I recently noticed a Forbes.com article in which they commented on the jobless rate versus the Dow, which is the temperature gauge of the American economy. They said the Dow has been at about the 11,000 range for the last couple of months and they feel that is a good indicator that we are out of the recession and on the road to economic recovery.
I have to agree. I remember listening to stock market news on my car radio on a road to and from work in the 1980’s and early 1990’s and I recall the first time that the stock market hit 10,000. Times were pretty good then.
There is some discussion about why the jobless rate is still so high, if in fact our economy is healing. The Forbes article mentions that it could be that American companies have been having existing employees work more hours, and having part-time people, before hiring new full-time staff. Companies surviving the recession are probably gun shy about staffing up too much and too quickly, first making certain that the recovery is solid before taking on new employees. That makes perfect sense. In that case, it might seem likely that in the next couple of months or so, we might start seeing the jobless rate going down, as companies become convinced that the economy is solidly rebounding.
In any case, new housing starts and auto sales are both up, which are two of the leading indicators of a renewed trickle-down economy. In fact, some economists indicate that the recession was actually over at about the mid-point of 2009, and it has taken this long to understand that.
What does this mean for you, the possible house buyer or possible couple thinking of hiring an architect to design your residence? Do it now. Why? Because as soon as demand overloads the existing turned-off supply, prices will begin to rise, and you will have lost your opportunity to have some of the best house pricing bargains of the early 21st century.
I have known people back in the days of double-digit house loans, back in the later part of the last century. They said: “we’ll never see single-digit residential loans again.”
Guess what? We have had Low Single Digit house loans for about the last 5 years or more now. How long will this continue, as America’s economy continues to recover? Before you see the return of 18% housing loans, you might want to seriously consider partaking of the current ridiculously low rates (4%+/-) and even if you intend to pay cash for your house, enjoy the lower construction material and labor prices. Why? Because they will be skyrocketing as soon as the pent up demand over burdens the supply. What supply? Contractors’ ability to build the new house contracts.
Rarely do we have the golden opportunity to see where the economy is heading and to be able to do something about it.