Forevercashers are interested in the economy. Granted, we tend to focus on local, smaller businesses and investments, but we recognize the fact that we don’t live in a vacuum. What happens on one side of the country affects those living on the opposite coast. Laws passed in Washington D.C. can change the way we do business. That’s why Forevercashers do well to pay attention to economic indicators.
“Economic indicators” are numbers used by experts to track the health and performance of the economy. They may be seen in the form of a country’s GDP, a new job report, or even national debt.
But one that I found interesting was posted not too long ago by the Wall Street Journal, and it was this: 14.5%
New home sales dropped 14.5% from February 2014 to March 2014, and 13.3% since February 2013.
That’s not what we would be expecting during an economic recovery. We would expect more new home sales and more mortgages being given out by banks. So why the decline?
Some experts think that banks – in an effort to avoid another crash – have made mortgage standards TOO strict, to the point where qualified buyers can’t get a new home. This lack of activity affects future sales projections and has made some folks concerned about how long the economy might need to get back to pre-recession levels.
A lot of these facts might feel like they are somewhat removed from your daily life and the investment choices you make. But nothing could be further from the truth. With fewer buyers home prices might go down as sellers get more desperate. But investors might have to accept higher interest rates on loans and lower their profits from rental properties.
We have yet to see if new legislation will force banks to adjust their standards or if the system will fix itself. Either way, Forevercashers who pay attention to economic indicators like these will always be ahead of the game.