Employment and real estate prices have regularly influenced our economy over the last century. Recently, they have negatively compounded the economic crisis and will most likely continue to be an issue as we fight through to recovery.
What will it take to change the direction of unemployment and low real estate prices? It begins with corporate confidence and consumer spending. Due to the challenges we currently face, many corporations have held on to large amounts of cash. Until corporations feel the worst is behind us and start deploying their large cash reserves, we will see a delay in our recovery. These large cash reserves will be used for research and development, marketing, and most importantly, hiring. Over time, people’s confidence will increase due to hiring, and as this happens people will begin to tap into their savings to start buying goods and services such as clothes, small home appliances, automobiles and vacations.
As more time goes on and we experience improvement with unemployment, people will begin to feel more confident and see the opportunity to invest in the markets. Doors will open for new opportunity for individuals to consider buying homes again. People who thought that owning a home was once out of their reach can now afford to buy. Home buying will certainly increase as we see unemployment decrease, which will benefit most of us — as long as we don’t get greedy again. Slowly, both will recover. Unemployment will most likely come down before real estate goes back up.
Everything is cyclical. Eventually, low unemployment and higher real estate prices will help the economy again. How long will it take? We don’t know. Recovery from a crisis such as the recent recession will take longer than we think. Be patient and use the knowledge we have learned from this recession to plan appropriately for the next crisis.