A housing bubble can be an economic bubble, which occurs in either local or worldwide real estate market. It is characterized by fast rises in the price of real property until untenable levels are approached or reached relating to incomes …
Download file to see previous pages...
Subsequently, the rapid increases lead to decreases in home values and mortgage debt charge that exceeds worth of property. Housing bubbles are usually identified after a market correction since house bubbles do not burst the way stock markets do. A housing bubble can occur when there is excess demand in housing with the supply that does not increase. There was a housing market bubble in New York that reached its climax in 2006. The housing bubble was attributed to rise in subprime lending, poor policies, poor taxation, emergence of new lenders, underwriters and mortgage brokers and credit raters. The housing bubble in New York took a period of ten years before it was realized. Because of the housing bubble in New York, the consumers, lenders and the entire economy were affected. The bubble was identified in New York by housing prices rising faster than the consumer prices, which was attributed to the increased demand for houses and a non-increasing supply side in housing (Frank, 2009). Housing Market Bubble and New York City economy in 2006 During a housing boom, there is a substantial rise in real output as investment in houses and their related investments increases. There tends to be more jobs in the housing sector, and the investment gives out more economic output. Of course, the assets for extra housing activity have to be generated from somewhere, which means less activity for the other sectors of economy than it could have otherwise occurred. On bursting of a housing boom, new housing begins to fall, and the process is reversed. Another aspect of house pricing that affect the economy is that of household wealth effect and the related consumption. In times when house price increases, owners of houses for investments become wealthier and in the end increase their consumption spending since consumption is dependent on a person’s wealth. The wealthier an individual becomes, the more he has the willing power to consume and thus, the more he will consume (Frank, 2009). The New York economy experienced changes due to the housing bubble. Before the market bubble came to be realized in the year 2006, the revenues related to real estates had increased tremendously, but with the housing market bubble, the revenues collected in the form of taxes from the real estates decreased drastically. The decrease in tax revenues could be attributed to the weaknesses in carrying out the housing transactions. There was a decrease in the growth of GDP since it grew at a lower level from the previous years. Private investments fell to 3.3% with a considerable increase in all sectors of private investments, but investments in inventories decreased significantly (Wiedemer, 2006). Consumer spending was highly affected by the housing bubble. As the mortgage interest rates rose, the consumption spending was decreased. However, since the interest rates rose slowly and the corresponding wealth effect was not random, the overall effect on the economy was not immediate, but took time before it could be noticed. An attempt to determine the value of houses rated NYC housing value as being 25% above the sustainable level. Usually, the reduced consumer spending may be because of the consumers not having trust in the housing investments, where they experienced a mix up of prices; price increases and price reductions. The consumers felt less wealthy after the bubble burst and they responded by cutting back spending (Wiedemer, 2006). During times of house bubbling, there were an increased number of brokers and underwriters, these made the real estate trade become easier with their role in shortening the transactions between purchasers and sellers of real
...Download file to see next pagesRead More
The cost of housing or for that matter for any commodity solely depends upon the demand-supply dynamics if it is allowed to operate in a free market without any government intervention. Housing demand was on an upswing since January 1993. The median housing price, which was $125,000 in 1993, doubled up to $250,000 by 2006.
While mortgage and house markets downtowns have been causes of economic problems in various parts of the world, but experts assert that this situation is unique (Simkovic 257). This study reveals that, the uniqueness of their situation explains for the first time ever downturns are motivated by a credit crisis in the non-banking area of finance, which is contrary from the norm, whereby such actions have created downturns in the general economy through a credit crisis in the banking zone.
New York was one of the first states to be recognized as United States territory and the city itself was the capital city of the United States until Washington was later chosen as the capital. As shown below New York is an important part of the United States as both an economic bloc and a cultural area of the nation.
The discussion includes research findings using related books, academic journals, and recent newspaper and magazine articles on the topic that is causing a lot of tension for reasons that will be shown below. The drop in real estate market prices is not an isolated event.
The original settlement of New York City was by Dutch traders. They established it as a trade center in 1624. At this time it was called New Amsterdam. When the British took over nearly fifty years later, they changed the name to New York (U.S.
xperience of Sudhir Venkatech, a sociology student of the University of Chicago, who innovatively solicited accurate and comprehensive information from residents of the Robert Taylor Homes by posing, not as on observer, but as a participant. The paper therefore aims to address
As the demand of houses spiked, more production and an aggressive marketing by both real estate developers and mortgage providers ensured, and it reached a time when the supply was above the demand.
Aggressive marketing by the real estate developers and the
is also the question as to whether an otherwise appropriate administrative inspection is unconstitutional as the key purpose of the statute authorizing the search, which is deterrence of crime, is similar to the purpose of penal laws as the inspection might reveal violations of
We joined NYC mortality records from 1999 and 2000 with the 2000 U.S. Enumeration information by postal district zone. Age-balanced death rates by race/ethnic fixation were computed. Straight relapse was utilized to focus the
1 Pages(250 words)Research Paper
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Research Paper on topic 2006 New York Housing Market Bubble for FREE!