The macro tale has had a dark cloud hanging over it, the story has played out time and time again, investors have been spooked when the housing market looks to die at our feet. Then overnight the investing climate changes, things look up, in turn crushing the shorts. Much of the investor hope and solid returns have stemmed from the hope that the housing market will save us from all of our economic blunders. These returns have resulted from the housing market profits (home builders finding the model for success in the new environment) or the housing derivative plays (people actually spending money) as the economy comes off the bottom. The brilliant economist and market guru’s suggest that the housing market can supply the much-needed crack that the market needs. The experts analysis fail to encompass all aspects of the situation at hand. In their analysis they fail to point out the sorrowing reality, the repercussions of the housing market not bottoming. Housing remains a pillar of hope for the markets and the economy, but on the flip side of the coin, it remains the nail in the coffin if it fails to perform as we all hope.
Breaking down the relationship between housing and our overall economy can be done simply. Individuals, perhaps like yourself, buy homes, or have them built, then proceed to fill them with all the wants and needs one could desire. For generations housing has fueled our economy. For countless years people have bought homes and filled them until their hearts are content. This has fueled profits for many companies, from everything based in technology to your favorite furniture company. Now what happens when the massive amounts of building and moving dissipate as they have over the past few years? All the other attributes of the economy, everything from big box stores to the local lawn service company suffers from this slowdown.
That’s right, the economy of America remains shaky due to housing.
No, not due to the bubble we endured a few years back, rather the generational shift this bubble has caused and its repercussions on the housing market.
Even in the technology sector, where I see the most growth potential, this growth is hindered by the housing situation. Technology, in particular websites, make their money through advertising. These advertisers are the ones that produce entities to fill your humble abode.These advertisers are the ones that make televisions or furniture, the stuff we as object obsessed Americans like to buy. Without advertising selling their goods, advertising ceases to fuel the profits of the technology sector. The sorrowing reality punches you upside your jaw, knocking the foolish investor grin off of your face. The future many of us focus on, the growth we all need to make profitable financial moves still rests on the housing sector.
For multiple generations we have put our faith in housing. It has fueled economic growth when war was no longer an option for kick starting the economy. Today we sit amidst a transition period. Today things are different (obviously). We can no longer look at housing to fix the economy for a multitude of reasons. Most importantly, the housing bubble has destroyed the younger generations faith in housing. Buying a house as a long-term investment does not strike the same harmonious chord with the younger generation as it did with the elder generations.
The game has changed, housing no longer sits to bolster our economy. Instead the housing sector presents itself as a weight, a dead weight on the economics of America. From a patriot standpoint we must reevaluate the basics of our economy and growth we have seen for generations. From the investor standpoint we must watch the housing market like a hawk, because if the housing market goes by the wayside (again) the stock market will go as well.
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