Economy in the Midwest Shows Improvement
The Federal Reserve Bank of Minneapolis reported that the economy in the Upper Midwest is strengthening at a modest pace. Fed economists Toby Madden and Rob Grunewald delivered their mid-year update on the regional economic outlook last week.
The data indicates that employment, consumer spending, manufacturing and home construction are up in the region. The Fed’s forecast models predict the trends will continue into next year. Their report covers the Fed’s Ninth District, which includes Minnesota, Montana, North Dakota, South Dakota, northwestern Wisconsin and Michigan’s Upper Peninsula.
Fixed rates on 30- year loans were up slightly at the end of last week, but remain historically low.
Housing Shortfall in the Future?
Source: CNN Money
As the nation struggles to shake off the housing downturn, it may be hard to imagine a housing shortage could be on its way.
According to a report by CNN Money, the nation is simply not building enough homes to keep up with potential demand. Only 672,000 new homes were started in April, an annualized rate and less than half the long-term run rate needed to meet the nation’s natural population growth.
“It is ironic, but there is a growing consensus that there may be a new housing shortage coming,” said James Gaines, a real estate economist with Texas A&M.
So far, the shortfall has been masked by a weak economy that has put a damper on home buying. Once the job market rebounds, however, people will look to have their own homes again. This demand could get unleashed on unprepared markets, causing shortages and rising local prices.
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