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Real Estate and Recession - Research Paper Example
Finance & Accounting
Pages 4 (1004 words)
REAL ESTATE AND RECESSION Client name: University name: RECESSION AND REAL ESTATE MARKET The 2007-2012 global financial crises created several challenges and problems for different organizations, countries and financial experts. This financial crunch was a result of energy crisis, on-going recession, automotive industry crisis, Euro zone crisis etc…
This is what happened in United States before the global financial crisis. The values of houses touched the peaks during the year 2006 which begin to rapidly decline during 2006-2007. Now let us discuss some of the causes which led to the burst of housing bubble. The housing tax policy as discussed in taxpayer relief act of 1997 encouraged people to invest in housing rather than stocks and other types of investments. There were not enough regulations in place to have a proper check and balance on such housing investments. The use of mandated loans is considered another cause of the burst of housing bubble. Then the federal bank also lowered interest rates while the rise of houses was not uniform in all regions of United States. The Americans used to believe that investing in houses is a secured investment and they even preferred to become owners of their houses. There were many marketing campaigns being run to encourage people to invest in real estate. This encourages more and more people to invest. However, the high values of houses were later followed by decline in prices which busted the bubble. The housing bubble affected the U.S economy in various ways. Millions of new houses were built and sold. ...
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