This is a great article on the current economy from UCLA. Please go to the link to download the article.
“The business of real estate is closely tied to the health of the macro-economy. An important determinant of whether the recent economic shock will have a double dip is how consumption responds to the current and prospective declines in asset values. Absent a renewal of economic growth, as evidenced both in GDP and employment, the business of real estate will not prosper.”
Introduction In November 28, 2008 the Business Cycle Dating Committee of the National Bureau of Economic Research made it official: the US had been in a recession since December 20072. To the real estate industry the announcement was not a surprise. By the end of November 2008, the industry had been both a cause of, and felt the impact of, the recession. For example, during the eleven months before a recession was officially declared: • The rate of unemployment for the nation increased from 4.9 to 7.2 percent, and for California it increased from 5.9 to 8.7 percent. • The S&P/Case-Shiller home price index declined by more than twenty-five percent. • The S&P 500 was down 47 percent from its October 2007 peak. • Housing starts decreased by more than seventy-one percent. • The value of sales of commercial properties decreased by eighty-five percent. • There was a “meltdown” of the credit markets; CMBS issuances dropped to nearly zero, and delinquencies for all types of mortgages increased.