With the release of the Federal Reserve's Beige Book the other day Ben Bernanke sounded a cautious optimism about the future of the U.S. economy. He mentioned that in many areas home prices seem to be stabilizing and the losses in jobs is already starting to diminish considerably when compared to where we were back in February and March.
To add to that the stock market is up roughly 33% off it's low back in March. Which is good news when one takes into account that the stock market is a leading indicator predicting what they believe will be occuring in the economy 6 to 9 months down the road.
Anecdottally and empirically speaking, here in the Phoenix real estate market we are seeing activity that we haven't seen in almost 4 years. For the third straight month average home prices have risen and in June the MEDIAN home price for all homes listed in the Phoenix area rose. The first time that has occured in almost 3 years.
The stimulus money is starting to seep into the economy as well, giving it the intended boost everyone has hoped for. The Cash for Clunkers program that was part of the stimulus plan was such a resounding success that they ran out of funding ($1 billion) well ahead of the projected time frame. Car dealerships have not seen as much activity on their lots within the past couple of years. And there's even talk of rolling out another Cash for Clunkers program. See folks, the government can do something right.
With the uptick in home sales will come additional economic stimulus. People tend to remodel or at the very least clean up the homes that they are moving into. Furniture and appliance purchases will begin to increase which will lead to job creation in those industries. The snowball effect will be in full force.
So hopefully by the end of 2009 we'll see GDP back in positive, albeit only slightly positive, territory, job losses greatly reduced, foreclosures diminishing and everyone's mood elevated.
And if you want to learn more about our aforementioned red hot Phoenix real estate market just click here.
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