[History lessons] New home sales and recessions
I'm not an economist but I did enjoy studying history in school. So I don't know when the current recession will end or whether we'll have a double dip recession or if it will be an L, U or V shaped recovery. I'm just a Charleston real estate agent happy to report more positive news happening in the real estate market.
One of the reasons that we study history is to learn lessons from the past. Ben Bernanke was a student of the Great Depression and as Chairman of the Federal Reserve, he has done everything in his power (and then some) to avoid another Great Depression because he learned from the mistakes that policy makers made in the 1930's. Maybe he has succeeded; thus far we have only experienced the Great Recession. Years from now, we'll look back and ultimately judge his effectiveness in dealing with the current economic slump.
There has been lots of good housing news reported lately and here's some more. New home sales surged in July to hit their highest level since last September. From CNN Money:
"There are many economic conditions that led to the surge," said Bob Walters, chief economist for Quicken Loans. "But certainly low mortgage rates, huge price reductions on the high inventory of new builds, and the first-time homebuyer tax credit have been instrumental in getting consumers to take the plunge into the real estate pool of opportunity."
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Plus, the psychology of the market is changing, according to Peter Morici, an economics professor at the University of Maryland. "The notion that prices will drift down forever is gone," he said. "Now people are thinking the window of opportunity will not be open forever."
I know that Bill at Calculated Risk is not yet calling for either a bottom in real estate or an end to the recession but I found his chart on new homes sales to recessions to be interesting. Take a look at the bottoms in new home sales and when previous recessions ended and all except the dot com - 9/11 recession ended at the same level.
