Housing Market Recovery?

Food inflation

The idea of government deficit spending as a way to improve the economy, and thereby the housing market, may actually turn out to be detrimental to both!

One thing is for sure, the massive, unprecedented government deficit spending has improved the stock market.  But, what most American citizens do not realize is that their purchasing power, savings and home values are being eroded at a rapid rate.

One just has to look at the record high prices for gold and precious metals to see the effects of the cheaper dollar.  Or, how about the unprecedented high gas and heating oil prices?  Oh, let’s not forget groceries.  Here, the wave of smaller packaging has kept increases somewhat hidden from the general public.  But, the commodity price increases are quite evident in the produce section of your grocery, where one yellow pepper can easily cost $2.49!

President George W. Bush was no real conservative as far as deficit spending.  But the prize for deficit spending has to go to our current president who it is said, in his three years in office has increased the deficit by three times as much as Bush did in his entire eight years!

The current massive government deficit spending is eroding the purchasing power of the dollar, pushing prices higher and higher.  While doing very little to encourage sustainable job and economic growth.  Sure, the unemployment rate is dropping.  But anyone really looking at these figures knows the bulk of the drop is due to people running out of their 99 weeks of unemployment insurance and therefore no longer being counted by the government as unemployed.

It was just reported that for the second month out of the last three inflation-adjusted wages for US workers actually fell.  This is a very troubling sign as we all know that the government’s inflation figures (because of the omission of food and transportation costs) do not really reflect the true inflation experienced by the US consumer.

So, what’s all this have to do with the real estate markets and the consensus of opinion that they would be recovering in 2012?  As Americans disposable income is vanishing, they will inevitably pull back on spending.  When one is worried about job security, paying for enough gas for their daily commute and putting a decent meal on the table, they sure won’t be thinking about buying a new or move-up home.

As I said many times before.  Kind of ironic that still many in the housing industry say that there is pent-up buyer’s demand that will help the housing market turnaround.  From my point of view, they are correct about the demand, what they got wrong is that it’s pent-up demand not to buy, just the reverse, to sell!  How many people have just been waiting for a modest improvement in their home’s value so that they can sell it and move on to a home that is more reflective of their current housing needs?

You, the average citizen have a chance in November to send a strong message not only to the liberal deficit spending Democrats but also like-minded Republicans.  Many people thought our last presidential election was about hope and change.  I think it’s this year’s election that can restore hope in our economy and our great nation.