Uncertainty and Information Overload: Addressing Economic Uncertainty

Possible federal budget sequestration, continued government deficits, spending cuts, uncertain taxes, and federal policies—they’re all in the news along with a variety of other uncertainties about the economic outlook. The Economic Policy Uncertainty Index shows that uncertainties about future government policies are at historic highs.

What Does this Mean To REALTORS®
The deluge of negative and uncertain economic information in the news can be overwhelming: innumerable blogs, articles, and experts proclaim forthcoming problems. This never-ending cacophony of concerns can be confusing to potential home buyers. It may be helpful to note that the primary benefit of homeownership is the lifestyle it provides. The primary benefits of homeownership are well known—increased educational, cultural, and community opportunities available to families and individuals. The secondary benefit of home ownership is the slow accumulation of wealth as the property appreciates; however, this is a benefit over an extended period of time and is relatively independent of month-to-month fluctuations in the economy. In fact, the economy generally muddles through its problems, and NAR’s economic forecasts—which have been reasonably on target in recent years—show that that the housing markets are in a slow but continued recovery from the Great Recession—circumstances supporting a prudent, conservative buyer’s decision to purchase a home.

There is a deluge of negative commentary and uncertainty—but the advantages of homeownership are well defined on NAR’s website. This information can be a resource in addressing concerns over allegedly unstable economic times.

Jed Smith, Managing Director, Quantitative Research

Jed Smith is Managing Director, Quantitative Research with the National Association of Realtors®. He has worked on real estate issues for the past 20 years, providing input on a variety of housing, commercial real estate, tax, and planning issues. Recently he has been involved in several international studies.

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  1. I continue to be astounded that no one sees what is happening. Yes prices have increased in almost all markets but why? Could it be that BofA and most other large banks are selling REO’s directly to large hedge funds in REO to rent programs designed to remove inventory from consumers looking for homes. Could it be the Fannie Mae REO to RENT programs which recently sold over 1300 homes direct to Colony Capital (210 in Las Vegas alone) which have to become rentals for a minimum of 5 years. Could it be the NSP (Neighborhood Stabalization Program) which has never helped stabalize a neighborhood but only helps large investors buy and flip homes at a hugh discount directly from the banks and Fannie, using our money by the way. The whole sale slaughter of the home owner and home buyer is borderline corruption and it continues today. Why is NAR not addressing these issues.