...Deteriorating Housing Market Impact on the Economy
“Why the Housing Market is Still Stalling the Economy” – New York Times/upshot – April 24, 2014 by Neil Irwin
Introduction
The main focus of Neil Irwin’s article is the ever so rapidly deteriorating economy which seems to be a t a standstill and all this is to be blamed on one thing, a slow housing market. Though the big cities are experiencing fairly good housing demand, the same cannot be said for the counterparts who are their housing developments are not influenced by business but rather their demographic location. Analysis of mortgage uptakes ever since the end of World War Two has seen a promising increase and a rush towards the acquisition of residential homes. On the contrary, this increase has seen a decline for mortgage acquisition since the year 2009 and following subsequent years and recently led to the collapse of market prices for houses and the boom gradually declined.
Unlike yester years, adults are reluctant to move out of their houses because of the increased housing prices. Analysis shows that presently adults of up to thirty four years old prefer staying in their parent’s homes or even rent apartments, the opposite of what was previously the norm where adults had the urge to build single standing homes at tender ages between twenty and twenty four. This trend reflects on present demand for housing projects in that, developers say there is an increased demand for construction of flats which when looking at how it benefits the economy the impact is meniscal. Employment rates are on a ratio of 3:1, whereby flat construction employs 1.8% of manpower compared to
ANY TOPIC (WRITER'S CHOICE)3 building a single standing home which employs 3.8% of manpower (Voss, 20...
... middle of paper ...
...replicated in present America and soon they will say their savings are enough to purchase homes and give them the comfort of moving out of their parents houses to independent lives. If this gets to happen there will be a increase in demand for manpower to construct the housing units to be occupied pushing for employment opportunities and increase in market prices of houses. This will be a significant boost towards the deteriorating economy of the United States. Interest rates and mortgage rates will even go lower and in the end we as a nation will have a better economy that it is today.
Even though as a nation our economy is struggling, forecasts of future couple years will be achievable only
ANY TOPIC (WRITER'S CHOICE)8 if there is a change in the living trends of American adults. A change in this trend will lead to low unemployment levels and growth of the economy.
The housing market is very unique as unlike other goods and services, houses have permanence, it is a fixed location good causing the rules of supply and demand to be taken to new extremes. In the case of the Toronto housing market we can view in almost real time the role supply and demand play on he ever increasing house prices, additionally the fundamental economic issue of scarcity is made extremely apparent by the limited size of the city of Toronto.
The lack of available social housing is mainly due to stock levels steadily diminishing each year since 1980, after tenants bought nearly half-a-million council houses under the ‘Right to Buy’ scheme. This coupled with the decline in house building; which is currently at its lowest level since 1946, has brought about a shameful lack of affordable public housing (Turffrey, 2010).
“The housing market will get worse before it gets better” –James Wilson. The collapse of the United States housing market in in 2008 was one of the most devastating moments for the world economy. The United Sates being arguably the most important and powerful nation in the world really brought everyone down with this event. Canada was very lucky, thanks to good planning and proper preventatives to avoid what happened to the United States. There were many precursor events that occurred that showed a distinct path that led to the collapse of the housing market. People were buying house way out of their range because of low interest rates, the banks seemingly easily giving out massive loans and banks betting against the housing market. There were
The housing affordability crisis has been slowly developing over decades. This implies that young households – in particular young families who want to get their feet on the owner-occupied housing ladder, are hardest hit by the crisis. (Housing Supply Working Group) It is clear, historically, that even with significant private sector rental development, there will always be a need for some government role in assisting low-income households with housing affordability and other income problems. The impact of lack in rental supply and the consequent upward the pressure on rents is pressuring on all levels of government for assistance to low income households so that they can afford suitable and adequate housing. And the household formation will be delayed as young people are unable to find affordable rental accommodation if the shortfall units of rental housings keep remaining. (Housing Supply Working
House prices have been affected by the number of people who buy houses to rent out and this has had an impact on younger people wanting to buy homes. Thus, the term ‘generation rent’ has come to the forefront in recent years. In A Century of Home-ownership and Renting (The Open University, 2016) census data presented supports the claim for the use of this term. In the video, they mention levels of home-ownership dropped for the first time since records began. From 69% to 64% in the space of 10 years and the percentage of households privately renting has been on the rise. 11% in 1981 compared to 18% in 2011. In addition, house prices have risen faster than previous years and banks have also restricted lending. These factors have all lead to more people not being able to afford a home of their own, especially at a younger age. So, as house prices rise this benefits the home-owners and allows them to gain more wealth and capital. The distribution of wealth has been affected by changes in these markets. There is evidence to support this claim. Table 3.5 (Investigating the social world 1, chapter 3, p. 96) shows wealth distribution in Great Britain from 2000 and 2005. The table shows results for housing wealth distribution amongst other things. It’s important to look at the look at the lowest and highest percentiles to look at any
This will be a new evolution for the young people now and the young people to come, this means more educated people, which will change the way our jobs, economy, and development of our countries can be. More young people will explore their horizons and develop to be the best they can be instead of being forced to work a full-time low paying job and hit a dead end.
