During the first recession that I lived through and was directly impacted by, my dad made the statement that our view on the state of the economy has to do with who we are and what our own situation is.
A person who is unemployed during a time of high unemployment believes that we are in a recession, as does a person who can’t make his or her house payments. A person who has a good job and is earning enough to make ends meet will ride out a recession without feeling like we are in difficult economic times.
Lately, I have been reading articles about how a recovery is just around the corner, but I am not seeing any evidence of a recovery. There is evidence that home sales are picking up, but a couple of months of higher sales fueled by tax incentives and the season does not necessarily mean that the housing market is recovering.
There are still many vacant buildings and homes in my neighborhood, and another one of my neighbors is unemployed.
Locally, the number of home sales are up from last year but the dollar volume is down significantly. That means the market is still contracting. Less money is changing hands and the impact is felt by sellers, their agents and others who profit when homes are sold.
The phone calls are still coming in from the people who are behind on their mortgage payments and those who need to sell but owe so much more on their homes than they could get for them that they are thinking about just walking away. I wait for the next wave of foreclosures to hit and wonder if it will be worse than the last wave or maybe not as bad.
The unemployment rate in Minnesota is almost as high as it was the year I graduated from college, which was record-breaking. Home values have declined, so commission checks are smaller and those of us who own homes have less equity. Some of us lost much of what was supposed to be our retirement in the stock market’s fall. I figured it all out and I will have to work until I am at least 120 years old. …CONTINUED
When there is some kind of a recovery in my world I don’t think things will be the same as they were. There will be many people who cannot buy homes because their credit rating was ruined by foreclosure. It will be several years before some homeowners have enough equity in their homes to move on.
The vacant commercial spaces around town are a constant reminder of businesses that have closed their doors and jobs that were lost. I don’t remember ever in my life seeing so many vacant commercial properties and retail spaces.
It would be nice to know what this recovery — that some say we are headed for — will look like. I am of the opinion that this isn’t a time of recovery but a time of transition between eras, going from an age of easy credit and overspending to one of frugality. I don’t believe that we will all just climb out of it and it will be business as usual.
What is a recovery? What does it look like and how will we know that it happened? The news media will write about it, but will we feel it?
Is this a recession or a depression?
Teresa Boardman is a broker in St. Paul, Minn., and founder of the St. Paul Real Estate blog.
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