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Home arrow Real Estate News arrow General News arrow Real Estate Investors fret as the Problem gets Worse:
Real Estate Investors fret as the Problem gets Worse: Print E-mail
Monday, 28 August 2006

PRINCETON, NJ -- In July, new home sales cut down and were now at 22% from the same time a year ago.  This was according to the recent Commerce Department report.  The supply of unsold homes strike its highest point in November 1995 with the median price of a new home tumbled $3,800 to $230,000.  The National Association of Realtors reported that sales of previously owned homes went up high on record. 

These data confirm the perception that housing activity has slowed in 2006.   The question is whether the current housing slowdown will moderate or there will be a housing disaster that could pull the rest of the economy. 

Investors are worried that the real estate markets are carrying on to worsen.  Even more importantly, 7 in 10 investors believe conditions in the residential real estate market nationwide are getting worse, not better -- up from 63% in June.

  Interest rates are comparatively low by standard and fiscal policy.  Many political and economic observers also cheered the so-called “soft-landing” as they continue to dispute that the economy is much stronger than generally perceived by the public. 

It is true that housing and auto manufacturing no longer dominate the economy the way they did a couple of decades ago; even so, the significant declines in these two important sectors of the U.S. economy have greatly increased the odds of recession late this year and in early 2007. The reasons for the next U.S. recession may be somewhat new, including record high oil prices, fears of job outsourcing to foreign countries, middle class wage stagnation, and the collapse of some local real estate markets.
Survey Methods

Results for the Index of Investor Optimism Poll are based on telephone interviews with 802 investors, aged 18 and older, conducted Aug. 1-17, 2006. For results based on the total sample of investors, one can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

-jhd-

 
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