Posted by Leonard Steinberg on January 26th, 2013

The question keeps getting asked: why is the New York real estate market so incredibly strong this month (and the past few months too)? Yes, mortgage rates are very low, the wealthy are doing well and have more confidence, the election circus is behind us, the optimism of Spring is upon us and the mass media is spewing the message that the housing market has indeed turned and is heading back up (you know this trend started many months ago once the mass press starts reporting it!). One of the other answers may lie in the analysis of consumer debt.  Mortgage and consumer-loan payments amount to the smallest percentage of after-tax income since 1983, according to quarterly statistics compiled by the Federal Reserve. The debt-service ratio was 10.6 percent of disposable income in last year’s third quarter. Five years earlier, the figure peaked at 14.1 percent. Could our bloated, inefficient, wasteful government learn a thing or two from the consumer maybe?

Household spending is poised to strongly contribute to growth this quarter and next. Consumers account for about 70 percent of the economy, according to Commerce Department data. While politicians have blamed policy and a host of other trivia for weak growth, pretty much every corporation will agree that the key driving force to growth is demand……and demand has been pretty weak to date. Now that is about to change. The nationally reported rebound in the housing market will also make consumers feel a bit richer and if anything, confidence is key to opening wallets. The end of a decline in inflation-adjusted wages, and a slowdown in debt reduction will help too.

Maybe what I am trying to say is that we are on the cusp of the PERFECT STORM for impressive growth in 2013, probably led and fueled by the housing markets. Now lets just hope the extremist political terrorists on both sides of the aisle don’t muck it up.