Thoughts on the Economy from Coldwell Banker

This week, we're afraid to open our third quarter 401K statements as they arrived in the mail. Some of us are making countless calls to their financial advisers in hopes of a miracle or a quick fix to stop the decline. Still others are choosing to ignore it with the “ignorance is bliss” philosophy.
The bottom line is, we’re in this together. The problem that we have right now is that we as Americans collectively borrowed more than we could afford to pay and in turn, we created a system on Wall Street to support that culture. Now we’re paying for the errors of our ways.
This is a huge wake up call for all of us and should be a good opportunity to remind ourselves to be more fiscally responsible and much more conservative than we have been in the recent past.
One of the major issues affecting the real estate sector of our economy right now—keep in mind housing represents 20 percent of the GDP so it is an important part of our national economy—is the inability for consumers to get mortgage loans. We have a lot of interested buyers right now—many of whom see the opportunities available in today’s market—but unfortunately, only those with golden credit seem to be able to close the deals.
As an important aside, historically speaking, during times of economic crisis, consumers tend to invest their money in tangible assets, like real estate. We expect that this may be the case in the months ahead as consumers look to buy homes for all of the lifestyle reasons that prompt people to buy (i.e. marriage, births, divorce, deaths, retirement, etc.) but also with a consideration of the historic long-term appreciation that makes home ownership a valuable investment over time.
We certainly are in a time of uncertainty. But while so many of us sit glued to CNN and our investment portfolios, the housing market labors on. Because the beautiful thing about real estate is that it’s not just an investment—though it may be one of the most important investments a consumer will make in his/her lifetime. Your home is where you raise your family and plant your roots. It’s where you hang your hat and make memories to last a lifetime.