Do Housing Woes Increase Odds of Double-Dip Recession?
September 2nd, 2010 categories: Chicago Real Estate News
July, it turns out, was one bad month for housing sales. According to the latest numbers from the National Association of REALTORS®, housing sales in the month fell to a 15-year low.
As if that wasn’t bad enough, the 27-percent drop in housing sales from June to July represents the biggest one-month housing drop ever.
Now comes the news that several economists are worried that the economy, fueled in part by the struggling housing market, is headed for a double-dip recession. The Wall Street Journal recently covered this issue, quoting economist Robert Shiller, a professor of economics at Yale University, as saying that a second economic dip may be imminent.
Shiller told the Journal that he thought the odds of a double-dip recession were at 50 percent. He said that the third quarter of 2010 might historically be viewed as the time when the second dip hit.
What will a double-dip recession mean? For one thing, it could bring more job losses. You can also expect housing sales in Chicago and across the nation to fall again, along, perhaps, with housing prices.
Of course, there’s no guarantee that Shiller is right. There might not be any second dip in our recession. If that’s the case, then the slow recovery we’ve been seeing might actually pick up some momentum. That would be a welcome sight.
Shiller pointed to high unemployment – the national unemployment rate remained above 9 percent at the end of August – as the biggest problem of the economy right now. He suggested an interesting idea: He wants the federal government to create new jobs. He specifically mentioned the creation of teachers’ aides in every classroom in the country. This, Shiller said, would add millions of jobs while helping children.
These are trying times in the country. No one’s happy that home sales fell so steeply in July. No one’s happy either that the unemployment rate refuses to budge. The only glimmer of good news is that Chicago, despite its financial problems, remains a strong city and housing market. Yes, housing sales are down here. Unemployment is up here, as it is across most of the country. But Chicago is a vibrant city, one powered by diverse industries and neighborhoods that still remain destination points for home buyers. I believe that Chicago is one of those cities that will benefit the most once the economy’s recovery takes full root.
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