By Douglas Goldstein, CFP®

Regardless of whether you invest in Israel or in the United States, the turmoil in the U.S. housing market has probably affected your portfolio. Plummeting U.S. home prices have caused severe economic developments, including:
1. shaking consumer confidence,
2. eliminating billions of dollars of value in the mortgage-backed securities market,
3. contaminating the balance sheets of financial institutions,
4. and slamming the brakes on the economy.

With interest rates now at rock bottom, people looking for income from their bank deposits are having a hard time. Governments keep interest rates low to try to stimulate the economy. If companies and individuals can borrow money for a low price, they are tempted to increase spending. This, in turn, can lead to growth. On the other hand, I’ve helped many people purchase FDIC-insured CDs (certificates of deposits in U.S. banks) because they wanted a high degree of safety.

Signs of Life

Recently, we’ve begun to see some indications that the housing lull may have begun to abate. Analysts have noted that since the beginning of the year, building-permit issuance and the number of homes sold have increased significantly. Will that growth continue? Some market experts have pointed out that home development had to improve from its ultra-low levels in order to keep pace with home destruction (when supply is removed from the market due to deterioration from age and other factors).

Does selling a home in Jacksonville help me in Jerusalem?

As many Americans feel the recession is ending, they’re investing in housing. This, in turn, creates more building activity, banking services, and general growth. Perhaps people will start taking out home equity loans to finance other purchases, fueling corporate profits, too. So, if your investments are directly or indirectly connected to the U.S. economy, you may start to feel a piece of the economic excitement.

Naturally, there are no guarantees in the world of investments. With the rising current foreclosure rates and high unemployment, the housing stabilization may be somewhat subdued. But keep a close eye on the biggest global housing markets to see how it affects you.

Douglas Goldstein, CFP®, is the director of Profile Investment Services. He is a licensed financial professional both in the U.S. and Israel. He offers securities through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA, SIFMA. Accounts carried by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company. His book is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.