Americans should be more concerned about housing slowdown
By Melissa Wirkus
Although analysts and experts know the grave dangers
associated with a housing market
downturn, a large majority of the American public does
not seem to see that any trouble could be in the future.
Most people assume that they have nothing to be worried
about since the government will take care of all the
details, and keep the economy in-line and regulated.
But these people could be in for a rude awakening since
we are in the midst of the biggest housing
downturn in the history of our civilization. Many
industry insiders are saying that things could be a
lot worse than previously expected, and we should be
preparing for the worst.
An August 31, 2006 article by Bill Bonner of LewRockwell.com,
“Real estate free fall?” gives some interesting
insight into the current housing market.
“‘Things do seem to be getting worse very
quickly. Free-fall is a strong word, but I think it's
the right one to use here,’ says Paul Ashworth,
chief U.S. economist at Capital Economics.”
“But most Americans look into the future, see
a weakening property market, and fear not. They have
been told that soft housing prices pose no problems
for the rest of the economy. They have no reason to
doubt that it is true; no reason to squint and try to
see further. They dread neither slump nor boom...neither
war nor peace. They believe everything will be managed
by the authorities so as to do no great damage to the
homeland.”
The reason why many people are not too concerned about
the news of this housing market slowdown is because
they have been expecting it, and it is not coming as
a surprise at all. But what most people do not realize
is that although everyone has been anticipating a slowdown,
no one knows how severe it could get.
“If there are going to be difficult years in America,
however, Americans are not worrying. They recall the
last recession in 2001, almost fondly. Even before they
had forgone a single Krispy Kreme donut...or darned
a single sock...the recession was over. And on its heels
came the biggest boom in housing prices the world had
ever seen. Recession? The last one was no trouble; why
should they worry about the next?”
“The expected slump poses no danger to them. But
what if the slump is not what Americans expect? What
if the softening of housing
prices is not so benign? What if the roof really
does cave in?”
Americans should be a little more concerned with the
current state of the housing market because it affects
so many other aspects of our economy. The job market
is very much affected by the housing market since so
many jobs are reliant and created for the housing market.
“‘House prices have been rising at unprecedented
double-digit rates in recent years, giving homeowners
massive windfalls and supporting a wave of investment
in new construction.
However, the number of unsold new homes is now at a
10-year high.’”
“Ashworth reckons that 30 percent of all the jobs
created since the end of the last recession in 2001
– 1.4 million – have been in sectors related
to the housing market boom, from construction to DIY
stores. As the boom runs out of steam, he calculates
that 73,000 jobs a month will be lost.”
Analysts are saying to expect the unexpected when it
comes to our current housing situation. If we are prepared
for the worst, we have a better chance of surviving
whatever happens to our economy and marketplace.