There is now hope that the housing market has bottomed out. It seems to indicate economic recovery. A strong and consistent market is needed before a housing recovery can be declared. Its importance is due to the home being the most expensive thing most people will ever buy. If the falling prices would stabilize or rise, it would go a long way towards making consumers feel confident once again.
One reporter says that people owning homes does not contribute much to economic growth. As Richard Florida stated in the Atlantic Cities, and is being paraphrased here, owning a home has been an integral part of the American Dream. However, he believes that new construction starts and number of sales of existing properties is not as important a measurement as believed.
He stated that cities with high scores in those statistics show a lower number of homeowners that would be expected. Therefore, contrary to popular beliefs that is no longer an accurate indicator.
Other reporters consider him wrong in two ways. One rebuttal claims that the focus on the housing market is an idealistic opinion. Conservative opinion posits that those who own homes are more interested in the economic condition of the country. The promotion of selling homes to more unqualified people led to or contributed greatly to what was the sub-prime mortgage rate disaster.
Should we not attach as much importance to how many people own homes and how many rent them?
The facts indicate that we should. Ever since the housing boom peaked, $7 trillion, yes trillion not billion, in housing prosperity has disappeared. When fewer households are being set up, fewer consumer products are being purchased. The high number of college graduates who cannot afford a home of their own and are living with their parents, decreases the demand for household goods. Less furniture, less kitchen ware, fewer appliances. Such purchases are all put off until they can afford a home of their own.
The jobs of people supplying those consumer goods are endangered or ended. In the real estate industry and the construction industry a stop sign appears. Millions of people in the nation are living on unemployment insurance or worse. Possibly, Florida’s side of the debate on whether the number of homes sold is a strong contributing factor is flawed.