From Engineering on March 19, 2008 in General
It seems the word “recession” has been lurking around every corner of late, and just the mere mention of the word is enough to cause alarm. Combined with the large amount of home foreclosures, the glut of homes on the market, high gas prices, and a falling stock market, the average homeowner is beginning to worry. What exactly defines a recession, and how long can we expect it to last?
A recession can be caused by a combination of simultaneous factors which include negative real economic growth, loss of jobs, a declining stock market, and loss of investment. One of the largest factors contributing to this possible recession, and the area causing homeowners the most concern, is the crisis in the home sub-prime mortgage market and the fall of housing prices. Has this ever happened before, and how long did it take us to rebound?
A similar situation occurred beginning in 1985 with the savings and loan crisis. Just as is occurring today, the Fed bailed out the banks, and the markets responded favorably. New construction starts were at their lowest dating back to WWII. Throughout the past four recessions our nation has experienced, the measures the Fed took to correct the problem were successful. That leads us to believe that this time should follow suit.
It is important to keep a clear perspective on the cause of the housing crash. Because of the irresponsible lending of mortgage companies, many new homebuyers didnt have the income or credit history to support the purchase of buying a home. As soon as the sub-prime rates began to rise, they didnt have the resources to cover their rising mortgages, forcing many to walk away from their homes. The majority of homeowners, however, are just as financially stable today as they were when they first purchased their home.
The housing market will rebound; it just needs to work through the glut of foreclosures. There are actually some great investment opportunities; sellers are willing to negotiate, and interest rates are at a record low. Additionally, because new home starts are lower, more contractors are willing to work for less. It actually is a good time to do some remodeling while costs are lower; and within a year or two, youll be ready when the market rebounds. Historically, the average recession only last 10 months, and economists are predicting a rebound as early as 2009.
As addressed in “Remodeling in today’s market, how far should you go,” approach your home remodel after evaluating all the circumstances. Your personal financial position, the dynamics of your area, the appraised value of your home, and the potential value after a remodel all contribute to an informed decision. Trulia.com is a useful sight for comparing real estate values both nationwide and locally.
Make an informed decision; request a free-estimate from a certified contractor to have a clear picture as to how much your remodel will cost.