OUTLINE – Essay Example
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Outline: Microeconomics: The Property Markets
B) Brief History of Real Estate Markets
a. World War I brought about a major change in the markets and there was a drastic drop in the prices.
b. World War II the economy saw a major sink and this was one of the lowest periods for the US Real estate markets.
c. The markets saw a major and rapid growth in the ten year period and a number of factors that helped in this growth form the factors that contributed to the housing boom.
C) Housing Bubble
a. The housing bubble is referred to as the increase in the home values beyond the real value.
b. A number of areas across US were affected by this however the most severely hit areas included Las Vegas, Phoenix, Hawaii, Washington DC, California and Florida (Shurick and Weir).
c. The year 2006 has seen a number of people refinancing their properties to be able to pay lower interest rates.
d. Post the IT bubble burst in 2000 the fed had reduced the interest rates, and also agreed to provide loans to people with low credit ratings.
D) After Effects of the Burst
a. The period between July 2004 and September 2007, the prime increased to 8.25%. The increase led to a major increase in the mortgage payments and the people with adjustable rates became more comfortable with the payments.
b. The markets however led to a major loss and the decline led to continuous increase in the interest rates of the house while decrease in the value of houses.
E) Assistance to Home Owners
a. With the major decline in the markets, the home owners were the most effected and along – side the entire economy was seeing a major decline. The government then needed to step in and bail people out of the issue.
b. The government also assisted the home owners in future buying decisions to make more sound decision and borrowing decisions.
F) Conclusions and Future Research Recommendation
a. The housing markets have had a major impact on the economy as a whole and have led to a number of issues for a wide range of people across the markets.
b. A further research here can be made on how the bubble burst led to a decline of the economy and how this led to strains on the international relationships of the country, also the impact that the housing bubble has had on the country’s currency rate and the overall inflation and recession rate.
Shurick, Steve and Jenn Weir. "The Housing Market: Boom, Bust, and Oh Boy!" Principles of Microeconomics. 2007.