One Thing Is Linked To Another
About two years ago, I was convinced that the real estate problem was solely a real estate problem. Then, I began to see that it was also a mortgage problem, a tax problem and an insurance problem. In order to solve the real estate problem you had to first solve the other problems because they were linked.
I know, some of you smart people saw this right off, but I'm a little slow on the uptake sometimes.
Now I'm hearing from some real estate gurus that the real estate correction is close to being over. That prices have nearly bottomed-out. I'm hearing that frustrated buyers are ready to re-enter the marketplace and start buying property. So, things are supposed to start looking up soon.
Not so dadgum fast, pardner.
Just as real estate is related to mortgages, taxes and insurance, I think it is also related to the overall condition of both the national and international economy -- and that linkage may be greater than we think.
Right now, the economy is sick.
We keep reading about an upcoming recession. I remember the recession we had back in the Nixon-Carter years. It was awful. It was recession combined with inflation. Uggghhh! In fact, some economists say it changed the basic framework of the American economy and that we are still living in the remnants of that recession today because it hasn't really ended.
If we do move into a recession this year, do you think many people are going to be buying real estate?
Having seen the last recession, I can tell you the answer to that question.
I see where gasoline in Tampa Bay has reached an average of $3.216 per gallon of unleaded regular. A year ago it was about $2.51 per gallon. Some are saying that gas will be $4 per gallon by the end of summer. Quite a jump, and that money has to come from someplace in the family budget. As costs go up, housing investments likely will evaporate.
Homesteaded properties just got a little tax break -- and I mean little. But apparently it was enough to cost a lot of government workers their jobs as governments cut-back on programs and employees. This is coupled with the economic reality that the State of Florida is losing jobs. In fact, construction jobs are down by 8,000, professional and business services are down by 5,700, and manufacturing jobs in the state have been cut by 2,400. The point here is that people don't buy property when they are losing their employment.
I saw a poll done by one of the national news services this past week that said that something like 97-percent of Americans do not think the economy is going in the right direction. Well, duhhhh.
On the international scene, I was hopeful that we'd have a big winter season here with European visitors due to the strong Euro versus the U.S. dollar. In fact, this weak dollar is now at $1.54 versus the Euro, and that's a new low. That new low was based on news that U.S. job cuts hit the biggest monthly number in five years. It also means that if you buy any kind of European-made goods, you're going to have to pay more American-made dollars for them.
With the weakening American economy, I'm not sure if the real estate industry can rebound any time soon. Prudent people don't buy houses when they are worried about keeping their jobs. Smart people don't buy big ticket items when inflation is making their paycheck worth less and less each month. You don't buy your "dream home" when you are worried about paying for essentials like gasoline, food and all the rest.
You see, I think the real estate market is directly linked to the overall economy. When the economy is strong, real estate is good and vice versa. Right now, the economy is weak and I think real estate will remain weak until the overall economy shows signs of being revitalized. There's linkage there.
Am I correct? Only time will tell.
For more information on real estate in the Tampa Bay area, please visit my website at http://www.thestpeterealestatesite.com/.
I know, some of you smart people saw this right off, but I'm a little slow on the uptake sometimes.
Now I'm hearing from some real estate gurus that the real estate correction is close to being over. That prices have nearly bottomed-out. I'm hearing that frustrated buyers are ready to re-enter the marketplace and start buying property. So, things are supposed to start looking up soon.
Not so dadgum fast, pardner.
Just as real estate is related to mortgages, taxes and insurance, I think it is also related to the overall condition of both the national and international economy -- and that linkage may be greater than we think.
Right now, the economy is sick.
We keep reading about an upcoming recession. I remember the recession we had back in the Nixon-Carter years. It was awful. It was recession combined with inflation. Uggghhh! In fact, some economists say it changed the basic framework of the American economy and that we are still living in the remnants of that recession today because it hasn't really ended.
If we do move into a recession this year, do you think many people are going to be buying real estate?
Having seen the last recession, I can tell you the answer to that question.
I see where gasoline in Tampa Bay has reached an average of $3.216 per gallon of unleaded regular. A year ago it was about $2.51 per gallon. Some are saying that gas will be $4 per gallon by the end of summer. Quite a jump, and that money has to come from someplace in the family budget. As costs go up, housing investments likely will evaporate.
Homesteaded properties just got a little tax break -- and I mean little. But apparently it was enough to cost a lot of government workers their jobs as governments cut-back on programs and employees. This is coupled with the economic reality that the State of Florida is losing jobs. In fact, construction jobs are down by 8,000, professional and business services are down by 5,700, and manufacturing jobs in the state have been cut by 2,400. The point here is that people don't buy property when they are losing their employment.
I saw a poll done by one of the national news services this past week that said that something like 97-percent of Americans do not think the economy is going in the right direction. Well, duhhhh.
On the international scene, I was hopeful that we'd have a big winter season here with European visitors due to the strong Euro versus the U.S. dollar. In fact, this weak dollar is now at $1.54 versus the Euro, and that's a new low. That new low was based on news that U.S. job cuts hit the biggest monthly number in five years. It also means that if you buy any kind of European-made goods, you're going to have to pay more American-made dollars for them.
With the weakening American economy, I'm not sure if the real estate industry can rebound any time soon. Prudent people don't buy houses when they are worried about keeping their jobs. Smart people don't buy big ticket items when inflation is making their paycheck worth less and less each month. You don't buy your "dream home" when you are worried about paying for essentials like gasoline, food and all the rest.
You see, I think the real estate market is directly linked to the overall economy. When the economy is strong, real estate is good and vice versa. Right now, the economy is weak and I think real estate will remain weak until the overall economy shows signs of being revitalized. There's linkage there.
Am I correct? Only time will tell.
For more information on real estate in the Tampa Bay area, please visit my website at http://www.thestpeterealestatesite.com/.
-30-
posted by Terry Ward at 4:38 AM
0 Comments:
Post a Comment
<< Home