The relationship between the real estate market and economy appears to be circular and reciprocal: one helps out the other, who responds positively. When neither the real estate nor the economy is in a good state, however, both continue to remain at the bottom: a less of a demand for homes (who can consider purchasing a home when no jobs can be found?) results in a flat real estate market, and a lack of purchasing power keeps home prices stagnant. A recent article from The Epoch Times indicates that the state of both could keep the current economy in a state of recession.

The fact that few jobs have been created as a result of the stimulus package, as opposed to recovery efforts from the Great Depression that created various government manual labor jobs, indicates that the economy is stagnant. With that, is the real estate market. In the piece in The Epoch Times, Alan Greenspan is paraphrased as mentioning that the declining home prices are one indication that the country is still in a recession. And, when you consider the unemployment rate, it has remained around 10-percent for the past year. Only those in higher income brackets have buying power at the moment.

Nevertheless, if the economy was in better shape, real estate would be a buyer’s market. Mortgage rates are low and many properties, through foreclosure, are up for sale at affordable rates. Rather, with a greater increase in unemployment constantly looming overhead, many are afraid to make a significant investment, such as purchasing a home or a car. Instead, the latest trend across all forms of spending is saving and taking an economical approach. Surely, if you can clip coupons to save on your monthly food bill, your home doesn’t need an upgrade for the time being.

Tags: housing recession, real estate recession