Even if you’re a pessimist, it’s getting harder and harder to ignore the positive signs emerging in the economy and the housing market.
The focus of business and housing news this week will be on the Federal Reserve and the conclusion of its policy meeting on Wednesday—it’s broadly expected that rates will be left alone at historic lows at near zero—and investors will likely have their ears to the ground for just what the bank says in its statement about inflation risks and general signs in the economy.
Waiting with bated breath for some indication Wednesday for the mighty word of the Fed, news outlets were awash with more good news.
Mark Zandi, chief economist at Moody’s Economy.com, on Monday boldly called the official economic bottom: “I think we’ll reach it this month, maybe September, but we’ll look back and say this is the quarter the recession ended.” A story that quotes Zandi further states: “Suddenly, it seems, economists everywhere are starting to talk about the end of the recession. But don’t expect the economists at the Federal Reserve to join in that bullish banter when they meet this week.” The story also opines that when central bank policymakers conclude the meeting Wednesday, they are likely to say only they expect modest growth to return sometime in the second half of this year.
The Washington Business Journal reported on Monday that home sales jumped 10.6% in Northern Virginia in July over the same period last month. It also reported that homes spent about a month less on the market—an average of 62 days on the market versus the 91-day average in July 2008. The Baltimore Business Journal also came out with a rosy report: Baltimore-area home sales rose 10% in July. That report states that “Both home builders and economists say the uptick in sales could be linked to first-time buyers taking advantage of the government’s $8,000 tax credit and overall better real estate prices.” And home sales in Milwaukee County increased more than 10% in July from a year ago, marking the fourth straight month of growth, the Milwaukee Business Journal reported.
A report from the Wall Street Journal shows that retail sales rose in the U.K. in July and sentiment in the housing market reached its highest level in almost two years, “providing further indications that the economy is on the mend.” Bloomberg reported that Australian home-loan approvals rose in June for a record ninth month as the lowest borrowing costs in a half- century and government cash got first-time buyers into the market. And Newsday.com reported that housing prices in China rose for a second consecutive month in July, another sign that Beijing’s massive stimulus is helping to boost economic activity.
The Scary Stuff
Anytime I offer up a list of good stories, I like to add a little balance with the some of the negative. And this one is downright scary: A story by CNNMoney.com notes that “Nearly half the nation’s mortgage borrowers will soon owe more on their mortgages than their homes are worth.” The story cites a new report by Deutsche Bank that estimates that 25 million borrowers, or 48% of all Americans with mortgage loans, “will plunge underwater before home prices are expected to stabilize in the beginning of 2011.”