Oct
16

Housing Market is Boosting the U.S. Economy

October 16, 2012

national and chicago real estate housing growth boosting economyAccording to a recent Federal Reserve survey, improvement in the housing market has been leading to economic growth in nearly all regions of the U.S. From mid-August through September, rising home prices increased economic growth in 10 out of 12 of the Federal Reserve’s regional banking districts.

So how does this affect the Chicago real estate sector?
The Federal Reserve is currently buying mortgage bonds that will lower long-term mortgage rates, which could lead to more borrowing and spending. The Fed also hopes to ensure that short-term interest remains will remain close to zero until mid-2015.

If borrowing becomes cheaper, a modest housing recovery can take place. When home prices rise, people tend to spend their money more freely, and consumer spending is what drives nearly 70 percent of all economic growth.

On average, every time home prices increase by about 5 percent, around 2 million homeowners will no longer be “underwater” on their mortgage. So, even a small increase in home prices can benefit many homeowners.

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Jessica Thom

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