A New House – Risks and Benefits
AXIA COLLEGE
Economics 212
October 8, 2010
Instructor: Robert Strain
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The department of Housing and Urban Development (HUD) in fiscal year 2011 set a goal to create and maintain over 100,000 jobs in the United States, thus the upswing in employment rates would also create an increase in income (Donovan, 2010). The demand for houses would increase due to the larger amount of non refundable income that consumers would now have. Ultimately this would lead to an increase in the price of houses.
The Federal Reserve can also influence national fiscal policies by buying and selling securities and bonds to influence interest rates. The then influenced interest rates would affect mortgage rates, housing starts, and housing policies in kind. The Federal Reserve in 2009 bought treasury debts in an attempt to restore the United States housing market (Lanman, 2010). On the tail end of the recent recession the Federal Reserve has also begun to cut discount rates. This is designed to stimulate economic upswing by making it easier for consumers to purchase and make investments, such as buying a home. Lowering discount rates would increase the overall money supply and thusly lower interest rates which would then have an effect on mortgage rates. When consumers find borrowing capital to make home purchases easier and more cost effective, the demand for housing should increase as well. A growing demand for houses will also drive the housing prices upward.
Researching what government agencies have what policies in place and what effect those policies have or will have is a must when considering a purchase of a new home. In doing thorough research into this information can an individual forecast housing prices, interest rates, and mortgage rates more effectively. Buying a home carries many risk and many benefits with it. These must also be carefully weighed against each other to decide if the time is right to purchase the... [continues]
AXIA COLLEGE
Economics 212
October 8, 2010
Instructor: Robert Strain
|
|
|
The department of Housing and Urban Development (HUD) in fiscal year 2011 set a goal to create and maintain over 100,000 jobs in the United States, thus the upswing in employment rates would also create an increase in income (Donovan, 2010). The demand for houses would increase due to the larger amount of non refundable income that consumers would now have. Ultimately this would lead to an increase in the price of houses.
The Federal Reserve can also influence national fiscal policies by buying and selling securities and bonds to influence interest rates. The then influenced interest rates would affect mortgage rates, housing starts, and housing policies in kind. The Federal Reserve in 2009 bought treasury debts in an attempt to restore the United States housing market (Lanman, 2010). On the tail end of the recent recession the Federal Reserve has also begun to cut discount rates. This is designed to stimulate economic upswing by making it easier for consumers to purchase and make investments, such as buying a home. Lowering discount rates would increase the overall money supply and thusly lower interest rates which would then have an effect on mortgage rates. When consumers find borrowing capital to make home purchases easier and more cost effective, the demand for housing should increase as well. A growing demand for houses will also drive the housing prices upward.
Researching what government agencies have what policies in place and what effect those policies have or will have is a must when considering a purchase of a new home. In doing thorough research into this information can an individual forecast housing prices, interest rates, and mortgage rates more effectively. Buying a home carries many risk and many benefits with it. These must also be carefully weighed against each other to decide if the time is right to purchase the... [continues]
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