The Current Scenario Of Raising Prices And Methods

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

as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value.

With the consistent increase of property prices and more personal debt than ever before, we assume that there’s a housing bubble in Australia. The statistics show that from 2008 till now, property prices have been going up as a result of increased mortgage debt. When it slows down, that could cause a property crash. We are sure that there’s a housing bubble, but we cannot confirm when it will finally burst although a few area in Australia has already met a decrease of house prices. There are 3 indicators of the housing bubble in Australia.

What does it mean for an economy to be overheated? How does an overheated economy fuel a “bubble”? Are there any bubbles in the U.S. economy today?

In 2007, the U.S. fell into a deep financial recession. One of the main causes of this was the bursting of the housing bubble, which lead to a housing crisis. What is a housing bubble? A housing bubble is defined as “a temporary condition caused by unjustified speculation in the housing market that leads to a rapid increase in real estate prices” (businessdictionary.com 2014). When the bubble bursts, the result is a quick decline in home prices (businessdictionary.com 2014).

Problems for home owners with good credit surfaced in mid-2007, causing the U.S.'s largest mortgage lender, Countrywide Financial, to warn that a recovery in the housing sector was not expected to occur at least until 2009 because home prices were falling "almost like never before, with the exception of the Great Depression." Most economists agree that the primary cause of the current recession was the credit crisis arising from the bursting of the housing bubble. Why did the housing bubble occur and why did its bursting cause such a severe and widespread recession?

During the first half of the past decade, the U.S. economy experienced a housing bubble in

The crisis that stressed lots of economies and financial systems originated in US mortgage lending markets. First signals of possible problems came in early 2007, when the Federal Home Loan Mortgage Corporation announced about its inability of purchasing high-risk mortgages, after what New Century Financial Corporation - a leading mortgage lender to riskier customers - filed for bankruptcy (John Marshall, 2009). In the research paper of 2009 he claims that source of the crisis emanated from the rise of house pricing, called housing bubble. “US house prices rose dramatically from 1998 until late 2005, more than doubling over this period, and far faster than average wages. Further support for the existence of a bubble came from the ratio of house prices to renting costs which rocketed upwards around 1999..” (John Marshall, 2009, p 10). Housing bubble was also fully analyzed by Dean Baker in his research “The housing Bubble and the financial crisis” in 2008. Dean noticed that, by the middle of 2007, house prices had peaked and began to head downward.

The bursting of the U.S. housing bubble, which peaked In 2007 caused real estate pricing to plummet. Inevitably, questions regarding bank solvency and declines in credit availability forced thousands within the mortgage lending industry (investors, lenders, brokers, originators etc.) to seek employment elsewhere. Consequently, Robert gained employment with the second largest furniture retailer in the northeast (Raymour and Flanigan). During his two plus year tenancy

Folks like Professor Schiller began warning us of the housing bubble starting as early as 2000, he was followed by G Edward Griffin and Jeffery Robert Hunn and they were followed by many others. The point being that we did know and could have avoided at least some of the pain; and we also could have heeded the lessons of history that the great depression showed us!

Further to the argument that agents were ignorant of and failed to engage with new information, the formation of asset price bubbles has been offered as a cause for the GFC. Ball argues that it is inherently difficult to recognise the presence of an asset price bubble until after the event has affected the market and even by recognising that prices did not accurately reflect true value, this could never have indicated a nearing price bubble burst to investors because EMH suggested that all then available information was

Since 2003, there are economists warned America  's real estate bubble will burst a year, although this prediction has not fulfilled,however, the occurrence of happen sooner or later. In 2007 August,America sub-prime mortgage crisis broke out suddenly, not only the real estate bubble has finally burst, America also fell into the since twentieth Century 30 the Great Depression of the most serious financial crisis.

Throughout the text of the book, you will read about different bubbles that occurred in history. Some of these bubbles have happened in the last ten years and some have happened in the last three hundred years. One of the most interesting bubbles that I read about was “The South Sea Bubble”. The South Sea Company in England was formed in 1711 to create confidence in the government’s ability to meet its debts and promises. This company took a government debt (IOU) for ten million pounds. In return, the government was given monopoly over all trade to the South Seas (Malkiel, Page 41). People thought there would be a lot of opportunity to make money during this time. In 1720, the entire national debt, which was thirty one million pounds, was capitalized. The stock rose from 130 pounds to 300 pounds when the bill was introduced to Parliament. After bill became the law, the South Sea Company sold a new issue of stock at 300 pounds. There were fights that broke out by investors who wanted to purchase this new stock price at a proposed installment offer.

By definition a housing bubble is a temporary condition caused by unjustified speculation in the housing

Besides, low interest rates and large inflows of foreign funds created easy credit conditions for years before the crisis and that simulated the boom in housing construction (Steverman and Bogoslaw, 2008). Moreover, easy credit and money inflow greatly contributed to U.S housing bubble and the rise of house’s price.