Friday, July 29, 2011

Realtors fear a national debt default will hurt the housing market

...because it will. In fact, they claim the housing market is already being hurt:
The National Association of Realtors®, on behalf of its 1.1 million members, their clients and customers, and the nation’s 75 million homeowners, urges Congress to resolve the mounting debt ceiling crisis before the August 2 deadline.

Until a resolution is reached, Congress will be unable to address the myriad issues facing the nation’s families, communities, and economy. The indecision in Congress is paralyzing progress on other fronts, and it is harming home buyer confidence and negatively affecting home sales.
Typically bearish economist Paul Krugman puts it this way:
Just to make a point that could be overlooked in the confusing discussion about the effects of default on financial markets: It’s true that nobody really knows what effect failure to make full payment on the debt will have. It could produce calamity, or it could be contained, with borrowing rates for the private sector barely affected.

But what we do know is that if the government is forced to slash spending when the money runs out — if it stops sending out Social Security checks, or stops paying vendors, or whatever — this will have a huge negative impact on the economy. We’ll be doing a 1937 squared.
And yes, it will hurt the Washington, DC metro area.

1 comment:

  1. The debt deal is going to hurt the country, hurt housing and yes, the government needs to get out of the housing market. The government regulations and unrealistic policies have been the main drivers in getting the housing market into such turmoil in the first place.
    Manila Real Estate