Housing Market and Business

As you might expect the health of the US housing market is closely tied to the health of the business cycle.

As the housing market accounts for more than ten percent of economic activity in the US this should not be surprising.

When the economic is in an expansion period people are feeling more confident, making more money, and buying more houses. However, the housing market boom during the present expansion period is unprecedented.

The boom was largely caused by the Federal Reserve’s constant expansion of the money supply. The Fed engineered low interest rates which added a lot of fuel to the housing boom.

The boom is not sustainable. Nothing goes straight up forever. A tendency of all markets is to return to the mean at some point. After a long period of growth the next housing bust, which is likely now underway, will likely be a major event.

Since the performance of the economy is so important to housing and housing is so important to the economy I’ve added a business video feed to this site.

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