Wednesday, December 21, 2011

Housing Starts Versus Population Growth Graph Signals Future Growth

This graph shows that housing starts relative to population has been very slow following the bubble burst. Some view this as a good sign for future growth. There is a lot of latent demand for housing being built up. The Graph is also interesting from another perspective. Growth in housing starts skyrocketed after our recent recent recessions. The Fed lowered interest rates during recession and this meant lower mortgage rates and new homes were built to put an end to recession. That is not happening following our last recession. That is one of the reasons why the economy has not resumed growth, even at historically low interest rates.

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