Ch 17 Case - cities such as Washington DC Miami and New...

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Chapter 17: Financial Planning Case 1. What didn’t Laura and John Burgos know when they put their house on the market in February 2002? Laura and John Burgos didn’t know how buyers would react to the $365,000 price tag- a stiff 74 percent premium over what they paid for the 1950’s ranch house less than three years ago. But with 30 prospective buyers trooping through in just the first week on the market, even a realtor who is not working for the Burgos’s predicts that the house will sell in a heartbeat. In other words, the prices of houses in the area had gone up. 2. In what cities is the real estate weak? Strong? With cities, such as Atlanta, Detroit, and Seattle are still weak, markets have exploded in
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Unformatted text preview: cities such as Washington DC, Miami, and New York. 3. What are the implications for the economy when new home sales increase? The implications for the economy are enormous. New- home sales more than 901,000 new-single family homes in 2001 alone-pump up homebuilders and create demand for lumber, carpeting, washing machines, furniture, and the other things that go into homes. Perhaps more important, rising housing wealth, which increased by roughly $ 1 trillion in 2001, puts money into consumers’ pockets by means of home equity loans and mortgage refinancing. That in turn fuels consumer spending....
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