In the June issue of Themes on the Economyģ, Mesirow
Financialís Chief Economist explains why the housing market is not
generating the kind of growth we expect during a recovery: Ever-rising
student loan debt is limiting the number of first-time home buyers.
ďEven those who were once closer to the top of the economic food chain,
such as newly minted lawyers and doctors, are hesitating because they
arenít sure they can qualify for a mortgage.Ē
Diane Swonk says the housing model in our country has historically
depended on a large volume of sales to first-time buyers, who then need
to buy washing machines, furniture and all kinds of housewares; that
spending creates ripple effects throughout the economy.
In the near term, Swonk says there is an offset. Home equity lines of
credit are easier to get and ''could provide a larger-than-expected,
temporary boost in spending.'' Current home owners are tapping home
equity to remodel and expand, since they canít trade up without the
first-time buyers and donít want to risk being turned down for a new
mortgage on a bigger house.
For more on structural changes in the U.S. housing market, read
Themes on the Economyfor June. Archived
issues can be found at mesirowfinancial.com.
Mesirow Financial is a diversified financial services firm headquartered
in Chicago. Founded in 1937, it is an independent, employee-owned firm
with approximately 1,200 employees globally. With expertise in
Investment Management, Global Markets, Insurance Services and
Consulting, Mesirow Financial strives to meet the financial needs of
institutions, public sector entities, corporations and individuals. For
more information about Mesirow Financial, visit its website at mesirowfinancial.com.
Karen Nye, 312.595.7147
Source: Mesirow Financial