Economics Housing Market

Topics: Mortgage, Real estate, Foreclosure Pages: 2 (581 words) Published: April 2, 2014

During the duration of 2007 – 2009, the housing market in the United States crashed affecting thousands, even millions, of homeowners. When you open an account in any bank branch, your money is given to other members. Banks take your money and lend it out to other members for various reasons. Let's say, a bank lends out money in order for homeowners to put money down on a home. By charging interest on the money they gave away, banks make a profit from lending out all this money. When people lose their job, they cannot pay their mortgage. When people can pay mortgage, banks have no source of money to lend out in order to make a profit. There are many causes to the recession, but the housing market was one of the main aspects. With the help of the government and people’s consistent need for a home, the housing market is recovering. The question remains, how much is it recovering? According to our research, the answer is not that much. The unemployment rate and the decline in foreclosures rates have a direct relationship. Foreclosure is when the bank takes a home as a result of the homeowner’s lack of mortgage payments. When the price value of homes go up, the amount of foreclosures goes down. When homeowners can pay their mortgages they can pay the banks back, who in return can lend out money to other members and collect profit. Now depending on the location of a home, the effects of the housing market can vary. The greatest circulation in the housing market tends to occur in cities with a low unemployment rates, usually smaller cities. The opposite can be said about larger cities. In some “run-down” locations, the housing recovery is slow because the prices for homes are slowly rising again, even though they will never return to their previous state. According to further research the housing market is doing better than it was five years ago. New home sales, homebuilding, and existing home sales are all up. One down side to all of this is that, mortgage rates...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Political and Economic Aspects of Cultural Differences Essay
  • Housing Market Crisis Essay
  • Business Economics: Australian Housing Market Essay
  • Collapse of the Housing Market. Essay
  • The Uk Housing Market Essay
  • Chinese Housing Market Essay
  • Essay about Rise and Fall Housing Market
  • Essay on Government Intervention in the Housing Market and Is It Ethical?

Become a StudyMode Member

Sign Up - It's Free