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Every time I say this, I annoy a lot of my real estate friends…  Real estate is NOT the solution to the economy.  It is a symptom.  Nothing more.

To put it simply, People without jobs are NOT buying homes.  People that are worried about their jobs are NOT buying homes.  and as long as those people aren’t buying homes, people that DO want to “move up” can’t… they need to sell their current homes.  As I write this, the unemployment rate is around 9%.  But, the BLS also says that the “real” unemployment rate (including people that are not filing for unemployment anymore) is closer to 17%.

And while I tend not to get too political on this blog, I will make a couple of statements…

  • Attacking job producers, like Gibson Guitars, is NOT going ot make entrepreneurs take the risks that they need to take in order to start or expand their businesses.  (If you didn’t know, they are not allowed by the government to import raw Indian Rosewood, but they ARE allowed to import the manufactured fretboards made from Indian Rosewood.  In effect, the government is telling them to set up manufacturing for those parts outside of the US rather than doing it in Nashville, TN).
  • Attacking companies like Boeing Aerospace for expanding in ways that the union (big money contributors to the Obama campaign) doesn’t like.  (If you didn’t know, the NLRB is trying to stop Boeing from opening an additional production facility in South Carolina.  They have continually been hit by union strikes in Washington state, and want to have a second facility in a “Right to Work” state… one which doesn’t force union membership).
  • Supporting companies like GE, rewarding the CEO with a Chair on President Obama’s “Jobs Council”… as the company inks a deal on expansion and job creation… in China, but not the US.  All the while, GE is holding money off-shore to avoid taxes.

The private sector WANTS to create jobs.  But, with the incredible growth of deficit spending (which squeezes private lending), and the incredible growth of regulation ($1.74T in regulatory costs to businesses), and the desire to increase taxes on those same business, and the increasing costs on the horizon from ObamaCare, businesses are not willing to take the risks.

The government doesn’t create permanent jobs, except for the people that they directly hire… and the government is already too big.  But they certainly have the ability to kill jobs in the private sector.  And until the government stops trying to kill jobs, there won’t be a recovery in real estate… 

No matter what Nancy Pelosi says about how Unemployment is a GREAT stimulus, people aren’t buying homes or cars or much else while they sit on unemployment… 

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