The Real Estate Business - Essay Example

Real estate business as other businesses has its challenges. Inflation can affect the businesses to a point of closing them down or operating on losses. The recession in the U.S economy has affected the real estate business. The residential housing Market has turned around. For instance, the Gross Domestic Product growth in the U.S declined from 4.9% in the third quarter to 0.6% in the fourth quarter of 2007. Unemployment rate has gone up, and this has seriously affected the lifestyle of people in the U.S. spending becomes a problem, and most people go for cheap product even in personal consumption (Lynn, 2009). In the U.S, real estate business is facing a formidable challenge, and this affects the country and global economic growth.

Investment in the real estate business has been affected by the finances and lending institutions. The for- sale housing market has had an enormous challenge, and the business is going down. This is as a result of low affordability, tight lending standards and excess supply in many regions. When a country is going through a recession, the market finds itself in the bad shape. People refrain from buying the products in the market because their spending power is weakened (Lynn, 2009). The real estate is also affected due to the increased cost of materials from suppliers.

The reason why the suppliers increase their costs in many counties is because during recession time the government adjusts the policies of taxation. The materials are taxed highly, and therefore the supplier has no option than to increase the cost of construction materials. This affects the market place, and the business will go down, and the end result is poor economic growth. Taxes are particularly burdensome, and businesses suffer when they are taxed unfairly. Like in the U.S taxation system is regarded as the most unequal and unjust in the word.

This can also be seen in other parts of the world. Political leaders may take advantage of their power to manipulate the taxation policies. Their businesses are not taxed in the same ratio as for the citizens. Economic development to them becomes a task of the citizens who pays the largest amount in paying taxes (Hinkel, 2008). The government should try and subsidize taxes so that companies and suppliers venturing into a business do not suffer losses. The customers also will be willing to buy or rent houses because the prices will be affordable.

The tax law should be reviewed in a way that they favor both parties. The seller and the purchaser are the parties in question. They should be in a position to do transactions without incurring much cost. The government should ensure there the transactions are fair by reviewing the tax laws (Hinkel, 2008). According to Hinkel (2008), real estate is governed by the state law. The state law varies from one state to the other. The law s control the ownership rights to the property, the form and content of the various documents and procedures involved in the sale, leasing, financing, and inheritance of the property.

The legal profession spends time and client’s money worrying about the ownership of property. This becomes difficult for the investor or the buyer to use the property because until the process is over the buyer has no right over the property. Therefore, if the buyer wanted to put up business in the estate, it will take him/her a