Housing Slump

Topics: Real estate, United States housing bubble, Mortgage Pages: 1 (341 words) Published: July 26, 2013
Finally, the housing nightmare hits main street and it’s been referred to as the worst housing slump ever. The Indian housing bubble is an economic bubble affecting many parts of the Indian housing market. Housing prices stayed on peak for a long period, but started to decline in years 2018 and 2019. Any collapse of the Indian housing bubble has a direct impact not only on home valuations, but the nation’s mortgage markets, home builders, real estate, home supply retail outlets, hedging funds held by large institutional investors and foreign banks, increasing the risk of a nationwide recession. A daisy chain of financial disaster you may say- one crisis begetting the other.

Real estate sector bubble may be typically characterized by rapid increases in the valuations of real property until they reach unsustainable levels in relation to income, price to rent ratio and other economic indicators. Consequently, this decreases the home prices for owners and they find themselves are in a position of negative equity- a mortgage debt higher than the value of the property.

There are signs that the housing recession may turn into a full-fledged economic melt-down and the governing bodies are expected to take immediate and effective actions. Put simply, the government can take loans from friend-countries or from its own central bank, The Reserve Bank of India. Ideally, they should loosen their credit policy across the spectrum- from mortgages to credit cards to auto and student loans. The government on the other hand, to meet the repayment of loans, can increase the tax to be charged. Also, only government mandated loans should be provided to the citizens. This results in robbing the confidence of the citizens and getting the economy back on its track. The next and an important step to be considered may be stabilizing the home prices. To arrest the improved trend, the legislation should support housing counselling and alter their bankruptcy rules. If the scope of the...
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