It looks like the Obama White House really does have its job cut out for it: Most economists agree that any meaningful economic recovery must be built upon the foundation of a substantial recovery in the real estate market–the place from where the worst recession since the Great Depression got its start.
But new figures just released this week have shocked many so-called experts because they are not at all what had been expected.
As the Associated Press headline screamed, ” December Home Sales Take Largest Monthly Drop In More Than 40 Years!”
Some thought the figure would, at least hold steady, and, those who by nature are somewhat more optimistic, hoped the figures would actually rise. Instead, December’s sales, according to the National Association of Realtors, fell 16.7 percent. One survey predicted the drop should have been around 10 percent.
Tax Credits to the Rescue! NOT
What has some economists concerned is that this took place even though the government extended the tax credit of up to $8,000 for first time homeowners while even adding a $6,500 credit for existing homeowners who opted to move to new digs.
Writes one economist with Capital Economics, as reported by the A.P.,the report “placed a large question mark over whether the recovery can be sustained when the extended tax credit expires.”
Of course, some would argue there isn’t really all that much of a “recovery” to sustain regardless of when the extended tax credit comes to an end.
Glimmers of Hope?
Yes, there have been some small signs in the housing market of a recovery: sales are, in general, up from a year ago this time, but still down an astonishing 25 percent from four years ago.
The median sales price also showed a very slight increase from the previous year–in fact, the first yearly gain since 2007, says the A.P.
But let’s be real here: while a “meaningful” economic recovery will be built upon a robust rebound of the real estate market, the real estate market itself will not fully recover until the nation stops bleeding jobs. Sure, we are losing fewer jobs in recent months than in the past, but there is still no sign of employers rushing to hire back laid-off workers or create new positions and the unemployment rate continues to , in most states, either hold steady or even get worse. As does the foreclosure rate.
American workers–and that means both current and future homeowners–should be as too-big-to fail as Chase or Bank of America or a number of other large lending institutions.
The latest home sales figures show that help is still needed…because many of us are still failing.