The Disastrous Housing Market: Congress Raising the Debt Limit

by Isaac Benmergui, Esq on December 26, 2013

Legal discourse here is such a rich battlefield of pros, cons, points of views and positions of argument in terms of what Congress should do about the nation’s economy with respect to the real estate market. The issue here is simple: complete default due to the inability to transcend a lot of political brinkmanship within Congress. In other words, the lawmakers need to put their feet down and get some action going regarding the debt limit!Congress

Analysts are stating that it could result in a massive and almost immediate recession in the economy, practically eradicating all recent gains the housing market has made in home prices, sales and residential construction. Moreover, U.S. Treasury rates would rise along with mortgage rates, providing fewer options for homeowners seeing buildings well beyond their price ranges. That means less homes bought, more renters, value and equity decreases, increased interest rates, stricter credit standards – to sum it all up, a complete financial breakdown of the industry.

Sure, the changes might be minor as some detractors might argue, but know that even a 1% increase in the mortgage rate would lead to up to 450K fewer home sales total. That’s a hefty number. What’s worse, an impasse on the debt ceiling review would also diminish a lot of consumer and business confidence, slowing down job growth – which, as you can guess, would also dramatically slow down real estate economy growth completely.

These are dire circumstances. And it all revolves around the law. What should Congress do? What can Congress do? Sadly, we’re at a government shutdown, so there really isn’t anything Congress can do, much less want to do at all. Only time will tell.

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