While riding in a vehicle with a friend of mine to a recent event, he told me that the American Economy requires that the construction industry, and the housing market in general, is vibrant. When a house is built, he was telling me, thirty different people are involved in the construction of that project, from underground and grading all the way to the final touches regarding landscaping. Those thirty people then spend the money they earned building that house at various other places of business for products, or services. All parts of the economy benefit from the involvement of those thirty people building that house. Therefore, it is safe to say, based on his observation, that a housing recovery is an essential part of turning around America's economy, and heading us back in the proper direction financially.
The democrats have hailed that the housing recovery is in full swing. The republicans have said that the recovery is sputtering, and that the housing market can't seem to pick up any momentum.
According to Heidi Moore, U.S. finance and economics editor at The Guardian, the idea that the United States is experiencing a housing recovery is a sham, and she began saying so in June of 2013.
The sales of new homes are plunging, dropping 14.5% in March, compared to February. Existing homes sales are also not on the rise. The demand for home loans has hit a 14-year low. Yet, reports continue to stream in that home sales are rising, and that the housing recovery is underway.
"People haven't been able to borrow for a mortgage for years."
Neil Irwin argues in the New York Times’ Upshot, confirming my friend's observation about housing and the general health of the economy, that the housing market is still stalling the economy. He points out that investment in residential property remains a smaller share of the overall economy than at any time since World War II, contributing less to growth than in past downturns, including the early 1980s when mortgage rates were 20% (compared to 4.5% currently).
Irwin argues if more people were buying homes and building returned to its postwar average as a share of the economy, growth would jump to 4% and about 1.5 million more jobs would be created. He says the main factor holding housing back is demand: Fewer people can or want to start a household of their own.
In Moore’s view, it's the other way around: It's the economy that's slowing the housing market. Factors including stagnant wages, high unemployment and high household and student loan debt are reasons why people aren't able to buy houses, says Moore. In other words, because the economy is stuck, the housing market is too.
All of it can be traced by to liberal left policies, and the damage they are causing the economy.
Without a vibrant free market, where government control, artificial stimulus plans and bond buying artificially hold up the financial structure, growth is unable to take hold. People are afraid to spend, to take that big step to buy, because they are either not working, or they are not sure they will have a job next year. Meanwhile, the dollar is losing strength. People aren't even sure if the dollar they have today will be enough to pay their mortgage tomorrow.
As the old saying goes, government needs to get out of the way and allow the market to do what it does. As long as liberal left policies dominate the landscape, growth will be slow. Less government is the recipe for economic growth.
-- Political Pistachio Conservative News and Commentary
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