29 October 2010 Comments Off on The Slowdown in the US Housing Market and Its Impact

The Slowdown in the US Housing Market and Its Impact

When the major lenders such as Fannie Mae and Freddie Mac hit the rocks, most of America was shell shocked by the consequences. However, it wasn’t a surprise to everyone. The slowdown in the US housing market has been a long time coming and its impact has been felt far and wide. In modern society, no one industry sits on an island. Every piece is intricately connected with its neighbors, making the result a financial domino effect.

The first thing that most people noticed with the slowdown in the US housing market was the fact that banks started their pocketbooks close to their hips. When it became apparent that lending standards were much too loose, financial institutions reacted by completing freezing lending until they figured out where the problems were and how to fix them. Of course, this affected not only home buyers and builders, but contractors as well. Building industries rely on the free flow of money in order to keep their businesses alive. Thousands of contracting companies have gone under since the slowdown began. This lead to a higher jobless rate and a greater burden on other industries to pick up the slack. More people are looking for work, leading to lower acceptable rates of pay and lower standards of living. In addition, more people are taking government assistance, meaning that industries that are still doing well are feeling a greater burden of taxation.

Another easily seen effect of the situation is the over saturation of real estate on almost every market. Home values have plummeted as there is a glut of supply with very little demand from buyers that are capable of closing sales. While prices are lower than ever, and it’s a great time to buy, very few people are in the position to do so. However, this does open up a greater possibility for more creative negotiations between buyers and sellers. More people are rediscovering things like owner financing and rent-to-own agreements. This isn’t always the best deal for a seller, but it is often the only way to move property in the current financial climate.

The good thing to understand about any financial pickle is that these things are quite cyclical in nature. What goes up must come down, but nothing can stay at rock bottom forever. The best way to handle the slowdown in the US housing market and its impact is to use it as a learning experience. Take the opportunity to find the weak spots in your budgeting style and correct them. If you’ve been hit hard, learn from the mistakes you have made and move forward with a better and more solvent financial plan for future success.

Comments are closed.