No Increase in Debt Ceiling Could Crash the Housing Market

Financial analysts and members of the real estate industry are worried that, if the U.S. government doesn't resolve the debt ceiling crisis soon, an already fragile housing market will be dealt a serious blow, and with it the entire U.S. economy.

NPR looks at how the ongoing struggle between President Obama and the Republicans is affecting the economy, particularly housing. The concern is that if it appears that the U.S. is going to default on its debt, then the global marketplace will abandon U.S. treasuries.

Reporter Chris Arnold summarizes:

"Here's how this would work: If the debt ceiling isn't raised, the U.S. Treasury could default on its debts. The Treasury says it would run out of the money it needs to make payments on some of its Treasury bonds...[then] investors could demand higher interest rates to loan the U.S. government money. But it could also drive up interest rates for all kinds of things, including home loans. If Treasuries are no longer sacred, what about home loans that are guaranteed by the government-backed mortgage firms Fannie Mae and Freddie Mac? [A]nother crash in housing could bring the banking system with it. An actual default on Treasury bonds could be even worse."

Full Story: Debt Drama Could Be Another Blow To Housing

Comments

Prepare for the AICP Exam

Join the thousands of students who have utilized the Planetizen AICP* Exam Preparation Class to prepare for the American Planning Association's AICP* exam.
Starting at $199
Planetizen Courses image ad

Planetizen Courses

Advance your career with subscription-based online courses tailored to the urban planning professional.
Starting at $14.95 a month
T-shirt with map of Chicago

Show your city pride

Men's Ultrasoft CityFabric© tees. Six cities available.
$23.00
Book cover of Contemporary Debates in Urban Planning

Contemporary Debates in Urban Planning

Featuring thought-provoking commentary and insights from some of the leading thinkers and practitioners in the field.
$18.95