Doors Floors and More

Cited: Reality Times

A forecast that was put out recently included some important observations on housing but did not get the attention it deserved by Federal Reserve chairman Ben Bernanke. He spoke to the economic club of New York describing well-known problems standing in the way of economic growth. In particular the double digit unemployment and consumer confidence that is shaky week-by-week at best.

But buried away in his speech he said: Housing in the coming year is going to be a relative bright spot - a helpful driver of national economic growth, rather than the wet blanket it’s been for the past couple of years.

Think about that: Home sales and new home construction, at least according to the Fed, are likely to stimulate the economy in 2010 — enough to generate jobs and help avoid a double-dip recession.

That forecast just happens to track nicely with another that came out last week: Fannie Mae issued its projections for the coming year — and predicted that housing sales will jump by 11 percent — even in the face of a slow recovery for the economy as a whole. Meanwhile, scattered reports from hard-hit local real estate markets suggest that there may be some reasons for guarded optimism.

For example, research firm MDA DataQuick’s latest report on sales and prices in southern California, including the counties of Los Angeles, Riverside, San Diego, Ventura, San Bernadino and Orange, found that October sales were up nearly three percent over September, and that prices are rebounding as well.

October sales in San Bernadino were 11% higher than September. In Ventura, they were up nearly 10%. Median prices for the six counties were up almost 2% for the month, but were still 6.7% below where they had been in October of 2008. Now, as is almost always the case, not all the news is on the up side. New home starts dropped by a surprisingly large, seasonally-adjusted 10.6%, according to the U.S. Commerce Department.

For those in the real estate and construction industry . . . Success in construction and building contracting requires that you deliver accurate construction cost estimates and proposals to your customers, and execute in the field according to your construction cost estimate. This means you need construction estimating software to accomplish the task accurately. But being accurate in your construction estimate is not enough, you must also have enough volume of work, and therefore volume of new proposals to pay your overhead, keep your best employees busy, and to have enough left over to pay yourself. Having good estimating software ensures your payment.

A lot of the decline came in multifamily housing apartment starts — a volatile month by month index — which plummeted by 35%. But there’s no sugar coating here: starts of single family homes dropped by 6.8%, which was enough of a negative to spook Wall Street.  The magic potion for home buyers this week is mortgage rates that are dropping again further into the upper 4% range. Fixed rate 30 year loans have averaged 4.8% and the popular 15 year loans averaged just 4.3% according to the Mortgage Bankers Association. This was thrown into the mix at the end of November, no wonder Wall Street a spooked.

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My Take: I think I can understand why housing would stimulate the economy, it would make more jobs available to people. More jobs means paychecks and that means people can afford to purchase homes. By building more homes, they create jobs. Workers would be needed to install granite kitchen counters, plumbing, electrical, etc.

Of course, more housing in Bethesda would mean that they would need Maryland house cleaning services, which would also create more jobs in the cleaning industry. Of course those services would have to make sure that they knew how to clean granite slabs properly. I am sure that they would know how to do it. One thing is definitely for sure that maid services MD are always needed as they are everywhere.

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