The Real Estate and Foreclosure Market Continue to Drag Economy

by Team IWP! on 21. May, 2010 in How to buy foreclosure, How to invest in real estate, Personal Finance Investing

Despite the greatest efforts by those in the White House, on Wall Street, Main Street, and the general economy, the real estate and foreclosure market is still dragging the market downward. The worst part of all of this that there isn’t an end in sight for many economist. We will be sure to explain in a bit.

However, this is still a great opportunity for those that are learning how to buy foreclosure property, how to invest in real estate, and learning more about personal finance investing to gain your experience and learn these things as the market isn’t going anywhere anytime soon. Somehow during all this madness we must continually look for our silver lining.

Less Construction Jobs

Back to the business at hand and outlining the real estate market. First let’s start with the construction market. Since the real estate market is down and there is so much housing and building stock filling up supply, the new housing starts and construction jobs will not be as abundant as they once where. These jobs are important because they provide great pay for many of the nations none college educated people. But with this sector sagging and the economy in the shape that it is in, there is little hope this market will come back any time soon. According to Yahoo Finance, “The sector has shed 2.1 million jobs from its peak in March 2007 to April 2010. The 5.6 million construction jobs that are left comprise 4% of U.S. jobs, down from 6% when employment peaked in December 2007.”

Homeowners Feeling Poor Again

During the time of the roaring 2000′s, homeowners were having their cakes and eating them too. They were allowed to move into larger homes than they dreamed of owning, while seeing those homes increase in value year and year. This was great because it also saw them dip into the equity of their homes year and year to pay off consumer debt that they had been steadily accumulating over the same period.

However, the reality of the housing values have changed everything. And although there are signs of the real estate property values stabilizing, there are no signs these values will reach the levels they once were any time soon. And this is leaving more and more homeowners under water, not spending, and not able to tap the equity in their homes causing a ripple effect throughout the economy.

Small Business Owners Are Not Borrowing

The larger corporations and businesses might be able to gain access to the credit markets for expansion, research and development, but not the small business section. And this sector is critical as they employ almost as many people as the large commercial firms in this country.

However, according to Yahoo Finance, “Some 49% of small businesses own at least part of the commercial buildings in which they are located, and the majority of them have mortgages, according to the National Federation of Independent Business. But as real-estate values have fallen, so has this source of equity, limiting how much a bank can lend them.”

No lending to small businesses, leads to no expansion. No expansion leads to no new jobs, which continues to be yet another straw on the back of the American economy and this is leaving many to wonder where is the end of the dragging economy.

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