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PELHAM, N.Y. Financial services company Standard & Poor's downgraded the long-term credit rating of the United States for the first time ever earlier this month and local realtors are concerned it could have a tangible effect on the local housing market.
The United States had held a credit rating of AAA for 70 years, however S&P lowered that to AA+ just days after the federal government passed the Budget Control Act of 2011 to end the debt ceiling crisis. The downgrade could potentially increase interest rates for those who want to get credit cards, mortgages or business loans.
Lester Kravitz, owner of Kravitz, Realtors, Ltd. on Wolfs Lane, said the lower credit rating could scare some people away from buying houses.
"It undermines consumer confidence, which makes people hesitant to make large purchases, including houses," Kravitz said.
S&P said in a press release that the government's plan regarding debt does not adequately address the problems the United States will face in the coming years.
The downgrade could also increase the United States' borrowing costs, which had been incredibly low thanks to the AAA rating.
Despite the gloomy forecast, encouraging signs have appeared recently. The Dow Jones plummeted in the initial few days following the downgrade, however the market has recovered since Thursday. The market closed on Monday at its highest point since Aug. 8.
The fluctuations in the market might actually prove to be a benefit to Pelham's stock market. Kravitz said the ups and downs could lead to an increase in purchases.
"The long term result of stock market volatility could be a greater demand for real estate since there's only a finite amount of it," Kravitz said.
What do you think about the U.S. credit downgrade? Do you think it will have any tangible effects on your life? Comment below, on our Facebook page or on Twitter @DailyPelham.
Contact Pelham reporter Andrew Meola at ameola@thedailypelham.com.
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