As Housing goes…..So goes the Economy – follow-up

Since the housing  “bubble”  the housing industry has progressed but not to the extent needed for a vibrant economy. I have provided a series of graphs to illustrate this assertion:

Graph 1: Housing starts and construction unemployment - approximately 20% of all mortgages from 2004 to 2006 were subprime mortgages and in 2006, over 90% of the sub-prime mortgages were adjustable rate.

Graph 2: This graph shows the spike in housing starts due to the $8,000 tax credit for first time homebuyers.

                                               Housing Starts                   Construction Unemployment

2006                                       2,000,000                                             8%

2014                                       1,000,000                                             8%

Graph 3 & 4: Construction spending for residential and non-residential construction and the Fed rate shown in this graph is a clear indicator of construction activity. Easy money and no-document loans turned the housing industry upside down. 

 

The economy is fragile and caught between the sword and the wall. 

The Washington DC orchestra leaders are AGAIN reacting to world events and not concentrating on our economy. We can’t talk about a sustainable economy when you have nowhere to turn even 8-years after the height of the housing “bubble”.