So, this election definitely played a role in the stock market for a short while. Elections do that, you know. There are potential changes coming (even though nothing really changed this election), and there’s a general excitement. Hope is in the air, and people are more willing to take risks.
But, there was another unexpected boom during this year’s election season: home building. Ever since the stock market hit a recession back in 2008, the housing market has suffered. This suffering has resulted in a lot of foreclosures and a lot of mess. People’s homes have lost value; some so much that
So what’s changed? Why did home building go up 3.6% in October, which is the most that it’s risen in four years? That’s a really long time to wait, and is it the beginning of a long-needed recovery for our economy?
I’m not really sure, to be honest. There are a few reasons that this could be.
Mortgage rates are at an all-time low. This is a huge deal; the lower that mortgage rates are, the more willing we are to take a jump and buy homes. The more willing we are to buy homes, the more demand there is. It’s a basic principle of supply and demand; there are a lot of homes that are vacant, but there’s a lot of uncertainty in that. People want their homes customized for them, which results in more building instead of buying empty homes straight out.
Speaking of foreclosures, that disaster has finally slowed down. Of the five years since the economy has been suffering, foreclosures are finally at an all-time low. Why? Probably because the economy is getting better and, sadly, most of the people who were teetering on the edge of being able to pay their mortgages have already lost their homes or been bailed out.
On the original topic, home building has also increased because the housing market depression resulted in less new homes being built. Now that the demand is back up (as I previously mentioned), contractors are playing catch-up. More people want new homes, so it’s that catch up period. How much longer will it last? I’m not really sure, but it’s a huge deal that contractors are back in business and building new homes.
There’s a lot of hope in the air regarding the home market, and it’s starting with the fact that more new homes are being built every day. This is a nice push to the economy that has been necessary, and maybe, just maybe, it’s providing a hopeful future for a weak economic time in our history.
What do you think about the sudden surge in home building and the home market? Do you think it’s going to have a positive effect on the economy? Are you concerned about the housing market? Share some thoughts in the comments, have a great Thanksgiving, and we’ll see you back here next week!