Ouch, here we go again????...The stock market is taking it
on the chin this week, especially on Wednesday and Thursday in which the market
posted the biggest losses so far this year. Is it time to panic? I don’t believe so.
One of the reasons for the stock market declines is that Europe
is once again back in the picture as economic data reports from the other side
of the Atlantic are continuing to show signs that the European economy is
slowing down. Before we were dealing
with the threat of European countries defaulting on debt, this time around it
is simply that their economy is slowing.
Because we exist in a world that is a global economy that is all
connected, whatever happens in Europe will impact the U.S.
Additionally, in the U.S, we once again are dealing with
Congress’s inability to play nice in the sandbox and they are pushing the
country to the brink of major funding cuts because they still cannot come to an
agreement on spending cuts. Although Congress
has the power to pass another piece of legislation that will prevent the across
the board spending cuts that will occur on March 1st, right now they
are not even discussing it so the odds that the cuts will happen grows with
each passing day. The real drop dead
date for Congress to take action is March 27th. That is the day that the current government
funding bill expires, and if the government doesn’t have a new spending bill in
place, the government will shut down.
The bright spot in the U.S. economy continues to be housing,
however even that is heading into some tough times once again. Existing home
sales increased .4% in January which continues the growth trend. However, that direction will more than likely
reverse itself in the coming months because housing inventory is at a 13 year
low. There are not enough homes for sale
compared to the demand. This is once
again driving prices higher in certain areas of the country and simultaneously
mortgage rates have been creeping up.
Ultimately this will reduce home affordability.
The bigger bright spot in housing this week is that there
has been a large increase in housing permits which means that home builders
plan on breaking ground to construct homes that will invariably have high
demand and assist in compensating for the lack of existing homes available for
sale.
This week’s report may sound a little more doom and gloom
than we have seen in a while, however I want to leave you with some positive thoughts. There will be good weeks and bad weeks of
economic trends. Right now we are in a
slightly negative cycle but the fact that real estate demand remains high and that
is very promising. Housing is the key to
our economy in so many ways. As long as
people are willing to enter the housing market, that holds great promise for
the future.
JJ Mack
916-517-1800
jj.mack@apmortgage.com
www.apmcroseville.com
No comments:
Post a Comment