The Federal Reserve expressed its dedication to further easing the national housing crisis and increasing job opportunities by announcing their third round of quantitative easing (QE3) by purchasing 40 billion in Fannie Mae and and Freddie Mac mortgage backed securities. Furthermore chairman Ben Bernanke emphasized that this policy will be in effect until “the labor market substantially improves” and that it will be operative for “a considerable time after the economic recovery strengthens”.
The concept is that developers will feel encouraged to build new homes, thereby employing construction crews, because they can obtain money more cheaply and will be assured that their potential purchasers can also get mortgages at lower rates to finance their purchasers. Since the housing market is such a large part of the economy, it is assumed that the purchasers of these new homes will also be purchasing home furnishings, landscaping services, etc. thereby further stimulating the economy and creating another level of jobs. It seems like a good plan. It will also likely put more spending dollars in people’s pockets who re-finance their mortgages at lower rates.
The success of the prior infusion of Stimulus money in the West Village can be seen all around as infrastructure projects abound with the refurbishment of roads, bridges, and the improvement of civic buildings and public transportation. Seems like a good plan that is working.
