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Street Smarts: One Bottom is Two Bottoms July 30, 2009

Posted by John Watch in AccuriZ News.
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Originally posted on Calculated Risk Blog

No matter how sophisticated or intelligent we are, the bottom line is that the consumer drives the economy. While it is important for policy makers and Economists to have access to PhD’s for the mathematical probability of what is going on with the economy, Mark Zandi of Moody’s.com and an advisor to governmental agencies stated in a April 09 Time Magazine article (paraphrased) that when he goes to Washington and takes a cab, he talks to the cab driver and the waiter/waitress when he eats to find out how the public views things.

This is called Street Smarts and we all need to understand that all of the public records, statistical tables, property data and graphs in the world will not get the American Consumer back into stores, car dealerships or home buying until they feel confident. And quite frankly, how can they feel confident when so much information is published with one set of data contradicting another set?

We need to report real data that is objective and easy to understand. Are house sales up in May? Yes, and they will be up for June, July and August because that is how the real estate market has performed for decades. Will sales activity decline in the Fall and Winter months? Yes, because they always do.

Will home prices increase? Yes they will because when supply is greater than demand, prices fall. And when the supply is influenced by people who have no choice but to sell values are depressed even further.

Common sense, not complex math is the answer. But common sense does not get the news headlines.

To see more information regarding Mortgage Assistance and Real Estate Reports CLICK HERE.

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