Check Point - A New House - Risks and Benefits

Check Point - A New House - Risks and Benefits - affect...

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Government bodies, which can affect the influence of the housing market, will be the U.S. Department of Housing and Urban Development. For example, in the latest fiscal year 2011 budget proposal, one of the goals that were set will be to create and preserve over 112,000 jobs through the Department’s housing and economic development investments in communities across the country. In this case, an increase in employment rates will help to increase level of income. This will allow consumers to have more non-refundable income, which will stimulate an increase in demand for houses. All in end, this will result in an increase in prices for houses. In addition, The Federal Reserve influences national policies that can affect the housing market. The Federal Reserve can utilize its three tools of changing discount rates, reserving ratios as well as buying and selling of bonds and securities to influence interest rates, which will
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Unformatted text preview: affect mortgage rates, housing starts, and housing prices. The Federal Reserve has been buying Treasury debts in 2009 in order to restore the housing industry in U.S. In the same way, after the recent recession, the Federal Reserve has been cutting discount rates in order to stimulate consumption and investments. A cut in discount rates will increase supply of money and therefore lower interest rates. As a result, this can help to increase demand for houses as consumers find it cheaper to borrow funds for spending. The increase in demand for houses can affect housing prices such as to bring about an increase in price. When purchasing a house, consumers should research on the plans and policies, which government bodies have implemented or are implementing to make a more accurate forecast of housing prices, which will allow consumers to make a purchase at a lower price to maximize their level of satisfaction....
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