimulus and create millions of jobs. The new administration has expressed plans to enable the U.S. to become “energy independent” within ten years. These costs, along with others that help develop the economic recovery.
The key to economic recovery is the health of the housing market. We are all very familiar with decreasing statistics regarding home sales. The media have flooded us with nothing but negative messages and predictions of disaster. To move forward we must remain positive and remember that it is always darkest just before dawn. We believe that the housing market has bottomed and the market will change for the better. Since the beginning of the year has been an increase in activity for both home purchases and refinancing. In 1991, real estate hit bottom and then bounce back and prosper. The ongoing fight in the real estate market is similar to those observed between 1989 and 1991. Federal Reserve Chairman Ben Bernanke said yesterday that the Federal Reserve Bank is prepared to use every tool available to help the ailing economy and housing market. Several months ago, former Federal Reserve Chairman, Alan Greenspan, which provides a stabilization of the housing market, would be followed by a strong recovery in 2009.
The tide has begun to change and economic recovery will begin with prosperity in the housing market. The mortgage industry is seeing the low historical rates of 30-year fixed-rate mortgages. The 30-year fixed rate mortgage has not been the lowest since Freddie Mac began the study of primary mortgage market in 1971. Refinance applications are increasing and people who care about studying the purchase of a home are beginning to get off the fence. Factor of three key components to create purchasing power, low housing prices, historical low interest rate fixed, and more money in the pockets of buyers due to low gas prices. Those of us in the real estate industry should have a message. It is a good time to refinance your mortgage and is a good time to be thinking, “Buy a home now!”