NewsTrack - Business
Published: March 17, 2007 at 10:54 AM (United Press International)
Auto sales hurt by housing slump
FORT LAUDERDALE, Fla., March 17 (UPI) -- The sagging housing market is putting the hurt on auto sales across the United States, the Detroit Free Press reported Saturday.
Mike Jackson of AutoNation Inc. in Fort Lauderdale, Fla., said prospective car buyers' concern about home values is a phenomena he's never encountered before.
"They're reluctant to make a big purchase if they don't know what their house is worth, even if they don't want to sell it," said Jackson, whose company owns 280 new-car franchises across the country. "They don't know how it's going to come out."
UCLA Economics Professor Edward E. Leamer said low interest rates in recent years enticed people to buy homes and cars sooner than may have been prudent. Now homes aren't appreciating enough to give consumers a cushion and that is putting a crimp on auto purchases, he said.
"I think it's going to be a tough year for housing," Leamer said, "and it's a tough story for autos."
Auto purchases are down 8.5 percent this year for General Motors, Ford and DaimlerChrysler.
Though I knew the market for houses was in bad condition, I did not stop to really consider the effects it could have on consumers and other markets. As the market worsens, consumers mortgage payments continue to raise. Many homeowners are forced to take out loan after loan or sell their homes because they can not keep up with payments. This should have an effect on auto sales because consumers do not have the necessary money to make another long term investment when they aren't sure what the value of their home will be in 10 years. Consumers are less likely to make another large commitment when they are already struggling to keep up on payments. Betsy Schiffan is quoted as saying, "Since the housing industry accounts for about 14% of the national gross domestic product, if it were to suddenly crash, the ramifications would be felt across the country. Theoretically, it could be almost as crippling as a stock market crash. America's housing stock is worth about $12 trillion, while U.S. investors' investment in stocks, bonds and mutual funds was valued at about $15.6 trillion in 2001. " How can we aide the housing market, increase demand, and lower costs for consumers???
Published: March 17, 2007 at 10:54 AM (United Press International)
Auto sales hurt by housing slump
FORT LAUDERDALE, Fla., March 17 (UPI) -- The sagging housing market is putting the hurt on auto sales across the United States, the Detroit Free Press reported Saturday.
Mike Jackson of AutoNation Inc. in Fort Lauderdale, Fla., said prospective car buyers' concern about home values is a phenomena he's never encountered before.
"They're reluctant to make a big purchase if they don't know what their house is worth, even if they don't want to sell it," said Jackson, whose company owns 280 new-car franchises across the country. "They don't know how it's going to come out."
UCLA Economics Professor Edward E. Leamer said low interest rates in recent years enticed people to buy homes and cars sooner than may have been prudent. Now homes aren't appreciating enough to give consumers a cushion and that is putting a crimp on auto purchases, he said.
"I think it's going to be a tough year for housing," Leamer said, "and it's a tough story for autos."
Auto purchases are down 8.5 percent this year for General Motors, Ford and DaimlerChrysler.
Though I knew the market for houses was in bad condition, I did not stop to really consider the effects it could have on consumers and other markets. As the market worsens, consumers mortgage payments continue to raise. Many homeowners are forced to take out loan after loan or sell their homes because they can not keep up with payments. This should have an effect on auto sales because consumers do not have the necessary money to make another long term investment when they aren't sure what the value of their home will be in 10 years. Consumers are less likely to make another large commitment when they are already struggling to keep up on payments. Betsy Schiffan is quoted as saying, "Since the housing industry accounts for about 14% of the national gross domestic product, if it were to suddenly crash, the ramifications would be felt across the country. Theoretically, it could be almost as crippling as a stock market crash. America's housing stock is worth about $12 trillion, while U.S. investors' investment in stocks, bonds and mutual funds was valued at about $15.6 trillion in 2001. " How can we aide the housing market, increase demand, and lower costs for consumers???
1 comment:
ash,
You bring up a good question about how to lower costs, and I think part of it has to do with the number of loans that are given out to home-buyers. Instead of giving out large numbers of loans, maybe companies should be doing more credit checking history and be more selective as a way to increase demand for housing and at the same time strengthen the market. ?
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