An Invisible Wall
There are many conflicting signals about the direction of our economy. We have entered into a challenging, fragile time and I expect we will remain here for the next few months. Summer 2010 began without fanfare, but marked an important milestone for our real estate market: it’s been one year since it hit bottom. During this time more buyers and sellers came together as each tax credit expired. But now activity has dropped off quite a bit. It seems as if our market has hit an invisible wall.
It’s always been predicted that the recovery would be slow and choppy; however, it’s clear our economy is in recovery. In the past year, we’ve experienced:
• Employment growth Six out of last eight months
• Private sector employment growth Past six months
• Personal income Seven consecutive months
• Wages and salaries Seven consecutive months
• Real estate sales Twelve months of improvement
The data supports that we are in a recovery, yet many consumers believe we are still in a recession. They are paying down debt and spending less. Businesses are still feeling the sting from the worst downturn since the Great Depression. Their caution has resulted in slow job growth, and banks are lending less.
The benefits of the federal economic stimulus package and real estate tax credits are dwindling. While the financial woes of Greece and other parts of Europe are not a direct threat to us, they have contributed to a significant drop in our stock market. It’s no wonder consumer confidence dropped two months in a row!
Our Local Real Estate Market
As mentioned, we’ve had 12 months of improving real estate sales:
We anticipated that real estate sales would drop after the expiration of the tax credit, but in June and July the decline was more than anticipated. There is a silver lining, however. It appears that the pressure on the high end market has started to ease:
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