News Column

Fractures in the Housing Market: Structural Change Watchlist from Diane Swonk

June 11, 2014



CHICAGO--(BUSINESS WIRE)-- 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.





Mesirow Financial

Karen Nye, 312.595.7147


Source: Mesirow Financial


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Source: Business Wire


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