http://news.yahoo.com/s/nm/20071030/bs_nm/usa_economy_homes_index_dc;_ylt=Ak5M7gCmnNtZRVFzua8b3IDv5rEF
Prices of single-family homes are dropping at its fastest pace since 1991. In 1991, there was the worst annual decline of 6.3 percent. Prices are dropping at around 0.8 percent a month this year. Tampa and Detroit have the steepest yearly price drops of 10.1 percent and 9.3 percent. Single-family homes are expected to have a record 7 percent year-over-year drop by December. These declines would bring mortgage rates 0.5 to 1 percent down to boost affordability measures. “The fall in home prices is showing no real signs of a slowdown or turnaround,” says Robert Shiller, founder of the indexes and chief economist at MacroMarkets LLC.
The demand for single-family homes is decreasing rapidly because of many factors. First, the prices before were so high that it was out of many peoples incomes. They had to lower the prices now since many people could not afford houses. Substitutes for housing has also been gaining popularity. Apartments and condos are gaining a good reputation and are beginning to become as popular if not more popular than single-family homes. Speculators are also selling the houses they own since they feel that the prices are going to drop. The population is also slowing down a bit because of the awareness of being overpopulated. This slow down is also causing housing prices to slow down as well. Finally, the taste and preferences of smaller families and apartments are increasing. People do not need to have single-family homes as they did a couple years back.
I think the price drop is a good thing for the economy because it allows houses to be more affordable. Prices have been going up non-stop for a long period of time now and it’s good that the prices are changing paths. I’m planning on living in a house when I am older, but was worried about the constant increase in prices. Now that the prices have dropped, it makes getting a house a lot easier. The demand for houses will rise again in the future, but I think it will keep rising and dropping around the same range.
1 comment:
Yes, it is good to see the price of single-family house is dropping. This will make single-family housing more affordable because in the past it was very difficult to purchase a single family house. Also, the drop in house prices will benefits many aspects in the economy. One of the benefits of the price dropping in US is the increase in Canadian dollars. As Canadian dollars become stronger this will probably cause an increase in demand of businesses trying to get into Canada and make some money because we’re doing relatively well economically. Also, an interesting point you brought up was the apartments and condos. I believe the demand for apartments and condos will decrease due to a change in price of a substitute, single-family homes. As a result it will create an increase in quantity demanded for single-family homes.
K. Chen
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