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Is the recession over?

The recession began in December 2007.  Did it already end?  Even the best market analysts are hesitant to give their opinion, because it is tempting to say that the recession is over due to positive activity in the stock market.

The stock market never ceases to amaze me with all of the history it has.  During the Great Depression there were several rallies.  Last year after the Bear Stearns fallout, stocks crept up.  Keep in mind, following the fall of Bear Stearns AND this stock rally, Fannie Mae, Freddie Mac, Lehman Bros, and AIG were not expected yet.

It may be crazily premature to say that the recession is over.  The economy may have pulled out of the free fall, but that should not be recognized as the bottom.  Have we seen the worst?  I believe so, in fact I am willing to bet my life on it that we are past the worst.  Things still have to settle.  Rising unemployment and corporate cutbacks will directly affect the housing market.  There are some analysts who project another 40% drop in real estate prices in certain areas.

Let’s look at Hoboken real estate.  We have seen a lot of activity lately.  Is it because of the $8,000 homebuyer tax credit?  Is it because we think due to the stock market position we believe we are out of the water?  Who knows.  What I can tell you is that certain aspects of the stimulus package IS working and only the future will tell how much of an impact it will have.

Back to the recession, we are clearly not out of it.  Although the decline has slowed, we are still in a decline.  Now don’t get me wrong.  WE have seen building permits up, stock market up, mortgage rates are historically low, and home affordability is at record highs.  Rightfully so, we should be encouraged by the signs of life in the housing market. 

I’ve said it once and I’ll say it again.  Housing and jobs are the key to recovery.  The labor and housing market will probably stay down for quite some time and will be the anchor holding us down.  It is hard to compare this recession to past recessions, therefore if you look for indicators to project what is a lagging indicator, it is tough to get.  This recession is different since it was caused by the credit bubble.  While unemployment used to be a lagging indicator, it could very well possibly be a leading indicator today.

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