House sales continue to drop
Sales of new and existing homes dropped more than expected last month, even though houses are currently cheaper than they were this time last year.
The median price for houses was reduced from $208,000 last year at this time to $180,000 today.
"To the Point" talks to Daniel McGinn, national correspondent for "Newsweek" magazine and author of "House Lust: America's Obsession with Our Homes."
McGinn says of the current housing market: "It continues to be quite tough. If we're going to look at what might turn things around: interest rates are at record lows, 30-year mortgage rates are around 5 percent ... so there's some hopes that at that rate, or even if they go lower, that that might draw people off the sidelines a bit. There's also hope that the new administration might take a look at some tougher measures to try to prevent some of these foreclosures."
According to McGinn, the housing market is critical to the health of the national economy: "Early this month Ben Bernanke spoke at a conference, and even he started to talk ... about the fact that, until we stabilize the housing market, it's going to be hard to stabilize the broader economy. Housing is really in many ways what started this economic crisis, and it's part of this negative wealth effect that we worry about so much right now.
"What's holding the economy down right now are a few things. People are very anxious about their jobs because they're reading about their friends being laid off, and many of them have reason to fear going forward that they might too. They've seen the stock market decline by 40 percent this year, which makes people feel poorer and makes them willing to open their wallets and spend. And they know that in many parts of the country, their houses are worth significantly less than what it was two or three years ago. So it's sort of a triple whammy effect that's keeping people from spending money and holding the economy down."
Hosted by award-winning journalist Warren Olney, "To the Point" presents informative and thought-provoking discussion of major news stories — front-page issues that attract a savvy and serious news audience.