Since the bear market began in March 2000, U.S. households have had almost $6 trillion in wealth lopped off. That’s obviously not good from any standpoint, but the exodus of investors from the bear market in stocks does have at least one positive effect: continuing strong real estate activity.
Millions of households are looking to real estate not as an investment but as a place to live, and that, in turn, is making real estate a safe haven for their funds. The housing sector remains a pillar of strength for a struggling U.S. economy.
After the terrible events of Sept. 11, many forecasters expected the recession to do serious harm to the U.S. economy. But their predictions couldn’t have been further from the truth. This recession was short, shallow, and nameless.
The industry is now operating in an environment scarred by the events of Sept. 11 and weakened by the slowing economy, so home sales will certainly ease. The pace of business innovation may also slow. But the outlook for sales remains remarkably upbeat.
Residential sales, after years of soaring, finally started coming down in the second half of this year--nudged in major part by the September 11 terrorist attacks. But don't expect that slowdown to last long.
After the tragic events of Sept. 11, it has become increasingly clear that the United States is entering an era dominated by a new set of priorities. A prolonged war against terrorism may change our way of life, both politically and economically.