Bri Sharp, Catherine Gregory, Chris Kennard
Tuesday, May 10, 2011
Demand of Houses Drop Along with their Prices
As the economy gets worse, people tend to save their money rather than spend it. When the economy goes into debt, the demand for high priced items is very low. Since the Lehman collapse, the demand for houses began to drop. In order for something to receive a higher demand upon it then the price must drop. This is what is happening to houses that are on the market. The government has spent their money in the past to help the housing market, however it did not help with the price and demand and money was waisted on this idea. People that receive home loans will never be able to pay off their home. They could have purchased their house when the economy was good, or at least better than it is now, and now since the prices of houses are dropping, their house could be doing the same. The debt that people are in and the low demand of houses on the market are bad for the economy and bad for businesses, such as real estate, trying to make money. However, the people that have saved most of their money can find a great deal on a home. They can buy a house for a price a lot cheaper then it originally was. The demand of people buying houses maybe low but it is beneficial to some individuals and family that have saved their money and are looking for a nice, cheap house to buy.
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The house market is in shambles because of subr prime and prime mortgages that countless citizens defaulted on, subsequently bankrupting themselves and destroying the housing market. The housing market boom that took place before the recession was a fake one. People bought houses when they could only afford apartments. Now people are learning the hard way that they will have to watch what they spend and if they simply can't afford something to save their money for another day. The hosuingq market will not go back up for sometime and it shouldn't, the reality is not everyone can afford a house, and that trying to do so can sometimes lead to economic ruin.
ReplyDeleteConsumers make economic choices based on their income. The more income a consumer receives the more demand they are likely to have for a product. Since we are in a time where the majority of consumer’s income is extremely low, the demand in the housing market has fallen lower than it ever has other than during The Great Depression. I do not think that government spending is an efficient way to stimulate the housing market. Since there is such a large deficit the debt on houses is extremely high. There has been a huge gap between the amount spent and the taxes taken from consumers. This large amount of debt has impacted the housing market tremendously. People who work in real estate are suffering the most. Since no consumers are accumulating very high income the demand to buy houses has fallen dramatically. Since the demand for house buying has decreased so much, it is extremely hard for real estate agents to sell house. If a real estate agent isn’t selling houses than they are not accumulating any personal revenue. If a person is not consuming revenue than their deficit increases and in the long run their debt increases. Not only has this debt affected the housing market, but also in the big picture it has hurt the whole economy.
ReplyDelete-Lizzie Sanders