Lower interest rates will stimulate the housing market and prop up the economy. We already have the toughest energy regulations in the country, and the new requirements will make our homes even more energy-efficient. One rule requires tighter sealing of air ducts , which will reduce the amount of hot or cold air that is lost by the heating and cooling system before it reaches the living area. Another rule requires the use of high-efficiency window glass that will reduce the demand for air conditioning during hot weather by reflecting more of the sun's rays. In fact, some analysts say that rising home values, not the stock market , have accounted for much of the economy's record 10-year expansion.
Home ownership adds to the economy in two ways.
It shields homeowners from rent inflation and it builds real wealth in the form of equity . When property values rise, homeowners can tap their home equity for cash. And that's important for economic growth, because consumer spending accounts for two-thirds of the U.S. economy. Federal Reserve Chairman Alan Greenspan told the mortgage industry at a banking conference that it needs to encourage young people to buy homes so they can start building wealth. Figures show that about a sixth of the wealth effect comes from equity drawn from existing homes.