The U.S. real estate crisis - a sudden phenomenon, or just the greed for high returns of the American and international capital markets.
Because of the steady demand for residential property and the associated increase in value past 10 years, the American market participants went in a grateful certainty that this trend will continue steadily (from the point of view: Quality, durability of buildings and a steady population growth). Thus moved the Real estate market closer to the sight of American investors and institutional investors, who demands investments with low risk on the capital market. As well the international banks showed their interest in the products of the U.S. real estate market with all its segregation. They invested in productive products with low default risks and best financial ratings.
The international real estate crisis was triggered, which is also known as mortgage crisis, by awarding mortgages to borrowers with low creditworthiness that have no sufficient collaterals available. Customers were prompted with high-quality buying incentives to conclude a Real estate sales contract, which was secured by a mortgage debt. On the other side confidence and security was suggested by the investors rating agencies. The apparent security and the high return so called international banks in the financial maelstrom. The author is going to give an overview about the behavior of market participants, just to demonstrate in which points the causes of American property crisis in the 21st Century is justified.
2. Behavior pattern of American and international market participants in the real estate market
The real estate market in the United States of America was valid until 2007 as very solid. In the Years from 1995 to 2000 the demand for real estate and their value increased steadily. Despite the high interest rates on the capital market and the relatively high opportunity cost for investment decision in favor of the New Market,... [continues]
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(2008, 06). Real Estate Crisis. StudyMode.com. Retrieved 06, 2008, from http://www.studymode.com/essays/Real-Estate-Crisis-152054.html
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"Real Estate Crisis." StudyMode.com. 06, 2008. Accessed 06, 2008. http://www.studymode.com/essays/Real-Estate-Crisis-152054.html.