John and Mary are renting an apartment. John works for Bob the Builder, while Mary is a nurse. Every night they return home from work and discuss the prospect of John being laid off following the completion of the home Bob the Builder is currently constructing.
Not wanting to miss the $8,000 first time buyer tax credit, they bite the bullet as Mary is securely employed. So one Friday they head out to look at homes.
By Friday evening, their offer on a small ranch owned by the Johnsons has been accepted. The Johnsons, thrilled to have a buyer for their home, get out first thing Saturday morning and select a larger split-level model owned by the Andersons. The Andersons accept their offer.
Equally excited, the Andersons head straight to the subdivision they've been eyeing for months. By Sunday afternoon, the Andersons have entered into a contract for the construction of a new home.
When John arrives at work on Monday morning, he hesitantly announces his big news: He and Mary bought a starter house this past Friday. Bob the Builder reassures him, noting that his job is secure for now as they will be beginning construction of a new home for a family named the Andersons.
Without even realizing it, John has saved his own job and created job security for others by purchasing a small owner-occupied home and spurring a trade-up cycle.
This scenario could potentially play out millions of times across the country. John doesn't necessarily have to be a construction worker, John might be a newspaper reporter. His purchase of a small home, having generated additional home sales and the construction of a new home, could have funded advertising revenue for his newspaper -- having an equally stabilizing effect on his job.
The power to turn this ship around is within all of us. The answer to this downturn lies in the future generation -- who are currently renting apartments. This generation rivals the Baby Boom in size and duration, and when they enter the real estate market they will unquestionably create the demand necessary to stabilize prices, absorb inventory, reduce foreclosures -- and create jobs.
Still renting? Get out there. Take the free $8,000. Buy from a homeowner, not a bank, and watch recovery happen.