Observing the current economic and regulatory events closely, the critics recognize some warning signals. This description gives a positive view of the economy but there are critics that see a possible crash of the real estate market in the upcoming years. As a result of the plan, American households cannot take advantage of the mortgage interest deduction which could influence their net income. All these factors are strongly interacting and have a strengthening effect on the economic growth.Īlso, Trump’s tax reform plan plays its part in this development. An increased spending behavior leads to higher profits for companies and higher tax income for the government. Employment and higher wages imply that the households are able to increase consumption and, at the same time, save money. This economic situation can be traced back to low unemployment rates and rising wages. Some argue that the economies of developed countries are really strong at the moment. There are different opinions about the outlook of the real estate market for 2019 and the following years. This decreasing demand ends up in declining house sales and due to this fact, nowadays house prices rise at a slower pace than before. Thus, fewer households were/are able to buy a home. This was the motivation for the Fed (Federal Reserve) to increase interest rates slowly from 2018 on, which made credit raising more expensive due to higher mortgage costs. If an economy grows too quickly, it can overheat and end in a crash. One of the important drivers of the real estate market is the development of interest rates. In general, as an economy recovers, macroeconomic variables which serve as indicators of the economic situation, change. That development led to higher purchase power and ability to invest, so the demand for real estate increased. At the same time, the supply of real estate was relatively low, resulting in a rise of real estate prices. Between 20, the economy slowly recovered and thus, the financial situation of both households and real estate companies improved. After overcoming the global financial crisis, the years from 2010 have depicted a better picture of the economic situation. Having its roots in 2008, the subprime mortgage crisis led to a heavy decline in the market values of real estate with prices breaking down for more than 30%. Looking back at the last years after the crisis, the real estate market painted a picture of steadily increasing prices and high demand. How did the housing market in the US develop after the crisis and how does the outlook for 2019 look like? These are the topics which are going to be addressed in this article.Ī heavy decline in the market values of real estate with prices breaking down for more than 30%. The trigger behind the worldwide collapse of the financial world was the burst of the housing bubble in the US. One decade ago, more precisely on the 15 th September 2008, the financial crisis reached its peak with the insolvency of the investment bank Lehman Brothers.
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