White, L. H. (2009, August). Housing Finance and the 2008 Financial Crisis. Retrieved from CATO Institute : http://www.downsizinggovernment.org/hud/housing-finance-2008-financial-crisis
...and demand, the decaying economy of the United States will stop festering and even begin to heal.
Efforts to confront this issue were initiated by affects of World War II. Before the war, the Great Depression devastated the United States of America causing production of homes to stop. World War II soon followed and the country switched into productions for war, which also caused a halt i...
In President Reagan's own words, homelessness is one problem that we have had, even in the best of times (Reagan). However, economic experts are all in consensus that this is the worse era for the housing market. One...
Unfortunately, much more needs to be done in order to see the light on the other side. First off, the United States economy, in general, needs to improve. The economy is having a domino effect, and now it is hitting the housing industry. Our unemployment rate is up to 10%. Banks are not prospering like in the past.
Affordable housing in the United States describes sheltering units with well-adjusted housing costs for those living on an average, median income. The phrase usually implies to applied rental or purchaser housing within the financial means of lower-income ranges specific to the demographics of any given area. However, affordable housing does not include those living in social housing owned by government and non-profit organizations. More specifically, the targeted range for housing affordability sets below 30 percent of a household's annual income, including all applicable taxes, utility costs and home owners insurance rates. If the mean income per household breaches the 30 percent mark, then the agreed status becomes labeled as "unaffordable" by most recognizable financial institutions.
The housing market crash was a response to a chain of businesses and people who believed that the old laws of banking were no longer important. Banks were no longer required to hold on to mortgages for 30 years which gave them the ability to sell off to other companies, without concern for the mortgage holders. David Harvey, a renowned geographer, warned us of this problem, stating that “labor markets and consumption function more as an outcome of search for financial solutions to the crisis-tendencies of capitalism, rather than the other way around. This would imply that the financial system has achieved a degree of autonomy from real production unprecedented in capitalism’s history, carrying capitalism into an era of equally unprecedented dangers” (Coe, Kelly, and Yeung, 2013)
Around the turn of the millennium Ireland had a small housing stock, with the figure being the smallest in Europe. With income growing and the population increasing the EMU allowed Irish financial lenders to offer mortgages to customers ...
Towards the end of the 1990’s, the Irish economy was booming, unemployment rate fell to around 4% and productivity was continuingly to grow. However, from 2002 onwards, the nature of the boom started to alternate. Labour output was no longer increasing, inflation was excessive and progression in gross domestic product (GDP) increasingly became related to the housing market. By 2006, although the public finances still seemed strong, this was misleading; the Irish economy was heavily dependent on the housing boom. The covered banks accounted for over 65% of the overall growth in property- related lending in Ireland (including 100% mortgages and tracker mortgages) and over lending to developers in Ireland, further highlighting the bankers’ greed.