For an excellent analysis of our country’s current economic problems, read NAR Chief Economist Lawrence Yun’s most recent article. Yun says, “Aside from the lack of enthusiasm among large companies, one major reason for the economic struggle is that small businesses – the entrepreneurial heart of America – cannot find funds either to establish themselves or to keep going. (It should also be said here that many real estate firms are actually small businesses.) Because of the small nature of such companies, these entrepreneurs cannot issue bonds like IBM or Disney. Banks also have been extra tough on any borrowers without an established name. Small businesses, therefore, typically have relied on their owners’ savings and housing equity for the funds to test out new business ideas….
In order to push to the U.S. economy and get it on a sustainable robust growth path, small businesses need funds to establish themselves and to maintain operations. A home price recovery will be critical to that process in the upcoming years. Any obstacle to such a home price recovery will, therefore, hamper economic growth and job creation. As policymakers continue their discussions on future federal budgets, they need to be well aware that any trimming of housing-related programs – such as the mortgage interest deduction – will hurt home values and consequently derail many small business start-ups.” To read the entire article, click here: http://www.realtor.org/research/reinsights/economistcommentary?cid=WR08162011:26714&ed_rid=234580