Federal Reserve Keeping Close Eye on Housing

We’re not the only ones keeping a close eye on the national and Florida mortgage market.

Federal Reserve Chairman Ben Bernanke said the economy is experiencing a “substantial correction” in the housing market and that the Fed is closely watching how it plays out.

The decline in housing “was one of the major drags causing the economy to slow now,” Bernanke said in response to a question after a speech he gave to the Economic Club of Washington Wednesday afternoon on the importance of preparing for the demographic changes in the world’s largest economy.

The Federal Goverment, of course, has also been busy setting new regulations on exotic Florida home loans.

Bernanke predicted the housing slowdown would take one point off growth in gross domestic product this year and possibly next. Some experts are predicting a quick turnaround for the housing market, while others see the future as hazy for a long time to come.

The Fed was watching for “spillover” from the slowing housing sector to other areas of the economy, he said.

The chief characterized the long-term outlook for the economy as “healthy” and “growing,” but said particular care must be given to two issues: the effects of aging on the economy and the importance of skills, education and training both for children and adults in order for the United States to stay competitive in today’s world.

When asked about the benefits of immigration to offset the effects of the aging, Bernanke said additional immigration wasn’t “likely to solve our problem.” He didn’t have a lot more to say about real estate, but as more first-time buyers enter the market with a Florida mortgage loan, it will only bode well.