Confusing Signals Within Us Housing

The housing crisis of 2008 can trace its origins back to the stock market trends of the mid- to late 90 's. During a period of extended growth in the stock market, increased individual wealth among investors led to generalized increases in spending, including in the housing market. With more disposable income in the pockets of consumers, the demand for housing increased in the late 90 's. Due to the fact that homes are large projects and their construction takes a large amount of time, the supply of homes in the market is inelastic on the short term. Because of the fixed supply of homes, as per the law of supply, which

The increasing homeownership rate in the United States is a worthwhile policy goal. The housing economy creates jobs for American citizens as well as brings down the competitive qualities to purchasing a home allowing more middleclass citizens to spend money on houses. In doing so this drives the overall economy up in the United States.

Post-housing/financial crisis of 2007-2009, the housing market seems to be showing signs of improvement after great downturn. With the downturn in housing prices, many homeowners did not have enough equity to avoid taking a loss on the sale of their homes so they are sitting with home loans based off of higher-than-current mortgages. However, in November the National Association of Home Builders’ sentiment index jumped to 20, which is the highest reading in over a year. Demand for mortgages has also seemed to pick up a bit according to the Fed’s 4th quarter loan survey. Construction remains at historically low levels but has increased as of late, and the number of

A report prepared by the Economic Roundtable, Rental Housing 2011; The State of Rental Housing in the City of Los Angeles, noted that the city’s rental property had increased due to foreclosures that had started during the 2008 recession and been converted to rental property. Although this increased the options for renters, the incomes of family households had been decreasing since 1990. In this report, Daniel Flaming and Patrick Burns state, “Over the past decade, rent as a share of income has shifted from being barely affordable to predominantly unaffordable for renters (2012). They also note that the majority of renters in this area pay 30% to 50% of their income on rent. This is compounded by the problem of the increase of

Shortage of housing supply, especially in the coastal areas, is the critical issue that drives housing affordability crisis in California. California’s major coastal metros (such as Los Angeles, San Francisco and San Diego), where about two-thirds of Californian live, is lacking in sufficient housing to accommodate all the people who want to live there . For example, in 2015, there were 133,000 jobs created in the Bay Area while only 16,000 units of housing added there . In addition, the construction of new housings in California’s coastal metros, from 1980 to 2010, was low from both national and historical standpoints. During the past three decades, the number of housing units in the typical U.S. urban center grew by 54%, compared with 32%

Macroeconomics is an excellent tool for the analysis of the housing industry as something like a capital good, as a home is considered to be, cannot easily be studied in a short-term platform. Real estate is a good that costs several times more than an average persons annual income, in the United States that number is typically 7 times as much, and in the United Kingdom that number is 14 times as much. Several factors of both supply and demand directly impact the housing market on a macroeconomic scale. (Business Economics, 1)

New construction was most definitely booming in Miami during the period immediately before the sub-prime mortgage crisis. According to the City of Miami’s community development market analysis report, there were 27,212 building permits in 2005, to only 1,150 permits in the midst of the crisis in 2009. The same report lists the mid-1990s and the early 2000s as housing booms with record levels of new development (City of Miami). As of 2010, housing built in 1980 or later made up 24% of the housing stock in Miami, the period between 1950 and 1979 occupied 45% of the stock, and housing built before 1950 held the remaining percentage (City of Miami).

“Why didn’t Canada’s housing market go bust?” This is a question that has attracted interest from economists, market researchers, and the general public as a whole. The Canadian and U.S housing markets are moderately comparable in numerous respects, but when it comes to the financial crisis both countries resulted in extremely diverse ways. There are many things that can be attributed to the different outcomes of both countries, including: lending standards, rise of real estate, and above all the crash of the sub-prime mortgages which will all be examined. What will first be analyzed are the history of the housing market in both Canada and the U.S prior to 2008 and the market crash, then the comparison of the factors that caused each scenario in both Canada and the United States, as well as the present situation in both Canada and the U.S.

It has been 7 years since the housing bubble burst and the financial systems collapsed back in 2008. Since then, some will say that the housing market, as a majority, has healed and regained footing but is that entirely accurate? It has been an up and down rollercoaster since the collapse of 2008, however the housing market has only started to recover within the past 2 years. “Right now, I would say we are 64% back to normal and a lot of what is driving the housing market’s strength is existing home sales, but prices have also helped push the recovery” (Jed Kolko, Trulia). As stated in the first paper, the housing bubble burst because of the increase in interest rates that put homeownership out of reach for some buyers. This ultimately caused homes to become unaffordable, leading to defaults, foreclosures, and short sales. More so, on December 30, 2008, the home price index reported the largest dip in home prices ever recorded, losing 33% from its 2006 peak to 2012. This financial crisis, unanticipated by most, caused the United States to go into a recession and has been known to be most significant risk to our economy. It was the beginning of last decade, 2000, when real estate prices rose at an unprecedented rate, subsequently leading to the bursting of the housing bubble starting in 2006.

Housing demand includes household growth, real incomes, real wealth, tax concessions to both owner-occupied and rental housing, concessions to first homebuyers, returns on alternative investments, cost and availability of finance for housing and the institutional structure affecting housing finance provision (Yates, 2008). The growth in the number of households and in real income results in the increased pressure on housing demand.

When researching past economic recoveries, the housing market is the one to drive the economy out of recession. That being said, this economic recession hasn’t had much of an impact until recently. America’s housing boom had a tremendous influence on the economy for its low prices and flow of new home construction.

Florida is a bellwether state for the U.S. in that trends that occur in Florida tend to be experienced by the United States as a whole. Florida has pushed through some major events such as the Florida Housing Boom in the early 2000’s, the recession in the mid 2000’s, and the long but steady recovery phase towards the end of the 2000’s and modern times.This trend in housing occured throughout the United States and was a key feature of the Great Recession. It is possible to better understand housing trends and economic effects by focusing on a particular example of housing in Florida. In addition to the direct relationship between prices and demand for condominiums in Florida, there is also a direct correlation of how events

What is the housing economy today? According to the National Association of Realtors, pending home sales improved slightly in April and continues to be well above a year ago. There are reports of bidding wars on some properties in neighborhoods where few homes are on the market. Some are even working there through the inventory of homes that were foreclosed on during the housing crisis. But there are many whom this is not reality. CoreLogic reports that 4.4 million foreclosures have been completed since 2008, the start of the Great Recession. In April, some 52,000 foreclosures were completed, a drop of 16 percent from March. Still, that’s twice as many foreclosures as in a normal housing market.

The burst of the housing bubble in 2006 left millions of homeowners helpless to inevitable foreclosure. Current lending practices make it difficult for potential borrowers with tarnished credit histories (like foreclosure) to qualify for a loan. Since traditional sources of home financing are unavailable to so many people, alternatives have begun to flourish in the economy to meet the demand of people wishing to purchase homes with less-than-perfect credit histories. The primary options boomerang buyers have at their disposals to obtain home ownership again are: lease-to-own, seller-financing, hard money, and sub-prime. Each of these paths toward home ownership comes with unique sets of benefits and costs. This paper will explore each.

Compare housing wealth and GDP, we can see that housing wealth is larger than GDP. Housing wealth also fluctuates over time. Figure 2 illustrates the ratio of nominal housing wealth to nominal GDP in the US. From the figure, we can find that the ratio of housing wealth to GDP has averaged around 1.5 between 1952 and 2008. However, it has moved dramatically throughout this period. At the beginning of these periods, it was equal to 1.28; we can see the lowest value happen in 1962 and in 2005 it reaches the highest value of 2.26. It is at the peak of the recent housing boom.