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12 March, 2015
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In accordance with the assignment requirements, the US housing market analyses will be provided in the following report. The report illustrates detailed information about the US housing market, microeconomic factors such as demand and supply that affect the price and overall condition of the market. Housing market in the US plays significant role in shaping the economic and social well-being of the country. The housing industry has an excessively huge effect on the more extensive wellbeing of the US economy contributing 15% to US Gross Domestic Product (GDP) in 2012 and about 20% amid the go-go years of the most recent decade. There are two primary ways that the housing directly affects the economy. First, private altered speculation alludes to money spent on new home development and upgrades. These capital speculations have overall represented 5% of US Gross domestic product in the course of recent years; the 3.1% figure recorded in the first quarter of 2013 shows there is still much space for the area to develop. Second, consumption spending on housing services, which is bigger, yet more a stable contributor to GDP, refers to the amount of money spent on housing services, for example, rent and utility installments. Also, housing market exerts great influence over labor market. When real estate and rental accommodations industry employees are additionally included, the industry employs over 4 million workers, contributing to 3.1% of all non-farm employment in the US. However, these figures speak to a decrease of 1.3 million employments from their 2006 top. Actually, there are still 460,000 fewer individuals utilized in the private development area today than they were during the recession in early 2001. Nevertheless the positive effect of housing market on the US economy, it has negative effect too. For example, the US “housing bubble” has affected many parts of the US housing market in over half of American states causing the 2007-2009 recession in the United States. In addition, this was one of the major factors which lead to crisis in August 2008 for the subprime, Alt-A, collateralized debt obligation (CDO), mortgage, credit, hedge fund, and foreign bank markets.
There are several non-price determinants that affect demand and supply in the US housing market, such as population, incomes of households, social trends and interest rates. First, population size and changes in its structure straightforwardly determines demand and supply, since, the businesses decide to build new houses depending on the number of people. For instance, the blast years supported an abundance of new houses being constructed. The supply of lodging now surpasses the demand; subsequently the cost of lodging is liable to keep on falling. Second, changes in both the level of national...
Bibliography: John Sloman and Mark Sutcliffe, (2001). Economics for Business. 2nd ed. Harlow: Pearson
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