Thursday, June 13, 2013

How does the housing market affect the economy? (I want lots of material)I know a lot, so don't take time to explain anything unless you yourself...

To look at things from somewhat of the opposite
perspective, other than the loss of construction jobs, if you have a booming housing
market, some of the following happen:


  • The first
    is that people generally feel that the equity in their home is increasing, making them
    more comfortable with the idea of home equity loans to pay for various things they don't
    have the cash for.

  • People also feel like they don't have
    to worry about tomorrow since tomorrow their house will be worth more, so if things
    really go south, they can sell and be ok.  This generally leads to decreased saving and
    again, increased spending.

  • The other thing about the
    housing market is that if it appears to be consistently going up (particularly at the
    rates which it appeared to be increasing) the increase in speculation in terms of
    looking at housing as an investment.

All of
these things can also simply help drive money to go around the economy faster, and if
you read up on your economic theory, faster circulating dollars in a way have a similar
effect to there actually being more dollars circulating around.  This has  all kinds of
interesting effects, among them some positive and some negative, but all you have to do
to find all kinds of great and interesting (and at times frightening) examples is read
up on your recent economic history.

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