Housing Market Lifts U.S. Economy—The Globe and Mail

Housing Market Lifts U.S. Economy—The Globe and Mail

Posted on: October 24, 2012

ID-10062255In a recent article, “Housing Market Helping to Lift U.S. Economy”, the Globe and Mail reports that “stronger housing markets helped boost economic growth” at the end of this past summer in “nearly every region of the United States, according to the Federal Reserve,” which itself made the announcement on October 3, 2012.

While the housing market was a significant factor in weakening the overall American economy in 2008, the Federal Reserve now claims that “rising home sales helped lift home prices in most districts” and that the rest of the economy is also responding positively and incrementally.

Auto Sales Up

The Fed’s report, known as the Beige Book to industry insiders, “cited an increase in auto sales in most parts of the country.”  Auto sales “rose in September by 13% from a year earlier” and the American unemployment rate “fell last month to 7.8%, down from 8.1%.”  This was the first time in “more than 3½ years that the rate fell below 8%,” according to the Globe and Mail.

Oil and Resources

Sal Guatieri, senior economist at BMO Capital Markets, remarked that the Fed’s report marks a “shift in the central bank’s outlook” on the U.S. economy to optimism for healthy, modest growth.  The Fed reports that all sectors are showing improvement: South Dakota “oil production hit a record high,” while the districts of Minneapolis, Kansas City, and Dallas “saw robust gains in energy production.”  The trend in the American economy is steady and positive.

The Fed’s Aggressive New Policies Bolster the Market

The Fed’s report provides information on key business conditions around the country and forms the basis for its policy-discussion meetings held on October 23 to 24.  The change in the Fed’s outlook on the American economy, and the U.S. housing market in particular, is reflected in its recent “aggressive new policies.”

According to Bloomberg, The Fed “will expand its holdings of long-term securities” with “purchases of $40 billion of mortgage debt a month” in order to promote the housing market recovery as well as boost economic growth and reduce unemployment—moves that are sure to inspire consumer confidence throughout the United States and continue the housing market’s strengthening.

The Fed has also pledged to keep “interest rates near zero until at least mid-2015,” says the Globe and Mail.  The Fed, therefore, sees much promise in the recent recovery of the housing market and is encouraging further strengthening through its supportive policies.

The Globe and Mail reports that “home sales have been posting solid gains,” which we at MSR Americas have been carefully monitoring and reporting to our investment clients for a long time now.  With low interest rates, low housing prices, and a steadily optimistic economic outlook for the U.S. economy, the time is right to purchase Florida Investment Properties.