Lowell Deeds

The latest on real estate recordings and new technology from the Middlesex North Registry of Deeds in Lowell

August 23, 2007

Cause and Effect

by @ 8:45 am. Filed under Real Estate, History

Every day the business pages are filled with contradictory stories about housing, credit and the wider economy. Speculation about what the Federal Reserve will or will not do has been rampant. Whatever happens, the economic history of the past seven years teaches us that trying to correct one problem often creates a new and sometimes more hazardous situation. For example, through the end of the 1990s and into the early part of this decade, the American economy was riding the Internet boom to historic highs in the stock market. Suddenly, that all came crashing down, a situation worsened (but not caused) by 9/11. In an effort to keep the country out of a recession, the Fed cut interest rates to almost unheard of lows. That set off the refinancing stampede of 2003 and let to the skyrocketing values of housing thereafter. Many Americans were seduced by the allure of ever rising home values and either stretched financially to buy new homes or refinanced existing homes to extract all the new found wealth, using it to carry the economy with consumer spending. As is now clear, housing values may continue upward over time but not in a straight line trajectory. We’re now in a trough (hopefully that’s all it is), but the debt owed remains high, often higher than the current value of the home that secures it. Whatever steps are now taken to address this problem will have some consequence that we will feel two, three or four years from now.

Leave a Reply

[powered by WordPress.]


Recent Posts:


search blog:


August 2007
« Jul   Sep »


25 queries. 2.403 seconds