The U.S. economy is experiencing a recession marked, especially in the third quarter of 2008. Consumer spending, which comprises about 70% of overall economic activity has dropped dramatically, with the additional payment on personal mortgages.

This, in turn, led to a drastic decrease in overall demand in all sectors of the economy, including the domestic market. According to experts, the current economic downturn is the worst since the Great Depression of the 1930s. In such a scenario, it is not surprising that the market (in particular, construction house) experienced the largest decline in 25 years.

Planners and professional financial advisors, however, are optimistic about a resumption of U.S. economic system. If appropriate measures are aggressively adopted, there is every chance that the economy starts moving in the right direction in 2009. The victory of Barrack Obama (the first African-American president of America) is considered a blessing for the purposes of this recovery.

Election campaign of Barack Obama was based on increased government spending and reducing tax rates. These measures and the frequency of adjustment of the U.S. Federal Reserve can provide the necessary fiscal stimulus for economic recovery in the country.

Strength of the current recession has created a severe credit crunch, credit markets tightened, increasing amounts of foreclosures and a consequent rise in unemployment. They came as a severe shock to most major companies in the U.S. housing market. New construction permits are also in free fall, increasing problems in this sector.

The experts felt that the current strength of recession may lead to a decrease of 8% of U.S. GDP (gross domestic product) during the quarter. President Obama, however, has a superb well thought out and carefully formulated plan which, if applied to the market appropriately, can generate significant economic stimulus for the markets.

Obama's plan for the internal market in itself is simple: everyone should have access to 30-year fixed rate mortgage at a rate of 4.5% (nearly a full percentage point lower national rate current average interest rate of 5.47%). Refinancing of mortgages by the current owners would also be available at a rate of 4.5% interest.

The advantages of this scheme is simple and apparent - a reduction in interest rates would decrease the expenditure for a new property or refinancing mortgages. This would help people to retain more cash from home refinancing and this additional cost savings can now be spent on other items, thereby pushing up aggregate demand in the economy. If this regime can be effectively implemented, the number of owners would increase to a significant extent, the stabilization (or even increasing) the value of properties. Financial planners and experts say it could work.

This plan, as designed by the Obama team is planned for effective long-term problems that the current recession poses on the U.S. housing market. The plan comes at a price estimated at 3 billion dollars, and in theory can lead to a full economic recovery and provide a platform for economic recovery. However, in practice, the implementation of this plan is not as easy as it seems. Firstly, if both new mortgages and refinancing are available at 4.5%, the total plan May be prohibitive. Therefore, the government currently limits the plan only to new owners.

Second, and more importantly, people can simply take home loans to 4.5%, and simply buy a house from a person (s) he already knows. This would void the new plan and void.

Overall, the plan devised by Obama to provide an economic boost to the domestic market (by providing new mortgages and refinancing facilities to 4.5%) is, in theory, an effective mechanism to ensure economic recovery and increase property values.