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Can the Economy and Housing Market Bounce Back in 2011

January 8, 2011 by · 4 Comments 

Can the Economy and Housing Market Bounce Back in 2011 by James BarathOverall, the economy looks to have stabilized from the crisis situation a couple of years ago. Although there are still some global economic concerns in Europe, the U.S. economy appears positioned for continued growth and strengthening – especially in terms of meeting the growing demand for goods in Asian and Latin American countries.

The stock market finally had a good year in 2010 and saw some strong earnings to help continue the climb out of the financial crisis a couple of years ago. With the strong finish to last year, the stage is set for another good year in stocks.

The positive economic news and corporate earnings in 2010 should also help the labor market strengthen in 2011. Of course, it won’t turnaround over night, but will instead start out slow and build up to more noticeable improvements in the latter part of the year.

But don’t mistake those improvements for a complete rebound, since we probably won’t see significant improvement in the overall unemployment rate until after 2011. Still, any positive news for the labor market is good news for the economy – and for families across the country!

What Does All That Mean to Housing and Home Loan Rates in Northwest Indiana?

The economy, stock market, and employment are all closely related. For example, an improving economy leads to better corporate earnings and increased manufacturing demand, which in turn leads to increased hiring as companies try to meet that demand.

In addition, all of the aspects discussed above influence the housing market and home loan rates. One of the biggest influences is employment, since people who are unemployed, under-employed, or afraid of losing their jobs are less likely to purchase a new home. So the improvements in the labor market will be good for the housing industry as well. And in terms of home prices, a more secure employment market can help home prices stabilize – since fewer people would be at risk of losing their homes to foreclosure.

That said, it’s important to remember that all real estate markets are local…and that means there can be enormous variations across the country, state, county and even our local communities right here in Northwest Indiana. Areas where employment is struggling, the housing market will continue to struggle as well. However, in many parts of the country where the bottom has been tested and employment is improving, we’ll see the housing market on the mend in 2011.

Do you want to know how the housing market is in your community? Contact me for a great Realtor referral.

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James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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4 Responses to “Can the Economy and Housing Market Bounce Back in 2011”
  1. Anonymous says:

    Great information James! I think that looking at things at a global perspective can help buyers and sellers throughout Northwest Indiana understand that our market is not as great as it could be but time will heal if we as local residents take the next steps today in moving forward with our real estate needs.

  2. I scanned through the S&P 500 companies and it seemed that several real estate developers and real estate investment companies had high P/E valuations. This usually means that stock investors have high hopes for these companies to run up or be involved in a merger. One would think that with the real estate market so down that stock investors would be avoiding these companies rather than bidding them up. Do Wall Street insiders know something that Main Street has not yet realized about real estate?

  3. The answer to your question actually lies within your observation of the real estate industry’s performance of the past several years. The real estate market is down and now all these companies in the real estate sector are at prices that make them affordable to down right cheap. Everyone wants to buy low and sell high. That is how stock investors are looking at the real estate sector today.

  4. I further noticed that some of the Dow Jones Real Estate Investment Trust Indexes show values more than DOUBLE than where they were at the low in 2009. Obviously somebody has some serious chips in the game already, and has profited, at least on paper.
    Maybe these are more liquid investments than individual properties. I notice many the people I talk with are stubbornly dug-in, refusing to discount their homes–even if it is a completely paid-off property with no mortgage. Maybe these folks have not faced reality on the current prices but people who don’t have to sell are just sitting on the sidelines.

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