Opinion on economic issue - Essay Example

Opinion on Economic Issue INTRODUCTION In the modern era, the costs of rental properties are increasing more aggressively in the local market of the United States. In this regard, it has been recognized that the price of home and shelter is increasing every day. With regard to this particular issue several problems have been observed in the domestic market of the US. Subsequently, it can be asserted that the objective of this particular assignment is to examine the issue of inflation on the US rental properties, which is adversely affecting the micro and macro-economic environment of the US.

In this context, in order to identify the potential causes of the rising rental inflation in the US, the study has relied on varied academic articles and business reports. THEORETICAL PROPOSITIONSIn accordance with the viewpoint of Madigan, the average rent of the apartments had increased to 3.1% in the US market during the last year in comparison to the year 2012 (Madigan, “Why Rising Rents Haven’t Pumped Up Inflation”). On the other hand, Keely, Ark, Levanon, and Burbank, arguably claimed that the cost of housing property is decreasing in the US market in the recent days.

In this regard, Keely, Ark, Levanon, and Burbank argued that the buying demand of the housing property has been dramatically reduced during the last few years in the US. Contextually, several economists have believed that rising price of food and energy has influenced the demand of real-estate in a negative manner (1-49). On the other hand, Madigan claimed that rising prices of medical services, education and communication services have indirectly affected the demand of the real-estate in the US marketplace (Madigan, “Why Rising Rents Haven’t Pumped Up Inflation”).

However, Keely, Ark, Levanon, and Burbank arguably claimed that the rental demand on the US market has dramatically increased in the last few years (1-49). In this regard, it can be asserted that financial crisis and high rate of interest as well as the mortgage burden has affected the demand of the household buyers. On the contrary, it has influenced the tendency of renting residential, which has caused high inflation in the domestic market place (Madigan, “Why Rising Rents Haven’t Pumped Up Inflation”; Keely, Ark, Levanon, and Burbank 1-49).

A CRITICAL ANALYSIS AND FINDINGS Based on the above discussion, it has been recognized that the cost of real-estate property has reduced in the US market due to high rate of interest. At the same time, it has been also recognized that 38.2% of the US population are associated with mortgage household property, which signify that the tendency of buying house has been reduced among the US citizens (Keely, Ark, Levanon, and Burbank 1-49). At the same time, it has been also witnessed that the cost of medical and education services had increased by 1.7% and 1.8%, respectively within one year duration as compared to the year 2012 (Madigan, “Why Rising Rents Haven’t Pumped Up Inflation”).

Thus, a negative effect has been observed among the consumers. In this regard, in order to reduce the risk involved with the purchase of housing property and to reduce the investment burden, consumers prefer to rent household property. As an immediate effect, the cost of rent has also increased in the US. CONCLUSION According to the above study it has been recognized that during the early 21st century, the US has witnessed a dramatic change in their real-estate sector, which has affected the economy of the country adversely.

At the same time it has also influenced the price of rental property. Works Cited Keely, Louise, Bart van Ark, Gad Levanon, and Jeremy Burbank. “The Shifting Nature of U.S. Housing Demand.” Demand Institute (2012): 1-49. Print. Madigan, Kathleen. Why Rising Rents Haven’t Pumped Up Inflation. 2014. Web. 25 Oct. 2014.