With all the decline on the disposable cash flow of every home in the economy, household consumption began to deteriorate building a negative effect on various companies including the housing sector. It was identified based form the data collected by the Bureau of Labor and Statistics that the mixture annual level of the real estate industry’s CPI for Feb . 2008 was equal to installment payments on your 8 percent, with Nov 2007 showed the highest improvements from its preceding month equal to 0.
4 percent, as compared to the 4. a couple of percent of February 2007.
This simply means that the rate of embrace the prices of housing devices starts to decelerate but still remains high considering the disposable profits every home currently have. Furthermore, employment level plunges down along side with the housing market because August 3 years ago recorded the highest lay-off on the history of housing sector equivalent to 21, 000 as compared to only 1, 000 lay-offs took place last August 2006. With this large numbers of workers laid-off from their careers, plus the raising number of broke housing companies, employment price started to decline.
Though the GROSS DOMESTIC PRODUCT of Usa remains high despite of the turmoil inside the housing market, but its GDP progress rate significantly decline via 2006 to 2007 from 2 . 6th percent to 1. 5 percent correspondingly. This only means that housing business still imposes barrier towards the economic regarding United States. Enclosure starts was down by 28. four percent coming from 2006 to 2007 since consumers slashes their demand on casing units as a result of limited budget and high cost. In order to avoid the said major depression of the housing market, federal government ongoing slashing down their interest rate to guide casing companies to recover financially as housing revenue has been declining since 06\.
Last January 2008, the Federal Reserve cut the eye rate to 3. 5 percent in order to stabilize the economy and prevent the impeding states (Presse, 2008). Furthermore, it was also discovered that fresh home revenue declined simply by around 46 and 30 percent on 06\ and 2007 respectively. The said record was the lowest annual house sales since 1995. The above identified economic factors support most of the those who claim to know the most about finance and marketplace analysts in determining the near future performance of the housing market and of other industries in the economy.
In this regard, the essence this conventional paper is to discover various macroeconomic factors that affect the performance of the housing industry and how it affects the behavior of the entire housing market. Furthermore, discussions for the future current condition of housing market will be presented to be able to easily appreciate how economists and market analysts projects the performance of housing market. Anticipate also at the end of this newspaper alternatives that might address macroeconomic factors that negatively affects the stability with the housing market as well as evaluation that will serve as the guide in choosing the appropriate solution for the lack of stability of the housing market.
Structured from the offered data, fights and examples above, therefore, it is clear that housing market is indeed performing idly, lazily, slowly, due to various macroeconomic elements. Depletion of consumer’s disposable income produced significant negative effects to various macroeconomic factors that later on serves as the source of instability of numerous industries throughout the economy including the housing industry.
Furthermore, the projections of most economists and market experts regarding the upcoming condition of the housing market tremendously affects just how financial institutions establishes their loaning transactions while using housing corporations which adds to the financial challenges of the latter. With the aid of monetary and budgetary policies with the federal government, the issues concerning the instability of the housing market are solved.
Tvinge, A. Farrenheit. (2008). Given Slashes US Interest Rates to 3. 5%. Gathered April 3, 2008