Home Prices & Small Business Key to Recovery

The Ripple Effect
Just as there is a ripple effect in water, there are ripple effects in the economy. Banks have been especially reticent to lend to small business owners without an established name. So small business start ups are having a tough time funding new business. In the past, small business owners have used home equity lines of credit to infuse their new business with capital, but due to the decrease in peoples home equity, small business owners are without cash to inject into their business. This leads to more unemployment, which leads to less people pay taxes, which leads to further government deficit problems. Home price recovery is extermely critical to help not only homeowners, but small business owners, their employees and the government. According to Lawrence Yun, Chief Economist for the National Association of Realtors, “The good news is that the declines {in home prices} appear largely over. However, if we’re going to kick-start the economy, our small businesses will need to find funds to turn their ideas into business growth. That means home price recovery is more critical than ever.”

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