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XECO 212 A New House Economy

XECO 212 A New House Economy - able to wipe people out...

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(1) Title: A New House – Economy Name: Jordan Miller Course: XECO 212 Due Date: Friday, September 03, 2010 Instructor: Eugene Kaufman
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(2) One of the first things a potential new home buyer should know about is the current strength of the economy. One must consider if it would be a wise idea to purchase a home in a weak economy, rather than waiting for better stabilization. As the economy fluctuates, whether positively or negatively, the marginal benefits as well as the costs a potential home buyer would incur would fluctuate as well. As the economy expands the marginal benefits will increase as the homebuyers finances increase. This in turn allows for the buyers to better be able to meet the monthly financial expectations of the home they purchase. The tax deduction on mortgages has been in place nearly as long as there has been a tax code. The removal of the mortgage interest tax deduction means that housing prices will no longer be
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Unformatted text preview: able to wipe people out financially due to the leveraged bets people would have to make on the swing of the housing market. Removing the deduction also means that people in lower income brackets no longer have to compete as hard with a 250,000+ annual gross income. Those who make that much money while under the interest tax deduction receive 10 times more money than one who is only making 40k per year. There are a lot of people in this day and time who purchase a home solely for resale. As government spending decreases, the economy is likely to do better because taxes will not rise. More people will get jobs as the unemployment rate drops subsequently which will lead to more people wanting to buy a home. As government spending increases and taxes need to be raised to make up the deficit, the economy declines and has the opposite effect on the housing market....
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