Economics Housing Market Essay
During the duration of 2007 – 2009, the housing market in the United States crashed affecting thousands, even millions, of homeowners. When you open an account in any bank branch, your money is given to other members. Banks take your money and lend it out to other members for various reasons. Let’s say, a bank lends out money in order for homeowners to put money down on a home. By charging interest on the money they gave away, banks make a profit from lending out all this money. When people lose their Job, they cannot pay their mortgage. When people can pay Ortega, banks have no source of money to lend out in order to make a profit.
There are many causes to the recession, but the housing market was one of the main aspects. With the help of the government and people’s consistent need for a home, the housing market is recovering. The question remains, how much is it recovering? According to our research, the answer is not that much. The unemployment rate and the decline in foreclosures rates have a direct relationship. Foreclosure is when the bank takes a home as a result of the homeowner’s lack of mortgage
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When homeowners can pay their mortgages they can pay the banks back, who in return can lend out money to other members and collect profit. Now depending on the location of a home, the effects of the housing market can vary. The greatest circulation in the housing market tends to occur in cities with a low unemployment rates, usually smaller cities. The opposite can be said about larger cities. In some “run-down” locations, the housing recovery is slow because the prices for homes are slowly rising gain, even though they will never return to their previous state.
According to further research the housing market is doing better than it was five years ago. New home sales, homebuilding, and existing home sales are all up. One down side to all of this is that, mortgage rates have crept up since May, back when these same rates were at a record low. Nonetheless, they are still good at 4. 5% for a 30 year fixed mortgage. A fixed mortgage is an option that includes an interest rate that does not vary over time. For instance, a homeowner can make the same payment each month until the mortgage is paid off.
But one must consider, fixed-rate mortgages are hard to get approved of because the closing cost are so expensive. One of the main reason for this success is institutional investors. Institutional investors are buying up a lot of the broken-down areas and this causes other prices to rise. Which is not good for everyone, like first-time buyers. The fact that the market crashed in the past, personally I would be hesitate in renting or purchasing a new home. Buying in home n a “smaller” cities seems like the best way to feel secure in the market.
Now the solution to this slow rebuilding of a market varies from person to person, but the option would be to consider the facts and data. A strong housing market, more often than not, accompanies a “well-oiled” economy. A weak housing market, more often than not, accompanies a struggling economy. As we press forward after this life- changing recession, many people have benefited from the recovering housing market, but others will unfortunately never been the same. Economics Housing Market By maternal