Housing Construction at 17 Year Low

The depleting housing market has taken a toll on many sectors, this includes, not suprisingly the construction of new homes and apartments. The levels of construction have decreased drastically over the last few years, and have now reached a 17 year low in August.

This 6.2 percent decrease in housing construction was reported Wednesday by the Commerce Department. This is the slowest rate since 1991, which was another tough period for housing.

The Government Steps in

As the mortgage giants Freddie Mac and Fannie Mae fell further in to trouble the federal government stood by debating what should be done. Some believed that the companies needed to fail in order to preserve the economy. While many others thought that it was time some one stepped in.

Luckily for Fannie, Freddie, homeowners, and investors alike the government chose to step in over the weekend.

So what does this all mean?" Mortgage rates will fall slightly, but is not expected to fall enough to stop the decline in house prices. There may be a new set of rules implemented on the way that mortgage loans are given.

A few advantages to this takeover is that delinquent borrowers may have a better chance at modifying their loan, and the hope is that with mortgage rates lowering that the number of home buyers may increase, which may help stabilize the market a bit more... We could all hope this is the case.

Financial Institutions Need to Fail

Federal Officials say they must let financial institutions fail for the sake of the economy. Thomas M. Hoenig, the President of the Federal Reserve Bank of Kansas City reportedly said for economies to work best institutions must be allowed to fail.

There has been an ongoing debate as to whether the federal government should step in to save financial institutes such as Freddie Mac and Fannie Mae following the sub-prime mortgage crisis that has swept the nation.

Mr. Hoenig, explained that financial crises will happen despite any efforts to prevent them from happening. Although it is agreed that one cannot have control over everything. Many also agree that there were many things, which could have been handled differently in order to prevent the sub prime mortgage crisis. Which is why it may be wise for the federal government to step in before it worsens.