March 23, 2009

Bumpy Road Ahead, But Light at the End of the Tunnel



The United States has seen one of the worst recessions since the end of World War II. Rises in unemployment, increasing foreclosures, and the current credit crisis have brought about a lack of consumer confidence, which is only making the economic situation worse.

What must we do to help jump start the economy?

Even though there is no shortage in negative effects the economy has placed on the housing market conditions, it has brought new opportunities for those who may not have been able to afford to invest in real estate a few years ago.


  • Home prices have dropped all over the country, allowing many to become first time homeowners.
    – Lower prices help to stimulate buyer demand, which is sorely needed to deal with the excess inventory available all over the country.

  • Mortgage Rates are the lowest they have been in years.

  • Tax credits for first time home buyers are bringing new life to the housing market.
  • Net rental income matches or exceeds the costs of property ownership in the majority of US markets, bringing many opportunities for investors to receive a respectable ROI.
    – With analysts predicting the market downturn to hit bottom by the years end, available properties will be very appealing to potential investors.

The stabilization of the housing market is key to improving the nation’s economy. In Minnesota alone, the real estate industry accounted for over 15.8% of the Gross State Product in 2007. When a home is sold in Minnesota, It generates economic multiplier impact. There is greater spending at restaurants, sports games, and charity events. The size of this “multiplier” effect is estimated to be $12,240. (Bureau of Economic Analysis; Macroeconomic Advisors, NAR)

Just remember:

If you owned real estate for the last 18 months, or even the last 10 years, you’re probably still better off than having invested in the stock market.

Real Estate has always been a long term investment with major booms and busts. In the face of this uphill battle, we must persevere and work together to prevent further damage to our economy.

“It’s our patriotic duty to invest in home ownership, because it’s going to make that road a lot shorter.”

Joseph N. LaManna


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